Transparency Is On Its Way
The price of a knee MRI in Colorado varies from $350 to $2,336. It’s a huge gap, but it’s also remarkable that the prices themselves are known at all…
But about a dozen states have now established health care price databases to help people shop and compare. Colorado is the latest, launching its Thursday, the same day a consortium of major health care purchasers (including Wal-Mart, GE and the AFL-CIO) issued a manifesto demanding more price transparency.
Source: KHN.
This is exciting. Actual markets! I wonder what will happen to medical tourism if this takes off.
This is a tough problem that defies an easy solution. If everyone paid out of pocket, prices would be transparent. But, 90% of medical bills are paid for by third parties. I don’t understand why insurers and health plans don’t help patients become better health care shoppers. For instance, a friend of mine needed a CT scan. She had no idea that prices could vary from one clinic to another. When she was advised to get a CT scan, why couldn’t she log into her insurers’ website and look up various medical imaging locations and have some type of indicator who would perform the scan for the lowest price. I did the shopping for her. It wasn’t that difficult but it was far more effort that it should have required.
I’m not necessarily a fan of forcing doctors, hospitals and emergency room into publishing prices. These are of no value (i.e. they’re list prices nobody actually pays). Plus, it’s not the same as competing for my business. But there needs to be some type of incentive. One idea that comes to mind is to create a safe harbor that encourages providers to disclose prices when asked. If it because harder for providers to collect from patients in the absence of a signed form indicating the price, that might encourage more to provide price.
Hmm, Devon that was great insight. It’s a lot to think about and a tough problem to fix.
I wonder what it would take to create a system where people compete for health care business based on quality of service, amenities, qualifications, etc.
The market is arguably so distorted, it’s hard to imagine what an alternative would look like.
Well, this is nice. Take a look at the report and see for yourself how useful it is.
Politically, it is an attempt to make a complete loss of medical privacy look like a good deal. The legislature passed the Colorado All Payer Claims Database statute a couple of years back in order to get on board with ObamaCare. It basically gives the state the power to force physicians to report everyone’s medical contacts, and records, to the state so that bureaucrats can rummage through the data and determine the treatments that are “efficient.” The legislation applies whether you pay via third party payment or with cash. There is no opt out.
The report doesn’t actually name the facilities, and we have no idea how it compares different kinds of MRIs. Did the more expensive places do more contrast imaging? We don’t know. Does pricing differ if you are a trauma patient that requires an MRI right now or someone with a nagging condition who can make an appointment and go at a slack time? We don’t know.
Metro Denver has a number of private radiology practices in addition to the usual hospital based or affiliated imaging centers. People who needed MRIs didn’t need this kind of centralized ham-handed bureaucratic meddline. Those who were cost conscious could, and did, ask their referring physician to recommend low cost centers, or just called around. Needless to say, the people most likely to do this were those who didn’t have first dollar insurance coverage.
In one memorable conversation a year or so ago a newspaper reporter called to discuss a story on health care pricing transparency in response to the usual push to create a law that would Solve the Problem by requiring all physicians to post prices for services. (Just like requiring hotels to post room prices on the back of the door provides useful information about your room rate.) The reporter was shocked that no one knew the price of an MRI. He had called a few hospitals.
He didn’t even know that the private centers existed.
A Dallas-based firm, Healthmarkets, used to offer online tools to help enrollees shop for medical care. Healthmarkets would pay a fixed amount of each procedure regardless of where enrollees received the care. Patients compared the amount of cost-sharing for doctors. Going to one doctor might result in no out-of-pocket costs, while seeing another could be quite costly. Those willing to use the online tools could cut their costs tremendously.
Prices are difficult to gauge, because once the doctor is operating, there may be additional problems/complications that raise price. It’s unfortunate, but I don’t think you can absolutely say without a doubt the price of a procedure.
I agree with Jackson. So many times I have heard from friends and family members that they do an extensive research for the least expensive physicians in the area, and they end up seeing them, but as soon as the physician performs a checkup then new “unknown” conditions come up that were not included in the “budget” and what started as a $50 visit, in many ocassions turnes out to be three times that amount…not necessarily because the physician is taking advantage of the situation, but simply because in some cases patients are not fully aware of what’s wrong with them, and once they see a doctor they end up finding out there’s more to take care of than just what they accounted for.
The bottom line is that transparency is an excellent approach to control costs, but I think that even transparency may not guarantee an accurate forecast of costs all the time, simply because some unknown necessary treatments sometimes come up, and at a times you have no choice but to go through with them if you want to remain healthy.
I want to know where in Colorado,you can get an MRI done for only $350.
Price transparency is a good thing for consumers, no matter the market.
Don’t know about $350 for a knee. Last year had an ankle quoted for $450, cash. Hospital prices were much higher. Orthopedics practice was fine with the low cost provider imaging quality. Metro Denver.
There’s competition already, and government regulation to force faux transparency may retard it by forcing so much reporting that start-ups are discouraged by regulatory overhead that big expensive hospitals take in stride. For an example of the competition in the Denver metro area, see the Touchstone webpage at http://www.touchstonehighline.com/.
Note that it offers “discounted cash pricing.”
Heck, I wouldn’t mind some brand new titanium and teflon knees for $700! Sign me up today!
At least price transparency is a goal, even if implementation is spotty.
As Linda Gorman mentioned, Colorado’s All-Payer Claims Database is an authoritarian raid on patients’ medical privacy. Also, as John Goodman has mentioned here, there are private firms that offer price comparisons:
Health Care Bluebook
Care Pilot
Vimo
MediBid, Healthbase (medical tourism)
An article titled “How to Research Health Care Prices,” the Wall Street Journal lists more.
I got the above from my blog post on Colorado’s pricing site:
http://www.patientpowernow.org/2012/11/colorado-all-pay-claims-data-base/
this looks great-people that are able to shop and find the best prices force providers to compete and lower their prices at the same time