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Providing prices isn't as easy as it sounds

Practices and hospitals say there are many reasons why they can't give patients estimates for care.

By Victoria Stagg Elliott — Posted Nov. 14, 2011

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A federal report demonstrates what many have long known: Most physician offices are unable to provide an estimate of the amount of money a patient eventually will pay out of pocket before medical services are provided, making it nearly impossible for price to play a role in health care decisions.

"My first reaction is that I'm disappointed they spent all this money to do this report," said Yul Ejnes, MD, chair of the American College of Physicians Board of Regents. "They could have asked any physician."

This is in part because it is not always clear what patients need before they are seen, but there are aspects of the health system that complicate the issue even more. On Sept. 23, the Government Accountability Office released a report on health care pricing to the U.S. House, which issued it publicly on Oct. 24.

To ascertain whether patients would be able to get complete cost information for a nonemergency service, researchers asked 20 primary care physician offices about the price of diabetes screening. Nineteen hospitals were asked about the cost of a full knee replacement.

"We're not talking about emergency or urgent situations," said Linda Kohn, PhD, the GAO's director of health care. "A lot of health care is planned in advance. People can take some time to explore, but it's difficult to find out what the price is going to be for you."

The practices and hospitals were all in Colorado, and the state was chosen because it requires hospitals to disclose upon request average facility charges for frequently performed inpatient procedures. There are no restrictions on how the information may be requested. At least 30 states have enacted or are considering some form of health care price transparency law, said the National Conference of State Legislatures.

Of the 20 primary care practices, two did not respond. Nine were asked about the cost for a patient on Medicare, and the remainder were queried about the cost for someone who was uninsured. Fourteen provided a wide range of billed charges for a physician visit, but only four could give complete cost information. Some didn't disclose prices because they were unsure what the lab would charge or what portion Medicare would cover.

Finding out price information for more complex procedures was even more difficult. Of the 19 hospitals contacted about the price of a new knee, 17 responded. Nine were asked about the cost for Medicare patients, and eight answered questions about uninsured patients.

Out of all the hospitals, seven were able to offer limited information about their charges. But none could provide a complete estimate primarily because other possible bills, such as those from surgeons, anesthesiologists and laboratories, were unknown. Ten didn't provide any price information at all.

Cost transparency is considered important because patients are paying an ever-larger share of their health care expenses. Some health policy analysts view patients' increased awareness of costs for planned medical services as a means of reining in escalating expenditures.

"People are increasingly being asked or required to share more and more in the cost of their care," Kohn said. "It's been said that people are not price sensitive when it comes to health care. If that person cannot get the information until after the fact, they cannot be price sensitive."

Physicians also are increasingly being called upon to discuss cost issues. "A cost conversation between a physician and patients is part of the informed consent process," said Tillman Farley, MD, a family physician and chief medical officer of Salud Family Health Centers in Fort Lupton, Colo. "The problem is there has not been a reliable source of this data. There has to be price transparency."

Databases available

There are, however, significant efforts to add clarity to health care prices. Several websites run by states, insurers or individuals claim to provide health care price information. FAIR Health launched a free online database on Aug. 1 that allows patients to look up the average charges for medical services in their regions.

The database emerged from settlements supported by the American Medical Association and state medical societies with multiple insurers over the use of the long-disputed Ingenix database.

The website was not part of the GAO analysis, but the eight websites examined by the government agency were found to be of varying usefulness. Only two -- New Hampshire HealthCost, which is run by the state, and Aetna Member Payment Estimator, which is maintained by the insurer -- could provide complete cost information. Some offered the average billed charges of hospitals before any discounts. Others had physicians' contracted rates with insurers.

Although there is much interest in pricing, experts admit that this will not be easy to solve because of the complexity of the health care system. Doctors, hospitals and laboratories usually bill separately. Patients may be cared for by out-of-network physicians at in-network hospitals. The services patients need may not be clear until they are examined.

"Doctors hate being compared to mechanics, but it's like when you take your car in to have your tires rotated and they discover you need brake work," Dr. Ejnes said. "A $30 service can turn into $300 worth of work. A mechanic can easily call before they do the work. That is not the case with a medical visit. We support the concept, but we certainly need to acknowledge the complexity of it."

Contractual obligations and insurance complexity appear to make health care pricing even more opaque.

GAO researchers interviewed medical society and insurance company officials to explore further why it was so difficult to get price information from physician offices and hospitals. Insurance company officials said contractual obligations may prohibit sharing cost data, which may be proprietary, with patients. Concern also was voiced about violating antitrust statutes.

Giving price information to patients as part of health decision-making or to third-party entities to aggregate the data is unlikely to trigger legal action, according to documents from the Federal Trade Commission and the U.S. Dept. of Justice analyzed by the GAO. The GAO recommends that the Dept. of Health and Human Services determine the feasibility of making complete cost estimates available to patients.

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ADDITIONAL INFORMATION

Why health care prices are so hard to get

The Government Accountability Office asked physician offices and hospitals how much certain procedures would cost, and in many cases couldn't get a firm answer. Among the reasons physicians and hospitals gave:

  • Unknown what the patient will need before being seen.
  • A single episode of care can mean bills from multiple physicians, laboratories and hospitals.
  • Cost-sharing varies widely according to insurance plan.
  • Real-time information about a patient's insurance deductible is not usually available.
  • Insurance contracts may prohibit sharing negotiated rates.
  • Concern that sharing rates may trigger antitrust action.

Source: "Health Care Price Transparency: Meaningful Price Information Is Difficult for Consumers to Obtain Prior to Receiving Care," U.S. Government Accountability Office, Sept. 23 (link)

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External links

"Health Care Price Transparency: Meaningful Price Information Is Difficult for Consumers to Obtain Prior to Receiving Care," U.S. Government Accountability Office, Sept. 23 (link)

Statements of Antitrust Enforcement Policy in Health Care, U.S. Dept. of Justice and the Federal Trade Commission, August 1996 (link)

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