AUGUSTA, Maine — A bill that creates a special commission and an annual study of hospital financial data for tax-subsidized hospitals in Maine may be the first step toward a more transparent health care system, according to proponents of the measure.
Just finding out how much any given medical procedure actually costs is nearly impossible, said the bill’s sponsor, Sen. Geoff Gratwick, D-Bangor.
He said while there were numerous reports noting the importance of greater transparency in medical costs he liked the medieval cliche about “would you buy a pig in a poke” to describe the problem.
“Informed consumers make informed choices,” Gratwick said.
Coincidentally, Wednesday the federal government released a new report detailing great disparity in the price hospitals across the country charge for similar procedures.
Gratwick, a doctor, said creating a more transparent system on medical costs, especially costs charged by nonprofit hospitals that receive public funding, was the key reason he sought office in the first place.
A first-term senator, Gratwick co-chairs the Legislature’s Insurance and Financial Services Committee, where the bill, LD 1453, was heard Wednesday.
The bill does two primary things, according to Gratwick.
First, the bill requires the Maine Health Data Organization to conduct an annual study of hospital financial data and to contract with an independent organization to analyze the data and present it in a “format that is easily understood by the average consumer.”
The bill also requires the state’s Department of Professional and Financial Regulation within the Bureau of Insurance to consider that analysis as part of the process it uses to review health insurance rate increases.
Gratwick said the state’s Maine Health Data Organization does collect and compile information on costs by hospital but it doesn’t detail that information very well or make it easy to find or easy to compare costs from one hospital to the next.
For example he said the cost of a basic lower back X-ray in Maine can range in price from $55 to $570.
“This data is really not very useful to patients without better analysis, without being focused differently,” Gratwick said.
Gratwick said the bill was an attempt to gather and analyze information that would help policy makers going forward, especially as the federal Affordable Care Act is implemented.
“This bill is but a small step on the path along to reforming our broken health system,” Gratwick said. “But almost regardless of which way our health system goes I think this is appropriate. It returns Maine hospitals to their primary role of carrying costs we can all afford for our medical care.”
Jeff Austin of the Maine Hospital Association, whose members largely pay for the operation of the MHDO, said the most current data on the organization’s website is from 2010.
Austin said Maine’s hospitals have not taken a position for or against Gratwick’s bill, but he did say hospitals support price transparency.
Still, Austin said the way the measure is written presents some problems for the association. For example, it doesn’t spell out precisely what pricing and financial information it sought from hospitals.
“We are not opposed to giving you data, we give you a lot, we will give you more,” Austin said. “I don’t know what you want or why.”
To illustrate his point, Austin pulled out several stacks of paper from a canvas tote bag. He said hospitals already disclose either through state reports or federal tax returns most of the information Gratwick seeks — everything from the costs of procedures to the compensation paid to top executives.
“We spend a lot of money providing the government data,” Austin said, holding up one hospital’s federal tax return known as a federal Form 990. “You see a particular line in here — CEOs salaries every year. As turgid and as impenetrable as it seems, t he press finds CEO salaries buried in here every year.”
There was no official testimony in opposition to the measure.
The bill also sets up an 11-member panel of lawmakers and others appointed by the Senate president and the speaker of the House that would evaluate the data reported by hospitals and health care facilities and make recommendations about how to standardize hospital financial and health care reporting to enhance transparency.
The bill will be back before the committee Tuesday for a formal work session, when the committee could make changes to it and possibly vote on a recommendation for or against its passage by the full Legislature.