In Cincinnati, an ankle MRI can range in price from $367.46 to $2,865.42 — a variation that is leading some companies to specialize in bringing transparency to the health care market.
By one study’s measurements, better price transparency and tools to compare costs between different doctors, clinics and hospitals are sorely needed. In their annual report on state price transparency laws, Catalyst for Payment Reform and the Health Care Incentives Improvement Institute gave Ohio and six other states a “D.” That might seem bad, but it was actually better than 29 other states that flunked with an “F.” Only New Hampshire and Massachusetts received the top score of an “A.”
But the grades were given on a curve, which means the report’s findings actually appear to be better than Catalyst for Payment Reform and the Health Care Incentives Improvement Institute would prefer.
“While no state has implemented laws that meet all of our criteria, we graded on a curve to acknowledge the states with the most advanced laws to date,” the report reads.
With the report, the two organizations say they hope to inspire action from state lawmakers: “While the private sector has made progress recently in making prices more available to consumers, there are still large gaps. States can play an important role in ensuring that consumers have access to both quality and price information by setting policies and implementing laws that advance transparency. The most comprehensive, consumer-friendly laws ensure ready access to information and data about a broad range of providers and services.”
For now, some companies are filling the gap in state laws by compiling comparative data and providing it to paying employers. Christine Evans, general manager of marketing at San Francisco-based Castlight Health, says her company provides a “health care transparency solution” that “allows companies and their employees to essentially save on health care costs and get better quality of care.”
As health care prices continually rise, Evans says this is a sorely needed service in a market that makes it too difficult for customers to compare prices and quality even within their own health networks and regions.
“Most people don’t get (that) when I go to a doctor that’s within a network in my region, the cost can actually vary by that much,” Evans says, citing the cost variance of local ankle MRIs.
For customers, it’s easy to pin the variance on price gouging at some hospitals, but Evans says the root of the problem is “information asymmetry.” She says big providers are often able to demand higher prices, but since the providers rarely share those prices openly and sometimes refuse to as part of a “gag clause,” there’s a distinct lack of transparency in the health care market that makes it difficult to keep providers in check.
But by compiling massive amounts of data from around the nation, Castlight has been able to identify what doctors, clinics and hospitals provide the best prices and quality of care, allowing customers to verify prices online or through various mobile phone apps before making a costly commitment to any particular doctor, clinic or hospital.
Evans says having this information available has led some providers to shift their costs: “One of the things that we’ve seen in terms of health care transparency and what it means in terms of creating an efficient market is as these prices and the qualities of these facilities and providers come to the surface, (they) allow the market to re-correct itself.”
For some health care providers, the transparency has encouraged them to bring down costs to match quality.
For others, it’s actually become easier to justify high prices — Cleveland Clinic in particular is known as one of the best hospitals in the world, and it’s been able to point to its quality ratings to justify its higher costs to customers, according to Evans.
The increased transparency can also help doctors, who, in many cases, don’t even know the prices they’re charging or how they’re perceived by patients, Evans says.
“We have someone here who knows a physician who saw his quality rating ... was four out of five stars, which is pretty good,” Evans says. “But he was actually not satisfied with that. ‘What can I do to get myself to five stars?’ This is a question we want physicians to be asking themselves in terms of quality, what we want the system to be asking itself in terms of providing better value care.”
Still, part of the problem falls on consumers, who Evans says tend to overuse emergency services. Evans cites the example of someone with a urinary tract infection, which has severe symptoms that would lead most people to seek care immediately. According to Evans, the problem is too many people seek out that immediate care in emergency rooms, instead of more affordable urgent care facilities.
“A lot of people don’t realize that if you go to the emergency room, it’s going to cost you $1,600 or more,” she says. “But maybe your health partner has a cost for care line. Maybe you could go see an urgent care center that’s within the vicinity of your home that might only cost you $30, $50 to get the same type of treatment.”
While states struggle to set their standards, the federal government has been recently moving forward with some transparency initiatives. The Health Data Initiative and HITECH Act encouraged providers to use consistent information systems and track and record how physicians are performing.
“Some of those databases are actually public, and people don’t know about them,” Evans says.
Some states, particularly Massachusetts and New Hampshire, have also “pushed the envelope forward,” according to Evans. She points to a Massachusetts initiative that requires access to out-of-pocket prices prior to a hospital visit, which lets patients compare prices before they commit to a treatment.
Until other states catch up, Evans says employers, who more than half of Americans rely on for health insurance, should take charge: “They can take action and control of that now by putting in place transparency solutions that enable people to get this information without having to wait for the legislation to come into place.” ©
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