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Tuesday, January 07, 2014

The Price is Right: Health Care Pricing Transparency Wars

Health care price transparency may be on its way to becoming the tag line of the year. Who doesn't like health care price transparency? The answer is almost every payor and  player in our health care system is at best ambivalent about price transparency. Looking at a few recent  skirmishes in our nation's health care price transparency wars helps me understand why -- first to the land of pharmacy benefit managers brokering widely diverging dispensing fees for prescription drugs distributed to the insured and uninsured and second to a group of orthopedic surgeons and residents invited to play "The Price is Right"on hip replacement hardware.

Last month, the California Supreme Court responded to an inquiry from the 9th Circuit clarifying that California Civil Code Section 2527  (requiring prescription drug claim processerors to compile, summarize, and transmit to their clients  pharmacy fee information) does not  compel speech in violation of Article 1, Section 2 of the California Constitution. You may see the full text of Associate Justice Goodwin Liu's opinion in Beeman v. Wellpoint Anthem here: http://www.courts.ca.gov/opinions/documents/S203124.PDF. 

Interestingly, the opinion notes that the opponents of the reporting requirements did not dispute the accuracy of the data collection  system or  the accuracy of the data collected,  just the relevancy of the information's distribution to pharmaceutical pricing (Beeman at 22). The irony of that is, of course, that it is precisely the relevance of the information on dispensing fees paid by various insurers to pharmacists which has made the storied history of California Civil Code Section 2527 so fraught. 

At the end of the day, the California Supreme Court advised the 9th Circuit that this kind of commercial speech designed for a public good (the theory being that transparency on pharmacist dispensing fees to insureds  would eventually raise those fees to the level of dispensing fees paid by the uninsured although why this might not work exactly the other way around is unclear to me) is not the kind of compelled speech that offends Article 1 of the California Constitution. This is interesting for several reasons, including an extension of California Supreme Court jurisprudence on commercial speech and possible fair competiton concerns, but it is  absolutely fascinating for what might still  be revealed about  prescription drug dispensing fees and pricing in California.  The battle between pharmacy benefit managers (PBMs) and pharmacists is far from over but even a tiny insight into how PBM intermediaries broker both the compensation of pharmacists and the price to consumers of certain prescription drugs is a remarkable thing.

On the provider understanding of pricing transparency front, we have a  study recently published in Health Affairs. A group of orthopedic surgeons and residents called upon to divulge the surgical acquisition price of commonly used joint implant equipment did not do well on the study's version of  "The Price is Right" (the old TV show where knowledgable shoppers compete to name the price of commonly purchased household items, which you may enjoy here: http://www.youtube.com/watch?v=sqk1-q8gXcY).  If you'd like to see Kanu Akike, et al's paper on how roughly 20 percent of orthopedic surgeons were even close to aware of the acquisition cost of their most commonly used hip repair hardware, including the hip hardware that some of them may use exclusively or near-exclusively in exchange for supplier and manufacturer compensation, you could look here: http://content.healthaffairs.org/content/33/1/103.abstract.

My favorite part of the study? Unlike "The Price is Right" participants, the study participants could not have the actual acquisition costs disclosed to them after they made their estimates -- this was prohibited by the manufacturers.

Watching "The Price is Right" as a kid, I never understood why a contestant might think a box of Rice-A-Roni might cost, say, ten dollars. I grew older and came to realize that stress can do strange things to your mind.  But I do still remember those revelatory moments when Bob Barker would reveal the actual cost of the Rice-A-Roni, the hand slap to the forehead, and the murmured "of course" that accompanied the reality check.

You see, the game show contestants had some exposure to actual acquistion costs. As for the orthopedic surgeons and residents, not so much.

 

 
 
 

Posted by Ann Marie Marciarille on January 7, 2014 at 04:55 PM | Permalink

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