• How the health system fails consumers, ctd.

    Nancy Kressin, the author of a recent JAMA paper I blogged about earlier this week, wrote me to respond to some of readers’ comments on that post. She approved my sharing it with you.

    It is not true that I could have learned the exact cost of the endoscopy for which I was being referred, in advance of having the procedure. I called my insurer, a major insurer covering federal employees, and learned that the exact cost to me could not be determined until AFTER a claim was submitted. However, I think this detail is somewhat of a distraction from the main point I was trying to make, which was that information on the relative cost of the proposed test was totally lacking from the discussion. If it had been a $5 blood test, that may have been one thing, but a procedure costing me several hundred dollars was what was at play. I think one of the key issues comes down to the value of the information to be gained from the diagnostic test, relative to the cost. Consumer Reports assesses information about consumer purchases of automobiles in this way (and is trying to lead discussions of health care in this direction), and I support that notion.

    It is not clear what effect giving health care clinicians cost information might have. In a presentation at the 2012 Society of General Internal Medicine meeting, Daniel M. Horn and colleagues concluded that “Real time display of cost information can reduce ordering of high volume laboratory tests, and has no effect on physician ordering of lower volume, high cost tests.” (JGIM Volume 27, Issue 2 Supplement, July 2012; . However, this information was supplied to the clinicians and not directly to the patients, so the extent to which the information was discussed in the diagnostic decision making process is unknown.

    If she wishes, she may continue the discussion in the comments, so feel free to speak your mind.


    • It seems pretty clear to me that lack of price transparency is an important cause of market failure in health care. The doctors don’t know what things cost, patients are afraid to ask, there is rampant price discrimination based on insured status and on which insurer. I also believe that many providers intentionally overcharge, just to see if anyone notices.

      Of course, insurers also deny coverage, just to see how much effort patients or doctors are willing to invest in challenging that denial.

      What’s sad (though not surprising) is how much of this behavior is strictly money-driven. I’ve been lucky enough to experience individual physicians who are truly more motivated by the opportunity to help people be well. But our institutions put that way down the priority list.

    • Before asking insurers to quote out of pocket costs let’s look at getting the actual claim adjustment right. As it now stands there isn’t much incentive to do that on either side. Insurers have an obvious interest in denying claims and providers can get a higher, undiscounted fee from the patient if the claim is rejected. That changes if the patient is unlikely to be able to pay, because of low income on one end and high service cost on the other, but for the common services which make up most people’s consumption of healthcare there just isn’t much incentive to do things right. The person with the most responsibility for payment- the patient- has the least visibility and control of the billing process.

      Heck, forget billing even. Just getting providers to take network status seriously would be a big improvement.

    • We need to have very tough legislation on price transparency.

      My own new law would work as follows:

      – for non-emergency care, if a price is not quoted before hand, then neither the patient nor the insurer has to pay.

      – the insured can request a printout of what other providers are charging for the same procedure in their city or county.

      – for emergency non-discretionary care, prices cannot exceed the Medicare fee schedule.

      That will get hospitals and clinics to pay attention.

      Bob Hertz, The Health Care Crusade

    • I saw this when a family member needed a cataract removed without having medical insurance of any type. It took going to a local eye care outpatient place to actually get a quote… where they charge uninsured patients the Medicare rate. No other hospitals or eye surgeons would even begin to say a ballpark figure for this simple & common procedure… you’d need a code. All about the codes. To get the code, you’d need to go through the evaluation (and pay hundreds for that) and get scheduled for the procedure – by which time you would have no option but to continue because you would’ve already racked up a bunch of bills, and would have to pay again to be evaluated by another surgeon if that’s who would do the procedure!
      Now why would this be?

      You would think if this eye care center could quote a rate, charge at Medicare rate for the uninsured it makes sense… since most of their patients getting cataracts removed are probably getting it paid for by Medicare – since it IS a procedure most likely to be needed in those over 65. My guess is that these hospitals are not making their money with Lasik & whatnot, and don’t have the lower overhead of a simple outpatient surgical office – such as no ER in the facility where they’re forced to treat uninsured people who won’t pay at all.
      Also, there were several attempts to up-sell & have vision correction done at the outpatient eye surgery.
      But the point is, this place obviously built its business model around cataract removal largely paid by Medicare rates, and non-necessary eye improvement surgeries largely paid without insurance (because insurance doesn’t cover that stuff). So they are not quite as wrapped up in all this health care quagmire.

      Also, all the information online that I could find about estimating the prices for this procedure, say that the average American price of evaluation & simple cataract removal (ie: without vision correction as part of the deal), runs about $4,000 to $4,500 per eye, for all the services involved.
      My family member’s cataract surgery was about $2,000 for the whole kit & kaboodle for one eye.
      Now how on earth could this place charge HALF the average?
      Clearly there’s something hinky.

      I think health care unfortunately has turned into just a big money making game, where if you’re involved, you have to play the game to continue to be in the business.. and that’s what led to this… and everyone has to keep dancing while the music plays.
      Hmmm sounds familiar.

    • In many cases, the fancy clinic will say that they charge $4,000, but they actually accept $2,000 from most insurers.

      They hold out the $4,000 charge for several reasons:

      – some insurance company may be stupid enough to pay that much;

      – the smart insurance company can brag that it gets a 50% discount;

      – some hospitals can claim that they have given away $2000 in charity care when they accept a lower payment.

      This is a sick system.

      Most other wealthy nations have a national fee schedule, which all providers have accepted.

      Given that this may be logistically impossible in the USA — i.e. who will negotiate for 500,000 doctors — we can still have much more transparency than we do.

    • While it is actually possible to get the cost in advance, it is a very time consuming process. You have to get both the CPT code (procedure code) from the physician’s billing department along with the ICD (diagnosis) code. You also need the zip code of the provider and on occasion, the provider’s tax-id number. Armed with that information, you can then call the insurance company and they can look up the price for that procedure and tell you what your out of pocket costs will be. However, expect to be on the phone for a long, long time to access this information.

      In general, the average person has no idea how to navigate the US health insurance system to be able to even start to know where to get the information they need to even begin asking about pricing.

    • Thanks Shana. Your comments are very accurate.

      Which is why we need what will seem like harsh laws.

      — If the provider will not provide a cost up front, the insurer does not have to pay. Nor does the patient.

      Note — some allowance will be needed for the rare situations where additional medical issues come up after a first procedure, or even during a procedure when a patient has a violent reaction of some kind.

      The administrators of our health clinics and hospitals are all very intelligent persons, They can figure out how to quote costs in about two days if they were forced to do so.

    • Totally agree with Nancy’s position…as a physician, I see firsthand the complications/frustrations that can arise with health insurance carriers.