The Quest for Price Transparency

The Quest for Price Transparency

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A torn meniscus. It did not disable but it impaired, and unpredictably. My stomach learned quickly to tighten at the sound of A’s peculiar whimper in response to a crippling pain that would shoot through her at seemingly innocuous movements of the afflicted leg. We have health insurance of sorts, the type that will help you keep your home if tragedy strikes, but that does not shield you from the brunt of what most of day-to-day health care cost is about. We’re well practiced in deferring and foregoing care. Here however, we reluctantly acknowledged that a hospital would need to be visited and a doctor consulted.

Tests and a physical examination made clear that an operation was unavoidable. The doctor was a thoughtful man who conscientiously went through what the operation would entail. Surgery would take half a day, then back home by afternoon, convalescence over the following few weeks, with complete recovery the usual outcome. While not painless, the procedure seemed reassuringly routine. His tone was caring and his outlook about our case optimistic.

The admirable candor with which medical personnel have learned to speak about difficult topics concerning our bodies and our care did not extend to the costs involved. The question of what the procedure would cost, gently broached, initially baffled the staff, eliciting answer-deflecting counter-questions about the adequacy of our insurance coverage, but resulted in no quotes or estimates.

With my insistence on the point, an assistant promised that a figure could be determined, if we needed it, once the surgery was scheduled. “But not before?” I was now the baffled one. A person who linked dollar amounts to medical procedures was eventually found and I was seated at her desk. She required a billing code however, and without a scheduled surgery there was none to offer. As we danced around that issue, my concern over the cost of repairing A’s knee was replaced by another curiosity: “Is what I’m asking not routine?” It was not. A billing code was finally lifted from the paperwork of a previous operation, and after some minutes a dollar number was produced. It was a sizable figure, but less than what I’d been led to believe such things cost, at least in the United States. I suspected something still was not clear. “This is then what I’ll pay, roughly, to have the procedure done?” I asked in a half questioning, half confirming tone. “No, that’s just our part of it, the hospital has their charges, of course.” “But we’re in the hospital and I’m asking you for an estimate of what this operation will cost.” She explained, with some frustration, that the operation itself was only a fraction of the pie; she had no way of knowing what the hospital might charge. This was not actually true – she was far better situated than I to know what the hospital charges would be. It was if I had asked for the price of a new car on a showroom floor and had been told by the car salesman that only the engine could be quoted – other components’ prices would need to be discovered separately, by me. In the real world, the total price for most services and products are conveyed to the consumer by the seller or provider at the end of a long chain of added values. In this case, the multiple components of the medical care provided a shield to simultaneously obscure the cost and justify its lack of availability. The billing person scribbled down a number for me to call, then asked if there was any other matter where she could be of assistance.

Hoping for a face-to-face conversation, I asked at the hospital information desk for directions to the office matching the telephone number scribbled on the scrap of paper. “That’s not in the hospital”, the information desk attendant declared, “but the call is toll-free”. We went home. For some reason, the inability to locate a price anywhere on the hospital premises for an operation that would take place there shook us as much as would have an encounter with a manifestly incompetent doctor. Though A and I talked only briefly of the cost, or rather the opaqueness of it, we were both invaded with a foreboding that a thing so untethered to its own cost would be in some unspoken way unreliable, dangerous. That night, A announced that she wanted to do the procedure overseas . . . anywhere but here.

Eric Lespin is a patient who lives in Alaska.

Costs of Care (Twitter: @CostsOfCare), where this post was originally published, is a Boston-based nonprofit organization that collects anecdotes from doctors and patients.

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48 Comments on "The Quest for Price Transparency"


Guest
Oct 27, 2013

Ik ben heel erg blij in uw artikel om de reden dat uw artikel was erg leuk en ik kreeg de juiste informatie in uw artikel.

Guest
Barry Carol
May 13, 2011

If regulators can’t or won’t do anything to require disclosure of contract reimbursement rates, legislators need to step up and do it. If they don’t, they will bear a lot of the blame for the unsustainable growth in healthcare costs. If insurers are actually willing to agree to price transparency even if it makes their business more competitive while intransigent large hospital systems stand in the way, it seems that only regulators and/or legislators can force action. What are they waiting for?

As for lower paid hospitals attempting to use rate disclosure to raise their rates, insurers could make it clear that they are trying to steer more patients to the lower cost hospitals through the use of tiered or narrow networks if their quality is at least comparable. Both approaches are a good way to try to create countervailing power against the hospitals with significant local or regional market power.

Guest
Nate Ogden
May 13, 2011

“What other industry hides the cost of its products or services and gets away with it?”

Government

Guest
Barry Carol
May 13, 2011

“High cost facilities have threatened termination of contracts if the insurance plans release any data which might reflect excessive charging.”

What other industry hides the cost of its products or services and gets away with it? The regulators need to step in and fix this. As I understand it, in Massachusetts, the Healthcare Quality and Cost Council has already collected data on contract reimbursement rates from all payers, and it has the authority to release the information to the public. So far, it has dragged its feet and not done so. Why?

Guest
DanielP
May 13, 2011

Pricing Transparency from an Insurer Perspective.

First, a disclaimer, I do work for an insurer in the capacity of physician/hospital contracting. I am also involved in a project to bring cost transparency nationwide. For the purposes of this post I’m using the term cost as the “allowed” or “negotiated” rate passed to the consumer for either a specific service (eg an MRI or office visit) or case (eg knee arthroscopy or pregnancy).

Charge and cost transparency is a very dynamic and challenging process with considerations and forces impacting each decision. The current healthcare environment in the US is pushing for transparency. In fact, you may recall that in the recently signed Affordable Care Act (ACA) contained the requirement that all hospitals to disclose annually a list of its standard charges for items and services, including for Medicare DRGs. This requirement was to take effect 6 months after enactment of the ACA (PPACA § 10101(f)). I’ve included the specific provision below:

H. R. 3590—769
‘‘(e) STANDARD HOSPITAL CHARGES.—Each hospital operating
within the United States shall for each year establish (and update)
and make public (in accordance with guidelines developed by the
Secretary) a list of the hospital’s standard charges for items and
services provided by the hospital, including for diagnosis-related
groups established under section 1886(d)(4) of the Social Security
Act.’’.

I submit that the number of hospitals which have complied with this requirement are in the minority – and not one of the hospitals I personally work with publish their rates. Which brings us back to the insurance plans providing the tools…

As an insurer we see the need for transparency so that members and professionals (physicians) can make informative decisions about their healthcare. At the same time, providing this cost data erodes the ability to maintain a competitive advantage between insurers. In my region we already have a competing insurer that shadow prices our negotiated physician rates without having to invest the time in performing analytical work and negotiations.

The response from hospitals about providing cost data is worrisome as well. Low cost facilities state pointedly that they will use this data to raise charges. High cost facilities have threatened termination of contracts if the insurance plans release any data which might reflect excessive charging. I am currently in negotiations with one of the largest hospital networks in the nation and they are demanding the right to opt out of any cost transparency tools. It is perhaps no coincidence that this for-profit hospital network lists several facilities in Forbes “America’s Most Profitable Hospitals” report.

In summary, while insurers may see the need for cost transparency, internal and external market forces make the reporting of such data challenging.

Guest

Thanks Daniel. We are working with a number of hospitals on this exact issue and would love your input. Please feel free to reach out to hospitals(at)faircaremd(dot)com.

Guest
Nate Ogden
May 10, 2011
Guest

Hey Nate,
I didn’t mean to lump you in with the carriers and hadn’t looked up your affiliation. A quick search shows that you are leader of a Ogden Benefits Administration, a “Third Party Administrator” or TPA.

Indeed, TPAs have a different set of motivations that I do not pretend to fully comprehend. At risk of showing my ignorance and in conflict with what you have already stated, my understanding is that some TPAs act as a middleman that manages the payments to doctors for insurers and also help select which providers get the patient. Please correct me, as I know many do not understand the nuanced relationships you have with Carriers, Patients, Employers, and Providers.

So for example (true story too):

My old friend Dr. X. gets paid 6xx for a diagnostic procedure by {any given carrier} but wasn’t getting all the patients he needed to fill his schedule. The TPA sends the same patients to him and he now gets 3xx for the same procedure from the TPA. The TPA is paid the {6xx?} figure by the carrier, pays the Doctor 3xx and keeps the difference? (Meanwhile, patients who go direct without using FairCareMD are charged 1,7xx)

Am I correct to say that in essence, the TPA acts as the personal shopper for health plans? If so, do you generally select the low cost provider or are there other factors? When you find great low cost providers do you simply maximize profits or do you somehow pass the savings along to the carriers or CMS? I only know TPAs from the perspective of the Physicians, Administrators, and Medical billers we work with every day so please tell us how they work from your side of the fence. Thanks.

I mean no aspersion towards TPAs or Insurers. This is a difficult problem and solving it will take efforts from all parties. The cost of inefficient markets hits TPAs and Insurers more than anyone and they have the most to gain from enabling patient consumerism through tools like FairCareMD. We are happy to work with all on our Open Network platform and can seriously enable cost savings for your clients.

As for not knowing me… While I don’t post much here, I am pretty involved in Health 2.0 since I met Matt Holt at a HealthCamp back in 2009. I also run the NYC chapter (www.health20nyc.com), presented last October at the national conference, created events like “Pitch Yourself into the Shark Tank”, and do a bunch of other stuff.

Guest
Nate Ogden
May 10, 2011

“TPAs have a different set of motivations that I do not pretend to fully comprehend. ”

The basics, world domination, inflict suffering and pain on the masses, and trolling comment sections. Did I miss any Margalit?:)

If you take 10 TPAs you would have 10 different TPAs. Some are owned by carriers, Aetna just bought one of the largest TPAs in an ACO play. United owns a big one. Those TPAs operate more like carriers. Next you have TPAs owned by PPOs, these PPOs can often also be owned by the health systems. These TPAs generally have goals pretty aligned with the provider interest.

Then you have poor suckers like me. I like to think we are truly aligned with the employer and by extension employee. For the most part we sell a commodity and are easily replaced, because of that we are under great pressure to serve their needs and solve their problems.

TPAs do generally act as the hub that tie together the PPO, UR, reinsurance, and everything else. Depending who owns us determines where the loyalities lie.

If I am renting a provider owned PPO for a client I have to treat them a lot different then a provider that is contracted with a non owned network that doesn’t protect them. We have great relationships with some providers and others we only speak to through attornyes.

Carriers, especially the fully insured we take business from so they usually don’t care for us, that being said we also do alot of work under their high deductible plans so in some areas they need us to survive.

When we do Taft Hartley work our employer relationship is also a lot differrent then when the employer is the one to hire us.

Very complicated relationships that are changing all the time.

Your example doesn’t sound like a TPA, in most cases that would be an illegal transaction, if it wasn’t disclosed to the employer or sponsor of the self funded plan then without question it would be illegal. It sounds like a specialized PPO or reseller, we see this a lot with diagnostic services, they contract with the provider at 3 then resell at hopefully 4 or 5, something better then what the carrier was paying or their would be no use for them.

What usually happens when we use companies like that, and we do, is the plan keeps the saving.

work calls I’ll try to provide more detail later

Guest

Thanks for the explanation Nate. Makes sense.

Trust me, those transactions take place thousands of times a day. Ask your docs. Perhaps we don’t know how it works at the TPA but that is our understanding of how many TPAs work.

Guest
Peter
May 10, 2011

Nate’s having his little joke. Of course there’s no web site for insurance “allowables”. That is propitiatory for each insurance company. Nate may be able to get the info from one of his insider “partners” but for the rest of of suffering payers it’s always as it’s always been – not transparent.

Guest
Nate Ogden
May 10, 2011

There is no free public website, I was mocking you when I said I spent millions to accumulate and give that infoirmation away for free, I didn’t think anyone would miss the sarcaim in that.

There are a number of companies that do provide that interface to members, see these for example

http://www.changehealthcare.com/solutions/cts.html
http://thinkift.com/products.html

These aren’t free, we have to pay to get our memebrs access to information like this but when successful it more then pays for itself. The frustraing part is spending all this money and members not use it, and still complain about cost.

So yes the information is available to people, some users are empowered, if your not then tell your HR to call me and I’ll fix that for you:)

For public info check this one out, its helpful sometimes

http://reflectivemedical.com/Home.aspx

Guest
imdoc
May 9, 2011

Nate, what in the world is that website??? I am very interested to know where all the insurance allowables are if the site exists. I recall in the past being told repeatedly it is proprietary information.
I have to agree with other clinicians here. Medicare price fixes, and many carriers are opaque with regard to payment schedules.
To patients like Liz, my response is to start with the Medicare fees which are published. That should serve as a benchmark, and many times one can negotiate from there.

Guest

He was being facetious I believe, denoting the typical game insurers play with such assertions.

Your insurance company’s negotiated prices with your doctor are treated like proprietary trade secrets even though they show up on the EOB after the fact. While the public may want access, they would “prefer not to” and suffer from conflicting motivations.

This, of course, is why our site is independent, free standing, and disintermediating health care (or at least replacing the middlemen with a very light, transparent one.)

Sign up your practice, sign up your hospital, go direct today. If you want to change things, you have to do it yourself. Conflicting motives of the other players mean that only the Providers of care and those that Receive the care can make this change. The Patients have arrived in droves and look forward to more great doctors signing up and listing their services. No wonder since 30% of them are paying for a greater portion out of pocket than ever!

Enough complaining about price intransparency, let’s just fix it now. I made the price so low to join that it is a non barrier. I even waive it for anyone with a clinical research background, innovative practices, and all PCPs. Help us fix this problem, we can’t do it without the great doctors we built this for.

Thank you Eric Lespin for this article and all for the great conversation. A. – if you want to visit the Big Apple we have a number of great knee surgeons ready to charge a fair price right here in the lower 48. We can also find one for you up there too if you wish as we find fair fees for our patients every time (although they sometimes need to travel significantly.)

On a personal note, I lived for 9 years with torn ACLs, played rugby competitively and never got them fixed because I didn’t have insurance and didn’t know the true cost of repair. Like A., I did know the cost of non-repair – knee instability and excruciating pain then they “popped out”. When I finally had insurance I got them fixed. If FairCareMD existed then, I certainly would not have waited!

Guest
Nate Ogden
May 10, 2011

I responded to Peter below with more info, its waiting moderation, it might or might not show up eventually. I don’t recall seeing you here before so I will point out that I am not an insurer, I am a payor so all your suggestions about conflicted motivations don’t apply. I have nothing to hide and strive to push transparency, if given the opportunity I would do away with PPOs alltogether as they no longer work.

If I could get plans to do it I would go back to a simple schedule, Insurance will REIMBURSE you, the member, I want nothing to do with paying providers direct, a ser amout per diagnosis or treatment. Your free to take that amount and see anyone you want and pay any additional you want or pocket the difference.

Guest
May 10, 2011

Nate, if you have more than 1 hyperlink, the response won’t show up. So maybe you repost it without the extra links and post those one by one.

I would like to see ONE insurer website where allowables are posted by provider…. I would also like to see pigs fly….

Guest
May 10, 2011

Tweet away, Alex 🙂

Don’t care for bacon…I am more of the apple pie type….

Guest
Nate Ogden
May 10, 2011

http://thinkift.com/products.html

I’m just surprised my comment sits in moderation so long, Matt usually loves to hear what I have to say….

Guest
Nate Ogden
May 10, 2011
Guest
Nate Ogden
May 10, 2011

do you ever think through the consiquences of these Margalit? Are you really ready to give up bacon, let alone Bar-b-que? Summer just about to start and Margalit wants to see all the ribs fly away.

Our vision of a good america obviuosly differ:(

Guest

Mind if I tweet that M.? Very funny.

Guest
Peter
May 9, 2011

What the “H” is that web site Nate? “Fable Vision” is that your web site? Link where, how, to what partner?

“I am giving it away for free”

Free?, with free trial, products to buy?

Guest
Nate Ogden
May 9, 2011

“You do? Do you? Who do? Where? Care to give us that web site Nate? Will that apply to all insurers?”

Yes Peter I spent millions and developed a website that discloses all insurance company allowables and I am giving it away for free. Please check it out at http://www.getaclue.com, let me know what you think.

To answer your question;

Yes
Yes again
I do
Linked to our partner through our website
No
No

Guest
Peter
May 9, 2011

“This patient had insurance, so the doctor’s office should know what the insurer will pay him for this service.”

But the provider is not allowed to reveal what the insurer will pay.

“why don’t insurers have a web site where you can input the procedure, the facility and the surgeon names and get an out of pocket estimate?”

“We do,”

You do? Do you? Who do? Where? Care to give us that web site Nate? Will that apply to all insurers?

Guest
Liz
May 9, 2011

When I was in college, I found myself without health insurance, like many college students in this country. Unfortunately, as a type 1 diabetic since childhood, being without health insurance took on a whole different meaning for me. At a minimum, I need insulin and a few basic medical supplies to survive (like all type 1 diabetics, I would be dead in probably about two weeks without insulin). Anyway, at that time, the simple act of just trying to obtain supplies without insurance often left me in tears. I remember actually rationing out my own insulin at the time, making each drop last as long as possible because I wasn’t sure when I’d be able to afford another supply over the counter.

When I was admitted to the hospital dangerously close to DKA (diabetic ketoacidosis, a serious complication of type 1 diabetes, which in my case was the result of a routine virus I contracted) during my junior year, my first thought was, “What is this going to cost?” It should have been, “Will I survive?” Once I was well enough to investigate the costs, I found that I could not get a straight answer from anyone at the hospital. I tried, and I’m pretty forceful and resourceful when I need to be, but no one could give me any sort of estimate. When bills did start to roll in, they came from all over the place – labs, specialists I don’t even remember seeing during my hospital stay, supply companies, and the hospital itself. Some of the bills didn’t even make sense, some were so complicated I couldn’t even fathom interpreting them. Most ended up in collections, because there was no way I could even begin thinking about paying them.

The point here is that our medical system has become so complicated, that even the most routine questions (“What will this cost?”) and obtainment of even the most basic, life-sustaining medications and biologics (such as insulin) have become a mind-boggling maze of billing codes, departments, specialists who bill out of network, and approvals. My experience is not unusual, and it caused me serious financial problems throughout most of my undergraduate and graduate career (ten years later, my credit is FINALLY clean of those medical bills that were sent to collections, many of which I never was able to pay).

Guest
Barry Carol
May 9, 2011

PCP –

Yes, insurers are very reluctant to disclose contract rates for two reasons. First, they fear that the lower paid providers will try to extract higher rates while those that are paid the most won’t be willing to lower theirs. Second, the dominant insurers all think they can negotiate better deals and bigger discounts than their smaller competitors can and they want to keep the difference as opaque as possible. In the end, disclosure of contract rates will probably have to be forced by regulators and any changes needed to deal with Stark laws and other issues will need to be dealt with by legislation, regulatory change or both.

The 800 pound gorilla in the room is the hospitals and hospital owned imaging centers and other facilities. Some are paid far more than others for the same work even though care quality is no better, at least for the most part. Just shifting care from more expensive to more cost-effective providers can help to mitigate costs even if overall utilization remains the same. Price and quality transparency tools can help accomplish that. Utilization driven by defensive medicine, futile or high cost / low value end of life care and unreasonable patient expectations will need to be attacked separately with different strategies.

Guest

Here is a case study of how we caged that 800 pound simian:

Design: Show patients quality and price information for 15 Gastroenterologists in New York and let them shop for care

Results: The average price patients selected themselves was 46% lower than the national average ($1,209 vs. $2,225).

Discussion: Nationally, with over 2 million colonoscopies a year, we cold save over $2 Billion on this procedure alone in 2011 if we let people shop for care. MRIs, Lab tests, ACL repair, GP visits, Pregnancy programs and 186 other specialties can be shopped as well. Let people see who is best and choose fair prices and we will significantly diminish the cost of care while reducing administrative work and costs for Physicians and their teams.

Guest
pcp
May 9, 2011

Aren’t the insurers extremely reluctant to reveal that they’re paying some providers up to 100% more than other providers for the same CPT code? Are they really going to be willing to disclose the different negociated fee schedules?

Guest
Nate Ogden
May 9, 2011

Exact opposite, with very few exceptions, Partners with Blues in MA, payors don’t want to pay one provider 100% more then another. They do it because they have to, usually a big name provider who threatens to leave the network if they don’t. In the past you could try to blame the provider and say they wanted paid to much but the media never delivered that message and the network always looked like the bad one.

An ideal sitution is for the payor to be transparent with reimbursement, have an HSA or some other plan design where it matters to the member then let the provider try and sell their double cost. Its why payors are comming out with transparency tools, its the best and possbily only way to combat overpriced providers.

Guest

The fact is that quality is most important to patients and they will pay more for it. In a quality, price transparent *efficient marketplace*, the cream rises to the top. Insurers who want everyone to get paid the same amount are not after price transparency, merely better “medical loss” rations (“loss” is what they call paying for care.).

If we all saw how little could be paid if we went direct, we would never want to pay our full coverage premiums and we would all get HSAs.

Guest
MD as HELL
May 13, 2011

There’s a BINGO.

Guest

Thanks MD as HELL, we like it too. Patients love it, performing over 100,000 searches for care already.

The real BINGO is getting MD, DOs, Surgicenters, Hospitals, Clinics… to sign up without having to spend millions to get their attention in the traditional pharma marketing model which is pointless, expensive, and adds nothing but costs.

Perhaps getting you to change your name to MD as NIRVANA is the key 🙂

Seriously though, we made it super cheap or free to docs to join. The system works well and we are getting traction but the rate limiting step is getting docs to raise their eyes to the horizon and imagine freedom. Cool Hand Luke had it right, life inside is no life at all. To continue the metaphor, for those that recall how the movie ends, our lawyers have verified that the Boss does not have permission to shoot. All Physicians must do is decide to be free.

Why do we need so many? In our models of patient behavior there is a tipping point that we must get to in order to truly disintermediate (remove the middleman from) healthcare. Once 2% of American Physicians are in our open network we predict the need for insurance participation on both sides will diminish and we have a healthcare reform we can all live with. Already this is the case in New York for some specialties and we are spreading nationally.

Why so cheap? Many people (especially marketers) tell us to charge Physicians more or to close the network and put some pay barrier to entry like everyone else does. These may seem like nuances of our style, but they are critical. We want an efficient marketplace that will disrupt the current paradigm and enable great doctors, engaged patients, and smart employers and carriers to thrive. To do this, we need minimal barriers.

We just put up a feedback form on the home page so please discuss here or tell us what you think there. We are here for you and promise to listen.

Thanks!

Guest
pcp
May 9, 2011

” Its why payors are comming out with transparency tools, its the best and possbily only way to combat overpriced providers.”

I’m all in favor of that. Thanks for the clarification.