New York Times column catches the eye of Peggy O’Kane

August 9, 2016 · NCQA Communications

NCQA’s president, Margaret O’Kane, commented on health economist Austin Frakt’s August 9 column in The New York Times. She thinks Mr. Frakt might be overstating the role of quality data in consumers’ choice of narrow networks—and after 26 years at the helm of NCQA, Ms. O’Kane knows a thing or two about quality.

Frakt makes the case that the California Public Employees’ Retirement System (CalPERS) reference pricing program cannot be implemented on a broader scale because consumers don’t have access to transparent quality information.

Reference pricing caps CalPERS’ payouts for surgery reimbursements and leaves consumers responsible for the balance after a certain level. Frakt writes that this has reduced costs by up to 20 percent since 2011, leading to lower-cost hospitals taking a larger market share and driving down costs across the board. But even with such a dramatic drop in cost, reference pricing is difficult to implement on a broader scale because there is little competition among hospitals and a lack of “ready access to comprehensible price and quality information.”

Ms. O’Kane counters that quality data does not, in fact, play a large role in consumer choice regarding narrow networks. Anticompetitive hospital behavior ultimately compromises quality: Consumers are forced to accept all hospitals in a network simply to have access to the good ones. Crucial data are lacking, especially for ambulatory surgery sites.

Read the NYT column: http://www.nytimes.com/2016/08/09/upshot/how-common-procedures-got-20-percent-cheaper-for-many-californians.html

Ms. O’Kane’s comment:

This is a great piece. One quibble, I think AF overstates role of quality data in choosing narrow networks, most research show not so much. Also, don’t believe we have quality data of ambulatory surgery sites, we should.

I keep thinking how anticompetitive hospital behavior also compromises quality, for example where you have to accept all the hospitals in the cartel if you want the good one. Not sure if the FTC has worked that angle with the courts.