Flor⁠i⁠da Leg⁠i⁠sla⁠t⁠⁠i⁠on Would Requ⁠i⁠re Grea⁠t⁠er Pr⁠i⁠ce Transparency

By: The James Madison Institute / 2016



Florida Legislation Would Require Greater Price Transparency
By: Dustin Siggins

A price transparency bill being proposed in Florida could shed light on health care costs in the state and better equip consumers to compare prices.

Florida state Sen. Bill Bradley’s (R-Fleming Island) bill, Senate Bill 1496, would require medical facilities “to provide timely and accurate financial information and quality of service measures to certain individuals,” according to a summary of the legislation.

The bill also would oblige health care practitioners to grant patients written estimates upon request and require health insurers to post information online to help policyholders gauge costs and charges.

Empowering Consumers

Bradley says the more information patients have about the health care decisions facing them, the more likely it is they will make better decisions.

“The main purpose of this transparency bill is to empower consumers to make health care decisions that best meet the needs of the consumer,” Bradley said. “An informed consumer can make smart health care decisions. Without information, the consumer is powerless, and the system will treat them as such.”

Educating patients on the prices of services they purchase could drive costs down, Bradley says.

“I believe in providing this information to the consumer so that he or she can make health care decisions that best meet his or her circumstances,” Bradley said. “To the extent that an educated consumer is able to shop for services, this may put some downward pressure on health care prices, since cost is certainly one factor in selecting a health care provider.”

Consumer-Friendly ‘Service Bundling’

To reduce the prevalence of hidden or confusing costs, Bradley’s bill would require health care providers to “bundle” related services, supplies, and procedures when communicating prices to patients.

“Under my bill, the ‘bundled services’ term is a consumer-friendly reference in layman’s terms to describe a group of services and supplies that might be typical for a procedure,” Bradley said. “The patient will be able to search using the descriptive service bundle term for an estimated range of costs for the whole procedure. For example, the bundled service term may be ‘knee replacement’ or ‘shoulder surgery,’ and the results will be presented [and sorted] by hospital, regionally, and nationally.”

Bradley says, his legislation would help consumers to compare the true cost of all services related to a procedure at one hospital with the true cost of the same services at another hospital.

“Once this bill passes, the consumer will have access to typical payments for the descriptive service bundles as well as quality information for certain health care providers in a manner that allows the consumer to compare multiple health care providers of that service bundle using consistent and informative data from provider to provider,” Bradley said. “I believe it will have a long-lasting impact on the health care system, as it will serve as a foundation for consumers to make better choices for their health.”

Enforcing Price-Gouging Prohibitions

Bradley’s transparency bill includes disincentives for price gouging and provides an enforcement method. The bill would create a system in which patients “not able to resolve billing issues with the health care provider” could seek help from a “consumer advocate,” who would inform a regulatory agency of foul play.

“The agency may impose administrative fines of $2,500 per violation or double the amount of the charges that exceed fair charges, whichever is greater,” Bradley said. “My hope is there are no violations and no health care provider has to pay the administrative fine, but without them, there is no way to enforce compliance with the law.”

House Bill 1175, the House counterpart to Bradley’s price transparency bill, sponsored by state Rep. Chris Sprowls (R-Palm Harbor), was added February 15 to the Health and Human Services Committee agenda. If passed, the new transparency requirements will take effect July 1.

Suggested Reforms for Florida

Sal Nuzzo, vice president of policy at the James Madison Institute, says lack of price transparency in health care is a persistent problem.

“Price transparency will continue to grow as a challenge because of factors like the aging of the population,” Nuzzo said. “As much as costs can be hidden within bureaucratic schemes, they will continue to rise as demand increases with an aging population.”

Nuzzo cites price transparency as one of “five specific policy reforms that Florida’s legislators can take that are both feasible, practical, and proven to address our health care cost and access challenges.”

Other areas are the repeal of certificate of need (CON) laws, expansion of telemedicine, direct primary care, and expansion of the role nurse practitioners play in providing care.

Bills offered in the House and Senate to repeal or reform the state’s CON laws are now being considered. The same is true of Senate Bill 132, a direct primary care bill that would establish health care providers do not need a special license to sell services directly to patients, as opposed to billing them through insurance.

Markets Are the Solution

Nuzzo says solutions to health care problems must come from market-based innovation, not from government regulations.

“Just because health care is something almost 100 percent of us will consume, that doesn’t mean that market principles don’t apply,” Nuzzo said. “There will always be demand for health care services, and there will always be individuals providing services to meet that demand. The issue at hand is how do we as a society treat that market. Do we acknowledge the challenges facing our system and seek to implement market-based solutions to them, or do we continue implementing government-induced bureaucratic rules and regulations that stifle innovation and keep us from meeting the challenges?”