June 27, 2011
Governor Deval Patrick
Massachusetts State House
Office of Governor, Room 280
Boston, MA. 02133
Dear Governor Patrick,
My name is Jim Freedman. I am the CEO and Co-founder of I.F. Technologies, Inc., a healthcare
transparency company. The fact that providers of healthcare are paid significantly different amounts for
the identical procedure is vital information that should be made available to all members of a health
plan. These price discrepancies compound the burden members are already experiencing from the
continuous rise in healthcare costs. By making prices transparent and readily available to members they
are empowered to make more informed, value-oriented decisions. And with increasing “out-of-pocket”
responsibilities, members are more motivated than ever to seek and use pricing information.
Fortunately, the source and means of providing this information to members already exist.
Traditional plans offering full coverage are all but non- existent today. Instead, the financial
responsibility for rising healthcare costs are being aggressively shifted to health plan members. As
reflected in DHCFP recent report on price variations in Health Care Services, carriers and PPO networks
negotiate and pay significantly different prices to healthcare providers for the same procedure. But,
they don’t make this information available to their own plan members. In a recent article featured in
the Globe a knee procedure performed at one hospital at an average cost of $14,153 was compared to
the same procedure performed at two other hospitals at an average cost of $25,284. If the patient in
this example was covered by a health plan with a 20% coinsurance requirement, the $11,131 price
discrepancy between these hospitals would represent an additional obligation of $2,226 to the patient
and $8,905 to plan--for this single procedure. Patients should know about these cost discrepancies
before having the procedure and consider this information as part of their ultimate decision. Regardless
of the employee’s responsibility, these price discrepancies ultimately end up impacting employer
premiums and increasing cost for the health plan. By making pricing information transparent,
employers can then engage their employees to make informed decisions that can save money for both
the employee and the health plan.
What is the best means of making pricing transparent and available to the member? The best source of
information lies with the member’s carrier or PPO network. The carrier/network negotiates the pricing
rates with all the various healthcare providers on behalf of their members. In addition, the
carrier/network has all the claims they have paid to each of these same providers. This gives the
carrier/network the unique ability to produce pricing information, for each provider, that is specific to
IF Technologies, LLC | 2365 Harrodsburg Road, Suite B160 | Lexington, Kentucky 40504
859.296.2466 | www.ThinkIFT.com
their member’s health plan. This type of pricing information is currently being offered by large carriers
in several parts of the country. There are also independent transparency companies like ours who have
the analytic capability to generate pricing information, and they can work with any carrier/network to
provide this information to their members.
It is also important that the pricing information include everything involved in the medical procedure.
Members often do not know what will be involved in their care and may not have the ability to contact
all the providers to find out what they are going to charge the member’s health plan. So providing the
price for just the hospital is not enough--the information should include all costs like the surgeon,
anesthesiologist, radiologist, or pathologist as examples. Again, the carrier/network has all claims data
so they know exactly which providers were involved in, and what they paid for any medical procedure
performed on their members. Because the carrier/network negotiates all the prices, they are the first to
know of any price changes that will impact the members of their plans and can make the appropriate
adjustments. Requiring the carrier/network to provide this information does not jeopardize the
confidentiality of their prices because its use can be restricted to only members of the plan. So while
the pricing can remain confidential, competition is promoted by making the price discrepancies amongst
providers transparent to the members.
The topic of pricing eventually provokes the long standing discussions surrounding quality, outcomes,
and other clinical measures. From a pure consumers perspective, at today’s healthcare prices most
would think that quality would be a “given”. The reality is that there is no defined correlation between
cost and quality. Just because you go to the highest cost provider, you are not assured of any better
quality, any better outcome, or any better experience. While quality initiatives have been underway for
years and limited comparative quality data is available via the HHS web site, to date there is no
universally accepted quality standard that the medical community offers their patients. As more robust
comparative quality and outcomes measurements are established and supported by the medical
community, they should be made available for everyone’s consideration. The absence of robust quality
and outcomes measurements should not preclude making pricing information available which will allow
people to make more informed healthcare decisions… immediately.
My company offers our transparency solution to members of carrier and PPO network health plans. We
have seen that members not only want pricing information, they get measureable results using it.
During their presentation at a national conference, one of our customers spoke about the impact our
transparency solution has had on their plan stating, “Members are choosing in-network providers who
offer a better value resulting in reduced out-of- pocket expenses for the member and lower claims costs
for our health plan”. This is an example of how employers and employees can work together to
maximize value and reduce costs. Requiring that pricing transparency be provided by all
carriers/networks is a simple and direct way for members to get the quality healthcare they are seeking,
but at price they know and understand before having the procedure. Our data and experience confirms
IF Technologies, LLC | 2365 Harrodsburg Road, Suite B160 | Lexington, Kentucky 40504
859.296.2466 | www.ThinkIFT.com
that healthcare costs can be reduced by over 20% simply by empowering members with true pricing
transparency. Furthermore, given current economic conditions impacting families across the country,
knowing the true cost of a procedure up front and having the opportunity to plan for it is empowering
members to access the healthcare they need as opposed to postponing a procedure due to cost
concerns.
Thank you and I would happy to answer any further questions or provide additional information.
Sincerely,
Jim Freedman, C.E.O.
IF Technologies, Inc.
IF Technologies, LLC | 2365 Harrodsburg Road, Suite B160 | Lexington, Kentucky 40504
859.296.2466 | www.ThinkIFT.com