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The Quest for Price Transparency

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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Marti MoorsAlex FairDanielPAlex Fair of FairCareMDimdoc Recent comment authors
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Marti Moors
Guest

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.

Barry Carol
Guest
Barry Carol

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… Read more »

Nate Ogden
Guest
Nate Ogden

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

Government

Barry Carol
Guest
Barry Carol

“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?

DanielP
Guest
DanielP

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… Read more »

Alex Fair of FairCareMD
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.

Nate Ogden
Guest
Nate Ogden
Alex Fair of FairCareMD
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… Read more »

Nate Ogden
Guest
Nate Ogden

“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… Read more »

Alex Fair of FairCareMD
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.

Peter
Guest
Peter

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.

Nate Ogden
Guest
Nate Ogden

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… Read more »

imdoc
Guest
imdoc

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.

Alex Fair of FairCareMD
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,… Read more »

Nate Ogden
Guest
Nate Ogden

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… Read more »

Margalit Gur-Arie
Guest

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….

Alex Fair of FairCareMD
Guest

Mind if I tweet that M.? Very funny.

Nate Ogden
Guest
Nate Ogden

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:(

Nate Ogden
Guest
Nate Ogden
Nate Ogden
Guest
Nate Ogden

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….

Margalit Gur-Arie
Guest

Tweet away, Alex 🙂

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

Peter
Guest
Peter

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?

Nate Ogden
Guest
Nate Ogden

“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

Peter
Guest
Peter

“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?

Liz
Guest
Liz

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… Read more »

Barry Carol
Guest
Barry Carol

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… Read more »

Alex Fair of FairCareMD
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… Read more »

pcp
Guest
pcp

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?

Nate Ogden
Guest
Nate Ogden

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… Read more »

pcp
Guest
pcp

” 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.

Alex Fair of FairCareMD
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.

MD as HELL
Guest
MD as HELL

There’s a BINGO.

Alex Fair of FairCareMD
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… Read more »