From the
PRESIDENT
Robert A. Zaring, MD, MMM
GLMS President | [email protected]
TAKE A CLOSER LOOK At Your Pricing
I
n late 2017, a national organization
known as The Healthcare Executive
Group released a list of the Top 10 issues
facing health care in 2018. Among them
is the difficulty of creating cost, or price
transparency, for medical services. Lawmak-
ers, doctors and patients all have a big stake
in access to this information. This should
surprise no one given the cost of the US
health care system, which currently exceeds
3 trillion dollars and represents 17 percent
of the GDP. We expect that these costs will
continue to grow at an average rate of 5.8
percent per year through 2025. Therefore,
lawmakers are looking at different ways to
lower costs; it is difficult to be a thrifty shop-
per when you don’t know the price or you’re
not paying the bill. How ever, one aspect of
this conundrum has changed. Consumers
are paying more of the bill by themselves
with out-of-pocket costs reaching record
levels in 2016 at $352 billion. The cause of
this greater financial customer participation
is the growing use of high deductible health
care plans. In 2016, 51 percent of health
care consumers with single coverage faced
deductibles of at least $1,000.
Physicians and hospitals are now start-
ing to hear the demand for greater transpar-
ency on pricing from the public. In a world
where charges often have little connection to
reimbursements collected by a provider, this
can be exceedingly challenging. This can be
even more exasperating when you consider
the various negotiated rates insurance com-
panies have with providers and the myriad
of insurance terms which patients don’t fully
understand such as copays, co-insurance,
and deductibles. Regardless, lawmakers
have taken some steps to increase price
transparency. Some states have developed
laws requiring medical price transparency,
but have faced bitter enmity from provider
organizations who see the information as
proprietary. Many states have tried to solve
the problem by creating All-Payer Claims
Databases which collect data from multiple
sources. These databases have had varying
impact and only those backed by strong
laws and good websites have been success-
ful. The Catalyst for Payment Reform and
Healthcare Incentives Improvement Insti-
tute looked at various states to determine if
the state had effective or non-effective price
transparency initiatives. Forty-three states
received a “F” with only Maine, New Hamp-
shire and Colorado receiving an “A”. This
analysis was disheartening for many price
transparency advocates, but has spurred
more states into looking more carefully at
the subject.
Patients’ attitudes to medical price trans-
parency are interesting and reveal valuable
information for physicians and hospitals
who must confront the problem. A survey
by Accenture Consulting found 91 percent
of patients want to know their out-of-pocket
cost upfront and almost half would consider
going to another provider to get that infor-
mation. Even though studies have shown
shopping for price saves on average 10-17
percent for services, only 11 percent say
they want the information for that. The
majority of patients want the information
for budgeting. Both insured and uninsured
patients remarked on having great concerns
regarding their ability to pay out-of-pocket
costs, and a growing number are seeking the
pricing information with or without the help
of their provider. This has not necessarily
resulted in greater shopping but often has
resulted in patients opting not to have the
service. Those that have the information
and decide to have the service have been
shown to be far more likely to pay their
bills. As mentioned, shopping even with
the information is limited, but those that do
shop focus on services such as dental and
vision and much less on things like surgery
or chronic care. Patients have also shown
that when they do shop they do not just look
for the lowest cost but what they view as the
highest value. Things such as brand name,
viewed quality, friend recommendations as
well as physician referrals would seem to
have a much greater impact on patient de-
cision making. It has been shown that some
consumers using health care cost calculators
have chosen the most expensive providers
believing the more expensive provider will
have better quality.
Numerous tools from health insurance
companies and stand-alone applications
are available to patients to help evaluate
price. The large health insurance compa-
nies all seem to have pricing comparative
(continued on page 7)
APRIL 2018
5