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Changing Prices: Trends overall, and in Texas, from year to year

flying cadeuciiSummary: Watching cash prices in health care, as we have for the past five years, we have noticed a few trends. Here’s one: cash prices vary across a fairly narrow band, in most cases, for most things. Another: More and more providers are quickly able to quote cash prices than were able to do so when we started doing this in 2011. Yet another thing: Prices charged by providers to insurers and others can vary a lot, and prices paid by insurers to providers can also vary a lot. And finally: the intermediation of the insurance system (a third-party payer) can really affect what you’re charged and what you’ll pay.

Some of our observations come from a recent exercise: updating some of our Texas data. We update annually, though sometimes it slips to 1.5 years.

In truth, quite often the prices do not change all that much. Unless they do.

Do insured prices change more than cash ones?

When the prices do change, it’s sometimes the result of the current wave of mergers and acquisitions in health care.

Here’s one story about that and a passage from The New York Times:

“Imagine you’re a Medicare patient, and you go to your doctor for an ultrasound of your heart one month. Medicare pays your doctor’s office $189, and you pay about 20 percent of that bill as a co-payment. Then, the next month, your doctor’s practice has been bought by the local hospital. You go to the same building and get the same test from the same doctor, but suddenly the price has shot up to  $453, as has your share of the bill.”

Here’s a clip from  a Stat  News (Boston Globe) story about that: “The cost of visiting the doctor is climbing as hospitals scoop up a growing number of physicians’ groups, according to a Harvard Medical School study.”

Here’s an Association of Health Care Journalists overview: WSB-Atlanta recently explored what happens when hospitals buy physician practices, which has been happening all over the Atlanta area. Prices for patients go up. The same physicians – in the same offices, with the same treatments – start charging more.”

The network thing

Another reason prices change: In and out of network providers. The insurance companies can’t even figure this out: read this piece about Aetna’s price calculator:

“A few days before Kate was scheduled to have her first MRI, she and Scott got a call from the radiology office, saying that the scan would cost them $2,400. They were shocked — the online calculator had told them it would only be about $500.

“What’s the source of the disconnect?

“A hospital had bought the imaging center and raised the price.”

Often, cash prices don’t change, or change only minimally

We have noticed the cash prices — what we tend to collect for our site — don’t show the same wild variance. As we were updating our Texas data not long ago, we noticed some trends.

This is not an exhaustive longitudinal survey of pricing done based on billions and billions of lines of data — but rather an update, a journalistic spot-check of pricing, with supporting data. It generally carries out themes we have observed, such as these:

  • Planned Parenthood prices went up for many things. But not by hundreds and hundreds, in general. The Texas Legislature has cut funding for Planned Parenthood, so this seems to be an obvious consequence. Depo-Provera went down, but a Pap smear, UTI test, well-woman exam and STD test all went up.
  • In Austin, as all over Texas, several abortion providers shuttered their doors. The  limits on abortion providers in Texas mean it’s much harder to find providers. We found just one abortion provider in Austin, the Austin Women’s Health Center, and its price went up from $400 to $600. (If we’ve missed someone, let us know. In general, our recent Texas reporting proved that it is hard to find abortion providers, and if we found them it was hard to get someone to talk to us on the phone. This then made it harder for us to find pricing for less politically fraught procedures — a well-woman exam, an STD test — at these providers’ offices.)
  • For several things, prices went down: IUD’s for example. As you can see from the chart below, some providers dropped their prices by as much as $300. One dropped the price by $75, while others stayed the same. Some went up by $300, but the several-hundred-dollar increase was not common.

(Important note: Our prices, collected by journalists, are not guaranteed prices. We always suggest that people call and confirm prices themselves. Ask “What will that cost? What will that cost me? What is the cash price?” Takes notes. Take names. Take phone numbers. Also, please note: We do not attempt to do up-to-the-minute pricing for every single provider; we believe that all providers should post prices, but since they do not, we collect representative price lists by surveying providers. If all providers posted prices publicly, our job would be a lot easier.)

If you look at these Austin cash prices for women’s health, for example, you can see the 2015 prices compared to the 2016 ones. (If the price listed is “$0,” that means they would not give us a price over the phone.)

Screen Shot 2016-07-07 at 9.47.42 AM

Here are two more comparisons: Austin’s Planned Parenthood, and the Renaissance Women’s Group.      Screen Shot 2016-07-07 at 9.47.55 AM

As you can see, it’s hard to generalize: Do prices always go up? No. Do they always go down? No.

Screen Shot 2016-07-07 at 9.48.10 AM

Our cash or self-pay prices seem to vary a lot less than the prices charged by providers, and paid by insurers.

Also, cash is a pretty good indicator of value: what a willing buyer and a willing seller will pay, transparently, in the marketplace is a reasonable yardstick.

Confusing? Yes. Consistent? No.

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Paul @ Pivot ConsultingLLCAllanJeanneFromClearHealthCostsJohn IrvineBarry Carol Recent comment authors
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Barry Carol
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Barry Carol

I think the best solution to hospitals acquiring physician practices and independent imaging centers and then sharply raising prices is site neutral payment. Even if a hospital can demonstrate that its costs are higher than those of independent providers, it doesn’t mean payers should pay them more. The test is the same, the doctor is often the same, and the value delivered to the patient is the same. Why should the price paid be higher? It shouldn’t be. If hospitals were paid on a site neutral basis, either they would stop acquiring independent providers or they would offer to pay… Read more »

JeanneFromClearHealthCosts
Member

Interesting thought, Barry. Would that require legislation? Separate from the idea of instituting this practice, we are skeptical of the prospects for meaningful legislation either in Washington or in the state legislatures. That may be because I’m a cynic, though. In the absence of such legislation, we think that all prices should be public all the time: cash prices, charged rates, insurance (negotiated or contract) rates, Medicare and Medicaid rates. So far, Medicare rates and charged rates, the least valuable ones, are the only ones public. We’re moving to reveal cash rates. Those cash rates can be quite revealing, and… Read more »

Barry Carol
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Barry Carol

Jeanne — I’m not sure if site neutral payment would require legislation or not. I don’t think it would but hospitals would likely push back aggressively if Medicare tried to move in that direction. Medicare has a long history of trying to base reimbursement rates on provider costs.

I’m all for as much transparency as possible as well but getting disclosure of insurer contract reimbursement rates still looks like a Sisyphean task to me unfortunately.

Peter
Member
Peter

I have direct experience on how hospitals dominate a local market and raise prices through acquisition. Here in the Chapel Hill area of NC we get both Duke and UNC hospitals acquire and dominate the market for price and services.

Anyone who doesn’t think health care needs to regulated, at least like a utility, is in denial on getting control of prices.

JeanneFromClearHealthCosts
Member

Peter, can you drop me a line? I’ve been gathering string to write about that. jeanne (at) clearhealthcosts. thanks!

Allan
Member
Allan

It is the government that is creating both vertical and horizontal monopolies in the healthcare sector and that is causing prices to rise. Conglomeration causing monopolies as we see now are supposed to be prevented by the government not assisted, but the government has other desires.

All sectors of the economy require some regulation, but micro-management causes what we see today. We require more private sector competition and less monopoly formation.

Peter
Member
Peter

Hogwash!

Paul @ Pivot ConsultingLLC
Member

I am with Allan on this: from economist John Cochrane: “Note that the changes doctors introduced were based on research, whereas changes government and insurers introduce are not. Bureaucrats can come up with any damn fool idea that merely sounds good and severely disrupt the health care system. It if flops, they don’t get fired; they get a bigger budget. How many bureaucrats lost their jobs after the ObamaCare portal debacle?”

Allan
Member
Allan

In his book “Intellectuals and Society” Thomas Sowell points out that academics can come up with dumb ideas as well. If the idea doesn’t work the academic doesn’t get fired. He gets promoted.

If a physician comes up with a dumb idea that causes harm, he gets sued for malpractice, can lose his license and in some cases have criminal charges pressed against him.

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