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Will new hospital billing data impact Alaska’s infamously expensive healthcare?

401(K)2013 / cc via flickr

JUNEAU -- New information on hospital costs, released this week by the federal government, may help Alaska rein in costs that strain budgets -- from the family unit to the state treasury -- and have threatened to become unaffordable, according to government officials who are still reviewing the newly-public records. 

The state has already startled some in the healthcare community by proposing dramatic cost-cutting measures: travel incentives have been considered for state employees who elect to undergo medical treatments in cheaper markets outside Alaska. Preference has been explored for health insurers that steer patients toward the least-expensive treatment or provider. 

The Obama administration's release of hospital pricing across the country, alongside how much Medicare patients were billed and what the government actually paid for procedures in 2012, shined a light on the wide variation in pricing by city, region and state.

"From our initial review, the wide price variance between provider charges and actual reimbursement rates is an opportunity for consumers and health plan sponsors to gain more insight into how health care services are priced," said Department of Administration Commissioner Becky Hultberg, in a statement provided by the department's Emily Cotter.

That will enable more informed decision making by the payers, she said.

That new data will likely have a dramatic impact on the relations between those providing health care and those paying for it.

"The world for health care in the United States really changed this week," said Deborah Erickson, executive director of the Alaska Health Care Commission.

"This if the first time that hospitals have been able to see each others price data. Before, they never could share data because of anti-trust restrictions," she said.

In Alaska, the state government is one of the largest payers for health care, both directly and indirectly, for its own employees, Medicaid patients, retirees, funding provided to local districts for teachers, prisoners and numerous other categories.

Now that the new federal payment data is available, it can be used to both hold those costs down, and be combined with other data to make sure the state is paying for the best quality care as well.

The new data "will inform the State of Alaska's consideration of travel benefits, direct contracting, bundled payments, and other strategies to ensure our employees receive the best possible care at the best possible value," Hultberg said.

Hultberg says costs are often cheaper outside Alaska, and that even paying for a travel benefit the state can reduce costs for some procedures by sending those for whom it provides care outside for the operations.

She's acknowledged that that's not the state's first choice.

"We will first look to local providers to see if they have the interest and capacity to support our goals. This reflects efforts that other Alaskan insurers and large employers have already undertaken," she said.

Erickson also warned that new data could have some perverse impacts as well.

"In at least a few cases it probably will make prices go up, at least in the short term," she said, as it may reveal hospitals which weren't charging as much as they could have.

"I'm guessing there are hospital administrators looking at that data and determining that they may have, relative to other competitors, under priced their services," she said.

Even given the limitations in the federal data, such as the fact that it doesn't include physician fees, and those incentives, Erickson said that getting more information about what hospitals are charging and paying is much needed.

"Transparency is a good thing," she said, and is crucial for Alaska to be able to hold down its health care costs and get better outcomes.

The Health Care Commission is considering health care information effort, called an all-payer claims databases which could provide the state with even more data in future years.  

Contact Pat Forgey at pat(at)alaskadispatch.com