The Clinton Herald, Clinton, Iowa

National News

May 16, 2014

New health cost controls get go-ahead from feds

(Continued)

Say the limit is $30,000. The plan offers you a choice of hospitals. If you pick one that charges $40,000, you would owe $10,000 to the hospital plus your regular cost-sharing for the $30,000 that your plan covers.

And that extra $10,000 doesn't count toward your plan's annual limit on out-of-pocket costs.

That's crucial because under the health care law, most plans have to pick up the entire cost of care after a patient hits the annual out-of-pocket limit, currently $6,350 for single coverage and $12,700 for a family plan. Before the May 2 administration ruling, it was unclear whether reference pricing violated this key financial protection for consumers.

Some experts are concerned.

"The problem ... from the patient's perspective is that at the end of the day, that is who gets left holding the bag," said Karen Pollitz of the nonpartisan Kaiser Family Foundation. Previously she was a top consumer protection regulator in the Obama administration.

The new pricing approach is not yet on consumers' radar, but it's gaining ground. The Mercer benefits consulting firm said 12 percent of the largest employers were using reference pricing last year, nearly double the 7 percent who relied on it in 2012.

The approach has been pioneered in California by CalPERS, a giant agency that manages health and retirement benefits for public employees, and is the nation's second-largest purchaser of health benefits after the federal government.

CalPERS started with knee and hip replacements in 2011, steering patients to hospitals that had been vetted for quality and charged $30,000 or less.

Ann Boynton, CalPERS' health benefits director, said the program has been a success, with patients able to choose from about 50 hospitals.

"People do not feel like we went to bargain-basement hospitals where the quality is not good," she said. "The quality is the same, and in some instances, better."

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