Putting a Price Tag on Care

Patients often unknowingly choose higher-cost treatments and care settings that deliver no additional value. Sometimes they get tests and treatments they may not need at all.

People say a picture is worth a thousand words, but how much money is a picture worth? If it’s an MRI a doctor ordered to look at an injured knee, is that picture worth $1,000? More than $2,000? Less than $500?

Surprisingly, the price for that same MRI could be all three. And what it’s worth – its value – is another matter.

Prices vary by geographic area and by provider, often costing significantly more at a facility owned by a hospital system. An MRI of the brain can cost anywhere from $682 to $3,849 in Chicago, Illinois. The same scan can range from $443 to $4,273 in Houston, Texas.

Why the variation, and why do people choose the higher cost option?

All indications point to patients not knowing they have a choice to make, rather than patients actively choosing the higher-priced option. In a recent survey by Public Agenda, a nonpartisan advocacy group, only one out of five consumers said they compare prices between providers when shopping for medical services, filling prescriptions or scheduling procedures such as imaging or surgery.

The survey also revealed limited awareness of broad variation in prices for the same services and uncertainty about how to get price information. More than half said they believed charges were pretty much the same for a service regardless of provider. More than half also said they would like to learn prices in advance but don’t know how.

Experts say there’s a lot to gain by exposing these prices. Even the most routine diagnostic procedures vary significantly in price, according to a analysis by the Health Care Cost Institute, an independent nonprofit organization that has a large database of health insurance claims. In fact, the greatest variation was observed for imaging, radiology and lab tests.

Eric Barrette, co-author of the study and director of research at HCCI, says unraveling the overall cost of health care requires picking apart the actual prices of services. “We don’t pay for health care, we pay for a physical or an ER visit,” he says. “By drilling down into the price of individual services, we can better see where prices are higher than average and begin to unpack what is driving those higher prices.”

A bigger stake for consumers

Not only are health care costs rising, many consumers are paying a bigger share out of their own pockets when they seek care. Deductibles for members of employer-based plans rose 229% between 2005 and 2015, according to a recent report by the Kaiser Family Foundation. Coinsurance – a percentage of the cost of a service paid by the member – increased 89% in that time span.

While most health care consumers have yet to establish a habit of researching how much a test or treatment will cost them, insurers, government agencies, online companies and medical care providers are working to make pricing more transparent.

Amy Barbour is a customer service specialist in the Benefit Value Advisor program serving members of Blue Cross and Blue Shield of Illinois, Montana, New Mexico, Oklahoma and Texas. The program helps members get cost estimates, schedules appointments, assists with pre-certification, and provides educational resources for procedures like CAT scans, MRIs, endoscopy and colonoscopy procedures, and surgeries like joint replacement and bariatric surgery.

Barbour says she’s often surprised how little many of her callers know about what these services cost. “While members would never dream of not knowing the price of a part for a car repair,” she says, “in the medical world, not knowing the costs doesn’t seem to throw them for a loop.”

[Related: Video: Personal Shoppers for Health Care]

But Barbour believes things are slowly changing. “Ten years from now, I think it will be unheard of to not know health care costs in advance.”

The benefits of doing less

Finding the prices is one thing. Determining if many of these procedures and services are even necessary is another. More than $200 billion may be wasted annually on excessive testing and treatment, like X-rays, EKGs, surgery, antibiotics, and cancer screenings, according to the Lown Institute, a nonprofit organization dedicated to improving health and health care. For some patients — at the right time and under appropriate circumstances — these tests, procedures, and medications can be lifesaving. For others, they may expose the patient to unnecessary harm, such as radiation or antibiotic resistance.

Will the results of the test change the approach to my care?

There are both benefits and risks associated with CT scans, for example. Test results may show a benign or incidental finding leading to unneeded, possibly invasive, follow-up tests that may present additional risks. While having one test may not seem significant, a typical chest CT scan may expose a person to as much radiation as 500 chest X-rays.

Dr. Brad Wright, assistant professor at the University of Iowa’s School of Public Health, says the idea that unwarranted care can hurt rather than help isn’t too far-fetched. “From a public health perspective, if you have 320 million people, how many extra cancer cases are the result of unneeded scans?” he asks. “It might be nothing, but another set of doctor visits, testing and evaluations is created.”

Wright encourages patients to ask their doctors questions: “Will the results of the test change the approach to my care? Will the results change the course of treatment or is it just ruling out something? Will the results cause the need to re-test again two weeks later?” Many of these questions may go unasked because patients trust their providers’ direction.

[Related: An Agenda to Address Unwarranted Variations in Care]

However, an effort is underway to reduce the number of high-cost, low-value procedures and tests. Choosing Wisely, a program launched in 2012 by the American Board of Internal Medicine and Consumer Reports, has created and shared more than 70 lists of medical practices or procedures of minimal clinical benefit to patients in most situations. The lists, produced in conjunction with specialty societies and intended to foster conversations between doctors and patients, include information about when tests, services and medications may be appropriate and when they may deliver little value.

Choosing Wisely - Five questions for your doctor

A significant amount of money is wasted on relatively inexpensive and routine health care services, concluded a study just published in Health Affairs. It found that 93 percent of health care services identified as having little to no health value, like annual EKGs for low-risk patients with no symptoms of heart disease, cost less than $550.

The study analyzed one year of health care claims in Virginia, one of a few states with an all-payer claims database that publicly tracks information from Medicare, Medicaid and private insurers.

Consumers aren’t yet sure how to navigate avoiding low-value care, according to a study from Yale University, but they do want fewer tests and more conversations with their doctors. Study participants had a hard time imagining that a test could be bad for them, but they were willing to put off tests in exchange for more time with their doctors.

Mark Schlesinger, lead author of the study and a professor of health policy at Yale’s School of Public Health, says that what they heard a lot from people was that they were happy to try simpler options, as long as they could have more interaction with their clinicians and could still pursue other approaches later.

“Start by talking to them, Schlesinger says. “Start with simple tests and treatments, and always have the option of going to the more expensive, the more elaborate, the more invasive.”

More conversations may be one of the keys to achieving higher-value, lower-cost care.

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