Bill encouraging patients to shop for medical care advances

Measure would allow patients to compare cash prices for medical care

By Caleb McCullough,

Gazette-Lee Des Moines Bureau

DES MOINES — Iowans would be able to compare cash prices for medical care and receive credit toward their deductible for cash payments under a bill state lawmakers advanced Thursday.

The bill, Senate File 431, is based on model legislation from the Cicero Institute, a think tank started by Joe Lonsdale, the co-founder of software company Palantir. The bill is intended to drive down costs for patients by encouraging them to shop for the best price among multiple providers, said Cicero Institute Policy Director Jonathan Wolfson.

“The real goal here is to reward patients with an incentive to be priceconscious consumers, because we see in so many other areas of the market, when individuals are price-conscious consumers, prices of items go down,” Wolfson told lawmakers.

Under the bill, health providers would need to post online the prices they charge for cash payments for medical services. If a patient chooses to pay a cash price lower than the price the insurer negotiated, the payment would count toward the patient’s deductible. States including Texas and Tennessee have similar laws in place.

Under the measure, if a patient uses a coupon or rebate to pay for a medication at a cost lower than the insurance provider’s negotiated cost, the patient also would be able to credit that cost to the deductible.

Once a patient meets the deductible, insurers would split the cash savings with the patient if he or she finds a service for cheaper than the insurer’s negotiated price.

Federal price transparency rules already require much of the price reporting required in the bill. Hospitals must publish their outof- pocket costs for services, and insurers must publish their negotiated rates with in-network providers.

A number of health insurance companies are registered opposed to the bill. Lobbyists for insurance companies told lawmakers Thursday the bill would be difficult and costly to implement. They said they did not believe patients would seek out the lowest-cost option, as the bill’s authors suggested.

Scott Sundstrom, a lobbyist for Wellmark Blue Cross Blue Shield, said insurers already have tools that allow patients to compare prices across the list of in-network providers.

He said patients generally do not use that tool, which he said cost the company “lots of money,” to find the best cost. He said people do not think about health care costs in the same way they do for other goods, so price competition does not often encourage people to seek out the lowest price.

“Health care’s just fundamentally different in that respect,” Sundstrom said. “Where there’s really a matter of life and death, it’s incredibly complex. So most of us as lay consumers do not have the knowledge to evaluate who is the best provider of the service.”

LAWMAKERS SAY BILL NEEDS WORK

The bill advanced Thursday out of a threemember subcommittee. It is now eligible for a vote in the House Health and Human Services Committee.

Sen. Jeff Edler, RState Center, the chair of the Senate Health and Human Services Committee, said he thinks the bill has the potential to lower health care costs for patients, but he expects it to be amended in response to concerns brought up Thursday.

He said he and others would look at how the program has been implemented in other states and see how it should be changed going forward.

“At the end of the day, if it’s not going to help bring health care costs down in Iowa, we’re not going to look at it too long,” he said.

Sen. Pam Jochum, a Democrat from Dubuque, did not vote to advance the bill. She said during the subcommittee meeting she had a number of concerns about how the bill would be implemented, including how it would affect medical staffing in the state.

“I think we all would like to see more price transparency. We’d like to see lower costs in our health care,” she said. “ ... As I was reading the bill, I was also somewhat troubled by how this would actually be implemented.”