HSAs and Transparency

Why isn't proliferation of Health Savings Accounts (HSAs) making the medical marketplace more transparent? Answer: Because HSAs piggyback on the current payment system rather than mount a challenge to it. Long before you (with HSA in hand) get to the doctor's office, your insurer and your doctor have already agreed on what services will be covered, what will not be covered and how much will be paid. By the time you get there, there is nothing left to negotiate. See my analysis at HSAs Explained. What follows is a discussion of this issue, edited by yours truly.

Comments (15)

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  1. Dave Racer says:

    Minnesota has a transparency law that requires payers and providers to give a patient a “good faith estimate” of the cost of any medical procedure in advance.

    Almost no one knows about it, of course. The current legislature is trying to remove the requirement on providers, and lay it all on payers.

    By the way, as a free market, non-provider attempt to provide transparency.

  2. John Graham says:

    OK, everyone, at Ralph Weber's request I attach a PPT file describing the experience of an unidentified patient with an HSA-compatible high deductible health plan undergoing a hernia operation. All the paperwork is there. It is a fiasco of price opaqueness, which he volunteered to share with me.

  3. David McKalip says:

    This story is all too common. I have an HSA and know medical billing and still find it difficult to navigate the system. When I go to the pharmacy and try to negotiate a price, they want a higher price than my Blue Cross Blue Shield (BCBS) negotiation. I try shopping for a lower price, but can’t find one.

    I would like to see the HSA dollars unlinked somehow from the High Deductible Health Plan (HDHP) but do admit I am glad that I get the negotiated lower rate from BCBS. (In the end, I think there will be at first a higher rate paid by large groups of HSA patients, but then prices would drop over a few years and a new equilibrium reached. At some point doctors will be paid faster and paid enough to justify actually spending more time with their patients).

    In addition, I am trying to understand how we can help patients manage the billing/EOB reconciliation and ensure they get the most credit applied to their out-of-pocket (OOP) deductible to reach the point where insurance kicks in. I have a business idea on this, but need someone to work with.

  4. John Graham says:

    I don’t think pharmacy is the issue. Claims adjudication there is pretty straightforward and the pharmacist’s latitude is limited to generic substitution. Plus, the retail pharmacist is just doing one thing. The doctors or hospitals are messed up with adjudication because they cannot bundle the services. Compare the bill you get for a Botox injection or Lasik eye surgery to the one you get for something simple that’s insured, e.g. otitis media (an infection of the middle ear canal): the latter is a hundred times more confusing to understand!

  5. Ralph F. Weber says:

    Very good John. My wife’s case was almost identical, so your case study is by no means an isolated case.

  6. Marcy Zwelling says:

    I am SO glad that this issue has come up. You are right. It is a horror show. The HSA does not clear this up. The problem starts with who defines transparency? And whose transparency is it?

    That said. We have solved this problem in Long Beach. Please see healthylongbeach.org. This is a website that we have initiated to speak to the problem of price transparency and access. Access is not about a card. It is about knowing that your doctor is at the other end of the phone and “what” is on the other end of the phone…. What am I buying? What is its value? Value is personal. Cost must be transparent and public. So, we asked all providers in Long Beach to post their retail prices… all doctors, hospitals, surgery centers, imaging centers, etc. This is all posted on one site. Patients can even find an HSA to purchase or insurance to purchase. That is access. And we have support from the mayor and the city council and all legislators. The county (public systems) also knows that there is nothing wrong and everything right about telling a patient about the cost of care. ER’s can and should have cash registers.

    Why should a patient with or without insurance be saddled with crazy “billed charges” hanging over their head. I personally feel that this is OBSTRUCTIVE to care.

    Finally, why shouldn’t every insurer be MANDATED (I cannot believe I used that word) to post their payment schedule. We pay $1500 to your hospital for an appendectomy regardless of what hospital the patient uses if the patient purchases our ABC plan. Now, the patient sees the hospital’s fee schedule, the insurer’s payment schedule and he or she knows precisely the cost to him or her. The end. Case closed.

    And… if a hospital wants to compete and actually sell quality… it can sell Appendectomies for $2000 ($100 more than the hospital down the street) and “sell” better service because it will take you home after the procedure and feed you dinner… (or whatever)…

    Point is … legitimate transparency stimulates quality and competition. It is a good thing … but it has to be properly defined and processed.

  7. John Graham says:

    I have written about transparency here and elsewhere. I think it is time to update it. I don’t know why it is so mysterious for state legislatures to get this right. Simply subject providers to the same civil code of contract to which everyone else is subject. If the patient did not agree to a price (or at least a reasonable estimate) before the procedure, there is NO CONTRACT and, therefore, NO PAYMENT DUE. It would take ONE small claims case finding this to change providers’ behavior. Can someone explain to me how a contract between a patient and a health plan, and a contract between a health plan and a provider, somehow magically triangulates to a contract between a patient and a provider???

  8. Marcy Zwelling says:


    Last October, the California Medical Association passed a resolution I wrote, asking the legislature to allow physicians to directly contract with their patients and for that direct contract to supersede other contracts. The way this SHOULD work is thus: 1) patient contracts with their physician, 2) patient contracts with their insurer. Patient pays the physician. Physician is accountable to patient. Patient may be reimbursed by insurance. END.

    As it is with PPO insurance and with Medicare (or any government insurance plan) this triangulation allows for the interference of the insurer or the government.

    It is a zoo out there. Most of the cost of care is borne by those trying to navigate the system. If only all the animals would just get back in their cage and do their job. Insurers should be insurers, doctors should be doctors… etc, etc. It is more than triangulation … it is strangulation and it is killing us.

  9. Linda Gorman says:

    I’m in an area where a couple of large employers have gone HSA/HRA and HSA penetration in the state as a whole is relatively high. Some physicians I talk to say they are feeling it. Businesswise I note that when I tell some of the physicians that I see that I am a cash patient they now have administrative systems to handle it. Three years ago they didn’t. Things do not change overnight, but here and there it seems to be starting. Some Medicaid clients in the local disability group are experimenting with the Wal-Mart clinics. It will be interesting to hear what they think.

  10. John Graham says:

    Which invites the question: why are the plans not able to negotiate this without state support? They want it both ways: they complained bitterly when Schwarzenegger signed a bill that requires plans to pay claims for hospital procedures that were pre-authorized, even if the patient disenrolls from the plan before the procedure date. They claimed that this was covered in contracts.

  11. Ralph F. Weber says:

    Aetna seems to be trying to be transparent by posting costs for procedures on their website.

  12. David McKalip says:

    Correct about goal of Aetna posting cost data. I agree that transparency of cost and quality data is a worthy goal. However, the third-party payers are forcing posted measurements that are meaningless or are designed to serve THEIR interests and not that of patients.

    I have no problem telling a patient my costs and my results for medical and surgical practice. In fact I have no problem posting compliance with measures derived by my specialty society.

    However, having been a member of the AQA and other bodies creating such measures, I can affirm that they are derived in processes that are influenced heavily by politics, they are watered down or inaccurate and often need to change. The cost measures are really based on “efficiency” and reflect how well physicians ration care in ways that are designed to meet arbitrary and invalid ranges set up to benefit third-party payers (episode treatment group – ETGs).

    I applaud opposition to such faux-transparency. Real transparency will come when patients control the spending for their routine annual health care (backed by high deductible health plans).

    I have attached a paper I wrote on the risks and unintended consequences of PFP (which applies to ill conceived public reporting) and presented last year at the AMA.

  13. Ralph F. Weber says:

    Good point David. When it comes to prescriptions, there is complete opaqueness. I think rates need to be posted for sure. When my wife went in for surgery, if we had put it through on Blue Cross, it would have been $22,000. When I asked for the cash price, it became $1,299. I knew to ask, but the average American would not.

  14. jean franceus says:

    This entire discussion is based on a critically erroneous assumption. You are assuming, along with everyone else, that we have a “health care system” in America.
    We do not.
    We have “disease care system”, in which doctors are rewarded when their patients remain ill.

    * Medical schools need to teach med students to be health teachers. The model for them to follow would be Naturopathic physicians, who are trained to see themselves as health teachers. As a result, they have better relationships with their clients and healthier clients.
    * Medical doctors should be rewarded when their patients stay healthy and penalized when they fall ill. When this is the case, MD’s will be motivated to teach health, rather than to draw profit from treating disease. Revolutionary concept to MD’s.

  15. Jeff Ohly says:

    Saw speech in Imprimis.

    Three more things to save free healthcare, briefly.

    1. Tort reform. The lawyers are still sucking billions out of the sector. Add realty, not the legal lottery, to deal with legimate nonnegligent errors. Allow liability waivers for nonnegligence – it is a risky business and patients need to understand. Remove true negligence from attorneys to arbitrators with realistics, actual damage settlements.

    2. Deregulate treatment. The AMA has a monopoly. Allow nurses, medics, ENT's, moms, grandmas, and anyone else practice medicine. Disclose their qualifications, allow liability waivers, protect from litigation, but hang the frauds. A prudent practitioner will refer real problems above their qualifications. If a former army medic can glue or stitch a basic wound closed and give care instructions, for a fraction of the typical costs – let them. They know artery, nerve etc. damage. For all of history until now, midwives delivered babies at home. Again, they know complications. All of this is great for indigents, noninsureds, illegals etc. I can't get the same annual physical for free that the president receives. Medical treatment is not a right or entitlement – it is a privilege.

    3. Allow pharmacists to prescribe medicine. They know more about it then doctors. We have the infrastructure to control dangerous and additive substances. Again, allow liability waivers, protect from litigation, but hang frauds. Everyone knows the drug salesmen payola game.