Consumer Guide: Comparing Health Care Prices

    Consumer Guide: Comparing Health Care Prices

    By Shelly Gigante

    Health care consumers today are more cost conscious than ever before, demanding price transparency from their providers and trolling the web for deeper discounts on medical devices and prescription drugs – for good reason.

    Employers and health insurance companies, both public and private, continue to pass a growing percentage of medical costs along to the patient in the form of steeper copays and high deductible health plans.

    The cost of care for the typical American family of four, in fact, has more than tripled to nearly $26,000 since 2001, when that figure stood at $8,414, far outpacing the rise in household income, which averaged 2 percent annually between 2004 and 2014, according to the 2016 update to an index maintained by the actuarial service Milliman.1

    Higher out-of-pocket costs for medical care are largely intentional. By incentivizing patients to stay healthy and utilize lower cost treatment alternatives where possible, payers hope they may be able to hold the line on — or even reverse the troubling trend of — spiraling health care costs in America. (New reimbursement models that reward for value rather than volume also incentive providers to deliver higher quality care for less).

    To manage their medical expenses more effectively, however, patients need meaningful cost and quality data, information that many providers still keep close to the vest.

    "We are consistently hearing that one of the most important things consumers want from the health care system is cost information, and that consumers often don't know where to find it," said Andrea Ducas, program officer for the Robert Wood Johnson Foundation, a philanthropy organization which seeks to improve health and healthcare in the United States.

    Historically, price transparency in health care was next to nil. Consumers simply did not have access to cost data on doctor’s visits, medication, surgeries, outpatient procedures or hospital visits — and with minimal personal financial responsibility, those covered by health insurance didn’t much care.

    They care now.

    Today, price transparency remains a hot button issue with regulators and patient advocates, who push for greater disclosure. And, indeed, some progress has been made.

    “This is definitely a niche area in need of disruption,” said Ducas. “A number of companies are developing tools to meet this demand.”

    Many health insurers, for example, now offer a cost estimator for the most common procedures and services to members based on claims history, including BlueCross BlueShield. For its part, BCBS North Carolina lists the average cost of physician fees, facility fees and pricing for everything from anesthesia, to drugs to medical supplies, as well as out-of-pocket fees (deductibles and copays and co-insurance) for the patient. It notes, however, that  prices may vary for individual members based on their health plan design, deductibles and out-of-pocket limits.

    Aetna also offers a cost transparency tool that allows members in 50 markets nationwide to review and compare costs of medical procedures at inpatient, outpatient and other facilities (such as free-standing radiology centers). It also provides facility-specific pricing for more than 30 common medical procedures (maternity, MRI, CT scan, colonoscopy).

    Some states , including Maine, Oregon and New Hampshire, have also developed databases to improve cost transparency of health care services. And a handful of others, including Utah, Florida and Vermont, are close behind, enacting legislation to encourage price disclosure and the reporting of charges and fees, according to the National Conference of State Legislatures.2

    Online Health Pricing Tools

    The web has also empowered patients.  

    Healthcarebluebook.com, for example, provides a free search tool that allows consumers to research the prices for a procedure, test or service by zip code.

    Most comparison shoppers are surprised to discover the dramatic price discrepancy between healthcare facilities, said Bill Kampine in an interview, co-founder and senior vice president of Healthcarebluebook.com.

    “If you have insurance, in-network prices can vary by 200 percent to 400 percent, sometimes even more,” he said. “Patients don’t have any idea what a reasonable price should be for health care services.”

    The “fair price” listed on Healthcarebluebook.com, which is based on actual claims data, reflects what roughly 40 percent of providers get paid by commercial (private) health insurance companies to deliver a specific service or procedure in a given zip code. That gives consumers a rough idea of what their doctor should realistically charge.

    Unlike with other consumer goods, Kampine said research repeatedly shows that health care quality and price have no correlation — a well-kept secret in the industry.

    “A handful of studies, in fact, find a negative correlation; the more you pay the worse the quality,” he said.

    Other internet-based cost comparison tools include crowdsourcing site Clearhealthcosts.com, which allows consumers to share their price for core procedures in metro markets across four states (and counting) — New York, New Jersey, California and Texas. In other states, only Medicare prices are available.

    Tips to Lower Your Healthcare Bill

    As they research lowest prices, patients with high deductible health plans should keep in mind that paying cash for treatment is sometimes more cost effective, said Ducas. Providers may offer a discount rate for self-pay patients that beats their health insurance deductible.

    “Often, people realize that they can enter the cash market and pay cheaper rates than if they apply their insurance,” said Ducas.

    She notes, however, that services for which patients pay out of pocket do not get applied to their annual deductible. “It can be a roll of the dice,” said Ducas. “Paying on your own might make sense if you use limited health care services, but if you have significant health needs, paying out of pocket is not necessarily a viable option.”

    Kampine said patients should always get price quotes from at least three in-network providers. “Paying out of pocket may beat the price you would get at the hospital, but most people can find very good value by shopping within their network and being a good consumer,” he said.  

    Pricinghealthcare.com, a marketplace for direct-pay healthcare, may be able to help. The website gives health care providers a forum to post information about their brand, quality, services and pricing. Self-pay patients can also use the site to find facilities by location that offer rates that are typically “much lower than insured rates,” the website states.

    Other ways to save without sacrificing quality include using lower cost outpatient facilities over inpatient care, using generic instead of brand name drugs, checking your bills and statements for errors, getting preventive care to catch small problems before they become bigger, and maintaining a personal health record to keep track of tests and immunizations – thus avoiding unnecessary repeat tests. (Related: Cutting Costs With a Personal Health Record)

    Rising deductibles and copays are forcing patients to become more selective consumers.

    While price transparency remains imperfect, new legislation and the small, but growing number of cost comparison tools online are empowering consumers to make better decisions about where they seek treatment.

    To improve their position further, however, consumers need to be part of the process, said Ducas.

    “Our research has shown that where price transparency tools exist from insurance companies or employers, many people still don’t use them,” she said, noting that the tools may not meet patients’ needs. “Consumers are in a position to articulate how they would like to access price information, where they want it and in what way that information would be most helpful.” 

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    1 Milliman, “2016 Milliman Medical Index,” May 24, 2016

    2 National Conference of State Legislatures, “Transparency and Disclosure of Health Costs and provider Payments: State Actions,” 2015

    The information provided is not written or intended as specific tax or legal advice. MassMutual, its employees and representatives are not authorized to give tax or legal advice. You are encouraged to seek advice from your own tax or legal counsel.

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