Expert Calls for More Price Transparency

Harvard Business School professor Regina Herzlinger on Tuesday at a House Ways and Means Subcommittee on Health hearing said that the federal government should establish an independent agency to make information on health care prices and quality more available, CQ HealthBeat reports.

Herzlinger said, "Every day consumers use information to decrease costs, improve quality and increase the range of choices even for complex financial services and high-tech products. They could achieve the same results in health care if price and other information about specific providers were more widely available."

According to Herzlinger, the Securities and Exchange Commission could serve as a model for the independent agency, which would use an independent, private, not-for-profit group such as the Financial Accounting Standards Board to develop information standards and conduct audits. Herzlinger warned that the "transformation" of the current system "will not be an easy one," adding, "Just as (President Franklin Roosevelt) bucked substantial business interests to create the SEC, the current government faces powerful, well-financed opposition by providers to transparency."

Subcommittee Chair Nancy Johnson (R-Conn.) said that recent efforts by CMS to make Medicare information more available remain in the early stages, adding that the agency must clarify how health care providers should communicate with the public about prices.

Rep. Pete Stark (D-Calif.) said that efforts to make information on health care prices more available should focus on physician and prescription drug prices, rather than hospital prices. "Most people don't actually have a choice of hospitals," he said (Reichard, CQ HealthBeat, 7/18).