Press Release  AG Healey: Online Pricing Tools and Alternative Payment Arrangements are Not Enough to Contain Health Care Costs

Boston — A new report released today by Attorney General Maura Healey finds that inpatient spending has continued to drop at lower-priced hospitals and rise at higher-priced ones, despite measures aimed at helping consumers shop for quality, affordable health services. 

This is the ninth report the AG’s Office has issued as part of its ongoing work to examine health care cost trends in Massachusetts and aid policymakers in controlling health care spending. This year’s report focuses on challenges associated with using transparency tools online and alternative payment arrangements to control costs.

“Massachusetts families bear incredibly high costs for health care,” said AG Healey. “We need real solutions to control escalating costs and cannot put the burden on patients. While price transparency for consumers is essential, we must get serious about establishing real incentives for delivery of high-quality, low-cost care.”

The new report finds online pricing tools that allow patients to compare the cost of certain health care services may provide patients with useful information, but they fail to control health care spending. According to the report, these websites are used by only a tiny fraction of residents and are not influencing consumer decision-making in a meaningful way.

The report also examines the work of alternative payment arrangements in controlling health care spending and finds that frequent plan-switching by patients and administrative complexity of the arrangements limit their effectiveness as cost containment tools. Alternative payment arrangements are contracts between health care providers and insurers that give added financial rewards to hospitals and doctors that keep patients healthy and avoid high-cost services. Yet the report shows nearly half of all patients in such arrangements switched insurance plans or products, such as from HMO to PPO plans, within two years, making it difficult for insurers, hospitals and doctors to accurately assess and share the savings from keeping patients healthy.

The report also finds that insurers assign patients to hospitals and doctors in complex ways, adding unnecessary administrative costs and making it hard for hospitals and doctors to determine which patients are their responsibility under alternative payment arrangements.

The AG’s Office offers the following recommendations to reduce health care costs:

• Manage expectations that consumer-driven health care price transparency websites will substantially reduce health care cost growth. The report recommends designing tools that help consumers choose primary care providers affiliated with high-quality, lower-cost systems; enhancing cost estimator tools for “Shoppable Services” such as imaging, physician office visits, and elective surgeries; expanding access for non-English speakers; and fully integrating pharmacy and behavioral health services into online pricing tools.
• Closely review incentives for health care providers to direct patients to lower-cost health care settings.
• Recognize that health care provider financial incentives to manage their patient populations are significantly hampered by the frequency with which patients switch health plans.
• Standardize the methods used to assign patients to health care providers under alternative payment arrangements.

AG Healey and staff from her office will be speaking and presenting on these findings at the 2019 Cost Trends Hearing on October 23.

Today’s report was prepared by Deputy Chief Sandra Wolitzky, Assistant Attorneys General Amara Azubuike, Elizabeth Carnes-Flynn and Michael Wong, and Health Care Analyst Noam Yossefy of the AG’s Health Care Division.

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