A mammogram can cost between $45 and $400 in Miami, Fla. But in New York City, an MRI of your lower back can range from $416 to $4,527. If patients can’t pinpoint the cost of a procedure, how can they make cost-driven choices about their health care?
Much of the money in healthcare is being spent on even more expensive services, such as knee replacement surgeries, according to Harold Miller, president and chief executive of the Center for Health Care Quality and Payment Reform. Miller spoke about price transparency at the Economist’s Health Care Forum ’14 on September 17th in Boston.
Case in point: After discovering that it was paying between $15,000 and $110,000 for knee replacement surgeries, CalPERS (an abbreviation for the California Public Employees’ Retirement System) started capping payment for this procedure at $30,000 – for what it considered a good quality procedure. “If patients wanted to take out a second mortgage on their homes to finance a more expensive procedure, they could do that,” said Miller.
The impact: Consumers chose the $30,000 option, and the more expensive healthcare providers reduced their cost.
“You have to have all three legs of the stool,” said Miller. “You have to have price transparency, you have to have payment reform – which means paying differently for total packages of care – and you have to have benefit design changes so that consumers are actually sensitive to those price differences for the most expensive procedures.”
While price isn’t a factor in The Leapfrog Group’s ratings, Leah Binder, president of the Washington-based organization that provides access to quality standards at hospitals, is very supportive of price transparency. General Motors, one of the founding organizations behind The Leapfrog Group, knew its own cars were subjected to market transparency on price and quality. So the automaker was driven to provide the same cost and quality information to its employees on the healthcare they received.
Unfortunately, Binder said that she sees a “tsunami” coming to healthcare: a wave of change as consumers with high-deductible health plans are responsible for paying for more of their healthcare. Today, half of all workers in companies with more than 5,000 employees have high-deductible plans.
“People all of a sudden have to worry about how much that MRI’s going to cost,” Binder said, while admitting that quality will always come second to cost.
If, for example, your budget for a new car is $20,000, your second question is what you get for that money. You want to know the features and benefits, said Binder. “That’s exactly what’s happening in healthcare. That’s why we see this movement of providing quality and safety and transparency to the American public.”
To increase price transparency for its policy holders, customer-owned Health Care Service Corporation created a tool called Provider Finder. This tool delivers access to cost and quality information on about 400,000 healthcare professionals and 21,000 facilities.
All of the players involved – consumers, payers, providers and pharmaceutical and device manufacturers – are in this together, said Stephen Ondra, senior vice president and chief medical officer at Health Care Service Corporation, which is based in Chicago, Ill. He believes there will be a convergence around the idea that cost is necessary but not sufficient.
“This is healthcare; this isn’t simply price. This isn’t a commodity. This is our lives,” Ondra said.
Aine (“ONya”) Cryts is an on-staff contributing writer for MedTech Boston. She's a political scientist by education, a writer and marketer by trade. She has written for various healthcare technology publications and also served as marketing director at several healthcare software companies in the Boston area. Cryts is an avid volunteer, pet lover and long-distance runner. Story ideas are always welcome.
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