Comments to Sen. Cassidy’s Transparency Coalition

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Sent 3/22/2017

Dear Senator Cassidy and Members of the Coalition on Transparency,

We are encouraged by your willingness to work on solutions that will reempower patients too often on the losing side of policy changes.

Encouraging access to honest and straightforward information about costs and prices is critical to putting patients back in the driver seat and increasing their access to high-quality, lower cost care.

For our view of what has gone wrong, and steps to correct past policy failures, we urge the committee to review our “White Paper on Medical Financing” available at http://www.jpands.org/vol11no3/schlafly.pdf and White Paper on Repeal and Replacement of ACA available at http://aapsonline.org/whitepaper.

Ultimately correcting these missteps is crucial to lasting change, but if the committee is considering interim measures targeted more specifically at transparency, we would like to offer a few comments for consideration:

1) The Surgery Center of Oklahoma (SCO) is proof-in-concept that price transparency increases access to lower cost, high quality medical care.  Time recently featured this pioneer offering cash prices directly to patients: http://time.com/4649914/why-the-doctor-takes-only-cash/

SCO’s model is being successfully replicated at other facilities despite overregulation impeding physicians from opening and operating surgical facilities.

Anti-competitive Certificate of Need (CON) laws, and prohibitions against physician-owned hospitals are two examples of laws that need to be revisited and repealed.

2) Transparent pricing at SCO and other similar facilities are not a result of government mandated transparency.  We urge the coalition to carefully consider the consequences of mandated transparency policies. For example, large “stakeholders” are often able to influence policy and rulemaking to their advantage.

A case and point is the Ohio “Healthcare Price Transparency Law,” O.R.C. 5162.80. In Ohio, insurers succeeded in pushing much of the burden to physicians and facilities to determine what any given patient’s payment responsibility would be.

While the physician and facility can and should inform the patient of their fee, it should be incumbent upon insurers to make information about contracted rates readily available to their enrollees. How can enrollees make informed choices without knowing ahead of time, as much as practical, what their insurer will pay for a given procedure at a given facility?

We would go even a step further and suggest that in robust free market, patients would demand to see a schedule of contracted rates before enrolling in a plan. Or, free markets would likely increase demand for alternate benefit design like plans with no networks and reference-based pricing, i.e. the plan reimburses the enrollee a set amount for any given procedure. Reference based pricing frees the patients to seek the facility and price most suitable to the patient’s individual preferences. Imagine how this would unleash real market forces and encourage price transparency. Such a marketplace would even likely foster protections and innovative solutions for situations where shopping around in advance is not possible, .

3) Another example of industry special interests rigging regulations and laws to their advantage (and to the detriment of transparency) is found in the Group Purchasing Organization safe harbor to Medicare Anti-Kickback law. This safe harbor, established by the “Medicare and Medicaid Patient and Program Protection Act of 1987,” (statute: 42 U.S.C. 1320a-7b(b)(3)(C) and regulation: 42 CFR 1001.952 (j)) ostensibly facilitates greater bargaining power and thus lower costs for hospital purchasing of supplies and drugs.  However the safe harbor has in practice driven up costs and scarcity by perpetuating a system rife with hidden kickbacks and rebates. Pharmacy Benefit Manager (PBM) pricing abuse is also protected under this safe harbor.  It is time to repeal it. For more details see http://www.physiciansagainstdrugshortages.com/.

Thank you again for the opportunity to enter this crucial discussion on price transparency. As we state in our white paper, lasting solutions are not going to be achieved by minor changes to the status quo. True reform must include freeing patients and doctors to buy and sell goods and services without government interference, as reflected in honest prices. They should not be rationed according to a political formula.

Please feel free to reach out to us with questions. We would welcome a continued dialog.

Thank you again for your efforts to seek solutions that will benefit patient access to low-cost, high-quality medical care.

Sincerely,

Jeremy Snavely

Director of Regulatory Affairs
Association of American Physicians and Surgeons (AAPS)
520-270-0761
[email protected]