Last week, CMS unilaterally released chargemaster data from 300 hospitals around the country. As David Dranove summed up well in his recent piece, this is an old hat. Yes, there are big variations in hospitals’ chargemasters. And yes, there is a lot of buzz around consumer price shopping.
A Kayak for hospitals is all well and good, but hospitals are cash-strapped as it is and there is only so much money to be saved by driving down the costs the hospital charges the health care plan unless the waste within the hospital is addressed. I would like to highlight perhaps one of the most exciting things going on under the radar in US healthcare today: using price transparency data within the hospital.
Hospitals are now reimbursed a capitated amount according to each patient’s diagnostic-related group. Capitated payment means, essentially, that the hospital receives a set amount of dollars for each patient that walks through its doors with a given diagnosis — say, $X for a patient with pneumonia or $Y for a patient with MI. Regardless of how many drugs, tests, or scans the hospital uses for the patient, it will still get the same compensation from the insurance company.
Yet, the physician up until now still acts as a kid in a candy store, running up a bill without awareness of cost or value. This is largely because the doctor is ordering from a menu without prices. I have talked to many physicians, in both out-patient and in-patient settings across seven health care systems around the country — they want a menu with prices.
I have seen firsthand the motivation for this, as pay-for-performance model is beginning to take over with my own practice. Gone are the days where doctors’ salaries are unhitched to the cost-effectiveness of care. Everyone is now in the same boat.As a neurologist, I want to share a few examples regarding stroke care that illustrate the potential savings available from educating physicians regarding cost, and also some pitfalls to avoid that could compromise patient care.
CTA and MRA are two imaging methods of diagnosing clogged arteries in acute stroke patients. CTA can be used in most cases, and is more timely and detailed in showing arterial status than the roughly equivalent MRA. This makes it preferable as a diagnostic tool in acute stroke cases. However, MRA provides similar information and is frequently ordered in conjunction with an MRI since it utilizes the same machine, and the MRI test is being done anyway to obtain different and necessary data.
The piece of information that physicians do not often consider is that CTAs are thousands of dollars cheaper for the health system than MRAs. This saving holds true even if an MRI is done and then a CTA is done separately. Having a comparison price tag at the point of ordering informs the physician to think twice about the routine selection of a vastly more expensive test, and leads to savings for all stakeholders, including the health system.
Likewise, in treating hemorrhagic stroke, doctors frequently order Factor VIIA to control bleeding which not only costs $10,000 a dose, much more than the alternative — fresh frozen plasma — but also carries a higher risk of clotting complications. There are specific indications for preferred use of Factor VIIA, but 97% of the time it is used inappropriately.
The good news is that physicians are getting on board with the new model. I know this from my own experience as a stroke director for a hospital administering “Get With the Guidelines”, a nationwide computerized tracking program of stroke care that includes a physician-accountability component. This initiative has led to dramatic improvement in the screening and treatment of elevated cholesterol in the acute stroke patient.
At the same time, we must be careful of being penny-wise and pound-foolish. For instance, TPA is an anticoagulant that is used to treat stroke shortly after it occurs. Although it is very expensive, TPA is critical for post-stroke care, and discouraging its use due to its cost would be inappropriate. Not to mention, it would actually raise overall costs because the hospital would have to deal with sicker patients for longer.
Whether it is prescribing pricey Plavix instead of the equally effective aspirin, giving redundant blood tests, or ordering hypercoaguable workups in older patients, there is so much room for improvement. The trick is in large part to inform physicians — the ones whom the burden of value is being put on in the post-reform world — at the point of care about the relative prices and value of their options, enabling them to make optimal medical decisions, while not sacrificing quality. We are already seeing the impact of putting price transparency in the doctor’s hands in studies emerging form Johns Hopkins (FN) and other leading thought leaders such as University of Pennsylvania Health System and CHOP, where price transparency is being brought not to patients’ iPhones, but to the point of order.
Dr. David Halpert is the Stroke Director for the 200-bed Arnot Medical Services, a regional hospital serving upstate New York. Dr. Halpert is also the Chief Medical Officer of MemberRx, a company sponsored by Penn Medicine, Independence Blue Cross, and DreamIt Health and working with health systems around the country to transition successfully value-based care models.