City in Line to Participate in Health Cost Project

San Diego could be one of about a dozen American cities selected for a federal project to make more health pricing information public.

With little fanfare, U.S. Health and Human Services Secretary Michael Leavitt came into town and met with about 20 hand-picked San Diegans on April 19 at the University Club in Downtown San Diego.

At the closed-door meeting, Leavitt told hospital executives, doctors, some of the city’s largest employers and most prominent business leaders that the federal government will issue a request for proposals within weeks for a price transparency study to begin in 2007.

Attendees received word of the San Diego meeting only a day or two earlier.

The pilot program could involve collecting pricing information from hospitals, health plans and the military. In March, at the same time the Bush administration announced Medicare would begin posting on its Web site the amount it pays to cover certain procedures, Leavitt had announced that there would likely be a pricing initiative to involve cities with higher than average health costs.

The issue of price transparency is of national importance as health costs rise and the actual cost of doctors’ services are masked by a chaotic entanglement of payers, including insurance companies, Medicare and Medicaid.

Jim Knight, the chief executive officer of San Diego-based Consumer Directed Healthcare, Inc., who attended the meeting, said Leavitt indicated he wanted to move very quickly on the pilot.

Leavitt stressed that collaboration among employers, health care providers and the military would be key to being selected, several attendees said.

The study would require hospitals to publicly share pricing information, though details about what information they would disclose and to whom were not announced.

Dr. Robert Hertzka, past president of the California Medical Association and an anesthesiologist at Sharp HealthCare, said Leavitt implied that some component of the project would involve employees with health savings accounts, or high deductible insurance plans, perhaps even requiring employers that participate to offer them as an option.

Leavitt could not be reached before press time, and San Diego County Health and Human Services officials said they did not receive an invitation to the meeting, nor did they have any knowledge of Leavitt’s visit.

Information about pricing is also fundamental to the decision making of consumers and providers with regard to HSAs, which are backed strongly by the Bush administration and Leavitt. The plans aim to encourage consumers to spend on health care more conservatively. Money left over, which is tax-free, can be used for purposes other than health care.

Political Agenda?

Some leaders at the meeting, such as Connect CEO Duane Roth, Sharp CEO Mike Murphy and others said they didn’t think HSAs were the motivation behind the federal pilot project on price transparency. Scripps Health CEO Chris Van Gorder said he thought the government was responding to advocacy groups.

“It’s a political issue more than a tactical issue at this point,” Van Gorder said. “What you are seeing is the government respond accordingly.”

Groups involved in organizing the meeting for Leavitt included the La Jolla-based California Healthcare Institute, a biomedical advocacy group; the Lincoln Club of San Diego County, a Republican club active in campaigns; and the San Diego Regional Chamber of Commerce.

Roth, an active member of all three groups, said he helped invite stakeholders to the meeting and will be organizing another meeting in the coming weeks to discuss how San Diego might collaborate on the pilot and how a response to HHS might be prepared.

Some attendees said Leavitt made San Diego’s chances to be part of the pilot seem almost certain. Roth said San Diego’s reputation for collaboration across industries would no doubt put the city in the running.

“It was clear that this was not being advertised,” said Roth, who said he never spoke with Leavitt directly.

Little Detail Provided

Van Gorder, who couldn’t change his schedule to be at the meeting on only a day’s notice, and Sharp’s Murphy said they support the idea of price transparency, but that they could not say if they would commit to the project since so few details were given about what it would require or how much money it could cost local hospitals, some of which already operate in the red.

Attendees at the meeting said Leavitt did not say how much money the community might receive to reimburse participants for costs associated with the project.

Neither Van Gorder nor Murphy would say if he foresaw obstacles to the pilot because, Van Gorder said, “It depends on what it is.”

“I don’t know that (Leavitt) has it totally figured out,” Murphy said, and added later, “It’s premature to say who exactly it could benefit.”

Since 2004, California law has required hospitals to disclose the prices of their 25 most common outpatient services. Some hospitals, including those in two of San Diego’s largest health systems, Sharp and Scripps, offer their entire fee schedules to the public upon request.

Van Gorder said only competing hospitals and advocacy groups have asked to see Scripps’ fee schedule, which he said is about the size of a telephone book.

“Patients never ask for it, which we find interesting,” Van Gorder said.

Hertzka said price disclosure could mean improved care.

“If you think you are doing the right thing, you have nothing to hide,” Hertzka said. “If someone else is doing something better, there’s more room for improvement.”

Attendees said Leavitt mentioned Rochester or Minneapolis/St. Paul, Minn., Salt Lake City and Indianapolis as other possible cities to be selected for the price transparency project.