San Francisco supervisors hear experts, unions and hospitals on price transparency and propose local action

San Francisco — On Nov. 6, 2013, the Budget and Finance Committee held a lengthy hearing on hospital pricing and health‑care transparency, hearing testimony from labor‑management officials, academics, hospital officials and insurers before advancing a city resolution backing improved price and quality disclosure.

Supervisor Mark Farrell opened the session by citing recently released Medicare provider charge data that showed “drastic” variation in what hospitals charge for common inpatient services and called for greater transparency to protect consumers and city workers. He presented a resolution that would direct city staff to pursue contract and statutory changes and to explore an all‑payer claims database.

The hearing gathered a spectrum of views. Lisa Gopi, deputy director of the city’s Health Service System speaking for a joint labor‑management committee, said members and purchasers lack the price and quality data needed to make informed decisions and asked the Board to support a resolution (File No. 130629) and to pursue an all‑payer database. “You have to know what you’re paying for,” she said, arguing that transparency is essential for accountability and better purchasing.

Economist Glenn Melnick of the University of Southern California presented state and regional data linking rising hospital prices to reduced competition after consolidation. He said price increases — not utilization — have driven recent spending growth and recommended both private‑sector buyer strategies and regulatory mandates requiring minimum disclosure. “Providers’ growing market power to negotiate higher payment rates is the elephant in the room,” he said.

Advocates for purchaser‑side reforms echoed that view. Suzanne Delbanco, executive director of Catalyst for Payment Reform, described tools such as reference pricing (citing CalPERS’ example) and urged the city, as a large purchaser, to require contracted plans to provide robust price‑and‑quality transparency tools, to report on so‑called gag clauses and to consider building or supporting an all‑payer claims database.

Legal experts told the committee the law presents both obstacles and options. Jamie King, a UC Hastings professor, described common contractual barriers — nondisclosure/gag clauses and anti‑steering/anti‑tiering provisions — and explained trade‑secret claims that providers sometimes assert to shield negotiated pricing. King noted California statutes that limit gag clauses (SB 751 and SB 1196) but said litigation, California Public Records Act requests, state regulation or carefully tailored local pilots could also be used to obtain data.

Hospital representatives urged caution about posting raw prices without context. Anne McLeod of the California Hospital Association said hospitals’ published charges can reflect cross‑subsidies for charity care, research and training and local cost drivers such as labor and seismic compliance; she recommended pairing price data with quality and cost‑driver context so consumers and purchasers can interpret numbers fairly.

Insurer representatives from Kaiser Permanente said they support data access and consumer tools and emphasized the need to link price information to quality and access metrics. A Kaiser area manager told supervisors the plan is prepared to work with the city and Health Service System on reporting and consumer tools.

Public commenters — including union representatives, nurses and consumer advocates — pressed for compelled disclosure if voluntary efforts fail. Speakers cited wide local price variation, rising family premiums and growing out‑of‑pocket burdens and urged the city to require disclosure and hold providers accountable.

The committee concluded with unanimous support for pursuing transparency as a policy goal. Members asked staff to draft legislation and legal options and the committee advanced the resolution supporting price and quality transparency to the full Board while continuing the technical hearing (Item 1) for further development.

What happens next: Supervisors said a draft ordinance will be circulated, staff will review legal and preemption issues, and the committee will continue the hearing to refine an implementation path that balances disclosure, quality metrics and the city’s contracting constraints.