Talking to Your Doctor About Health Costs

In a new brochure developed for patients, medical student Jessica Jou writes, "Most people can find an estimate to hire a babysitter or fix a car. But what about a chest x-ray? Even in the age of Google, you may be surprised by how difficult it is to learn the cost of your health care."

This has become increasingly important as more patients find themselves with health plans that require the first several thousand dollars of expenses to be paid out of pocket. It doesn't help that talking to your doctor about health costs can be uncomfortable.

Using insights from hundreds of patient anecdotes that Costs of Care received during our last two essay contests, Jessica lists lessons learned and helpful tips, including answers to questions such as "What if my physician refers me to the billing department?" and "What kinds of cost-aware decisions can my physician make for me?

Download Jessica's brochure directly from the Costs of Care website.

Jessica Jou is currently a second year medical student at the Tufts University School of Medicine. She grew up in Taiwan where medical insurance is universally provided by the government. While in college, she lead a team of physicians and students to provide healthcare to rural villages in Nepal. They are now in their fifth year of service. And after working with the uninsured population in Boston at the Sharewood Project, she is inspired to empower patients and physicians alike to start the conversation about healthcare costs

Savvy patient finds hidden discounts just by asking

The following anecdote was written by Suzanne Nesmith, a patient from Arkansas who was a finalist in the 2011 Costs of Care Essay Contest.

My husband and I have been self-employed for many years, and though our income is quite limited, we have always been careful with our finances,  have always managed to live within our means, and have always paid our bills without assistance.  We had private health insurance coverage and saw premium increases each year. Then to avoid further increases, coverage of office visits outside of deductible was dropped, and our deductible was raised to $4500.  Finally, about seven years ago, the cost became prohibitive for us; when yet one more increase was announced, our monthly premium payment would amount to approximately 30% of our monthly income.  We were in relatively good health and, in fact, in 10 years we had only one health insurance claim-- an emergency room visit when our  daughter fractured her arm in a roller skating accident. 

We did not do it lightly, but we made the decision to drop the health insurance coverage we could no longer afford. We started to research alternatives and found Samaritan Ministries International, a Christian need sharing group. It was through SMI we were first made aware of how prices for medical charges could vary, that discounts were often made to self-pay patients, and what a difference simply asking about prices could make. What valuable information—for anyone, but especially for the self-paying!

Recently, I required more than routine health care and my doctor ordered a CT scan.  I called three facilities to ask what the cost of the ordered CT scan would be, understanding that it would not include the physician’s reading fee only and that it would be only an estimate.  The first things that was obvious was that hospitals are unfamiliar (and it appears to me uncomfortable) with being asked this question.   I was often transferred from one department to another, usually ending up in billing or finance, and more than once, was told,  “I’ve never been asked  that before.”   When finally connected with the person who could give me that information, I also asked if any discount was available for self-pay patients, and for cash payment.  The results were so interesting  that I put them in the form of a chart to show to my doctor.  

Facility	estimate	discounts	estimated result
XXX	$2921	20% discount if contacted within 10 days of billing, and paid with first billing	$2441
XXX	$5459	20% discount for self-pay 20% discount if balance paid within 1 month	$3276
XXX	$3849	58% discount if  ½ paid in advance and balance paid in next billing cycle.	$1616

Not only did we have the benefit of cost savings by comparing prices, we had additional cost savings through discounts by  simply asking—these might have otherwise been missed.  My doctor has since ordered a colonoscopy.  So, I called different facilities and was quoted prices of anywhere from $1288 to $1500; and in each instance it was not until I simply asked about any discounts was I told that I could arrange for a 50% discount if I would simply ask to pay (even as little as 1/4^th payment) at the time of service.  Simply asking about price and discounts will now be an essential part of my personal responsibility and proactive attitude concerning  my own health care.

            

Price Tags and Haggling in an Exotic Market

Daniela Carusi, MD, MSc is an obstetrician/ gynecologist practicing in Boston, MA

A friend of mine recently took an exotic trip. While shopping in a market, she picked up an appealing item and asked the seller what it cost. She was given a price that seemed high, and paused to consider whether the impulse seemed justified. The shopkeeper grew confused in the silence. Finally he asked my friend, “Don’t you want to know if I can do better?”

Clearly this person was outside of her bargaining comfort zone. Many – perhaps most - Americans are accustomed to paying the price as written on a tag. If you have to ask, you can’t afford it, or so I was told growing up in suburban shopping malls.

American consumers make the same assumptions as they search for transparency in health care costs. Obviously there are charges for these services – they are clearly written on the bills after the services are delivered. So why is it so hard to find out the cost of a service before it is performed? Here it is essential for the customer to understand that the charge and the price paid may be quite different; in fact, they are expected to be different. The health care consumer is not shopping in a chain store whose clerks forgot to stamp the items with their prices. On the contrary, the confused shopper has stumbled into an exotic market without a clue on how to haggle.

I work for a large health care system in a metropolitan area. I am well aware that the amount we charge for services is far higher than the amount we collect from payers. In fact, government payers will often pay 25 cents on the dollar, while private insurance companies will pay more. Still, we rarely receive more than 50 percent of what we charge. The reasoning behind the sky-high price tag always eluded me, and when I saw its effect on my self-paying patients, it infuriated me.

It is no secret that large insurers negotiate payments with health care facilities and providers. We charge a fee, the insurer hands over the pre-negotiated payment, and we do not ask the patient to make up the difference (such a system, known as balance billing, is not permitted where I practice). The patient pays his or her copayment, and the transaction is closed. The same occurs with government payers, though the negotiation seems a touch more one-sided.

This system breaks down for the uninsured patients – either those who have no coverage at all, or those seeking a particular service that is not covered by the insurance policy. The same exorbitant charge will go out to the individual consumer, who will assume (rightly so) that the entire amount is due. Failure to pay the bill lands many an American into financial straits. On a few occasions my billing service has sought permission to send a collections agency after a non-paying patient. Such a decision feels entirely counter to my doctor-patient relationship, one in which I want to support and advocate for my clients.

Once I understood this system I tried to make it feel fair. When I had an uninsured patient, I asked my billing service to charge a discounted amount, calculated by averaging my collections from all payers for that particular service. This met with great trepidation from the billing office. I was informed that it was impermissible for me to charge different amounts to different patients. No one had any problem with the fact that I was going to collect twice as much from the uninsured customer as the insured one. As the shopkeeper, I was expected to throw out the same initial number when asked to charge for my service, but no one was turning to the uninsured patients and saying, “Don’t you want to know if I can do better?”

This is why cost transparency in health care is so difficult. We can’t predict what the final negotiated payment will be without knowing who is paying and what kind of bargaining position that person is in. And no one had taught the individual consumer the rules of the game. Physicians may be criticized for not knowing the costs of the services we order, but there simply is no straightforward answer.

I look forward to the day when health care charges and collections can be both uniform and reasonable. I am thrilled that consumer advocates are seeking clarity in health care costs, but they must understand what all this encompasses. The cost must reflect not only the price of facilities, supplies, high-tech equipment, and service providers, but also the bargaining position of the person who pays.

Do we as health care consumers require a crash course on bargaining? I’ll give it a go for some sparkling jewelry, a piece of furniture, or even tonight’s dinner. But when facing a major illness I’d prefer a price tag, thank you.

A Student's Summer Reflections on Price Transparency

Jeffrey Herman is a sophomore at Brandeis University and just completed a summer internship with Costs of Care.

I can’t think of a single industry that is more inherently personal—more emotional than health care.

Everyone has a story of how the health care system has impacted their lives. My family’s experience with the healthcare system had both positive and negative results. Thankfully, my brother survived a brain tumor as a young child and my father’s heart disease was treated early enough to prevent a heart attack. However, the bills for these procedures were astonishing. Perhaps even more shocking was the complete inability of doctors and insurance companies to give an accurate estimate of what the procedures would cost. There was no more clarity with routine follow-up procedures like MRIs and stress tests. On any given day, a doctor may order the same test several times, so how does uncertainty exist about how much it costs? And if doctors don’t know the cost, how are patients supposed to be informed consumers of health care?

Many insured patients don’t worry about how much a procedure costs—frankly, with third-party payers, they often don’t have to. In fact, if you are sick and diagnostic tests are covered, you might push for your doctor to administer all potentially beneficial services. However, at some point the over-utilization of services at unclear prices results in detrimental care that is ultimately more costly than helpful. In some cases, particularly for patients with high deductibles or loop holes in their insurance plans, these costs may even cause significant financial harm.

When policymakers and doctors try to arbitrate solutions to the problem of price transparency, progress often can seem out of reach. Most avenues to change are either politically unpalatable or financially impractical. So instead, I propose addressing the problem from a grassroots level. To fix the American health care system as a whole we must engage consumers and doctors to care about it on a personal level. Informed consumers will push for efficient stewardship of resources and doctors will oblige if there are the right incentives to do so.

Several websites, such as Clear Health Costs and HealthCare Bluebook, provide easily accessible information about the price of various procedures. Clear Health Costs even breaks down prices by specific physicians/hospitals. If it is so easy to find reasonably priced care, patients will be more inclined to be cost-effective consumers. Additionally, such websites could exert competitive pressure on caregivers to both have reasonable prices and to be knowledgeable of what their services cost. Assuming that these websites will expand and spark similar sites, they will become an invaluable resource for health care consumers and caregivers.

The widespread use of social media also has significant potential to provide cost information to consumers. Eventually, Twitter and Facebook users may be able to access price information while connecting with friends, family, and other aquaintances. This convergence of health care information with personal networks promotes knowledgeable consumers. Perhaps more importantly, if these health care cost-consciousness permeates social media, users will feel social pressure to spend resources wisely. Imagine 750 million Facebook users with a price transparency application that appears in a newsfeed right along with friends’ status updates and wall posts.

After reflecting upon the state of the American health care system, it can be difficult not to feel optimistic. Party politics seem to overshadow progressive policies. Any potentially beneficial policy or idea is immediately rejected because it will be politically inflammatory or financially taxing. However everyone—on all ends of the political spectrum—can agree that change is necessary. Perhaps a grassroots approach that engages the public in cost-effective care with greater price transparency will bring about much needed reform. Providers and lawmakers will take notice if the public pressure is great enough. Ultimately, it is up to us.

MD Clarity - The Physician's Role in Patient Price Transparency

This post is by Mike Albainy, Founder of www.MDClarity.com

How much will a visit to the doctor’s office cost? It’s a seemingly simple yet perplexing question for both patients and physicians. A fundamental problem continues to be that patients and physicians do not readily have access to the expected costs of care, from lab tests to MRIs to outpatient surgical procedures. Today’s complex medical reimbursement structure makes this information elusive, in turn limiting physicians’ abilities to have a transparent discussion with patients about the impact of clinical choices on their out-of-pocket costs. While the need for transparency is nearly universally accepted, the questions of who should make this information readily accessible and how we get there have yet to be settled.

Why are estimates for care so elusive?

Simply put, medical bills are complicated. There are two key factors which determine an insured patient’s responsibility for a medical bill: what their insurance company has agreed to pay the doctor, and what their specific plan benefits include, from their deductible to coverage for specific types of procedures. Additionally, the provider’s charge structure is relevant for uninsured patients, but has little bearing in the ultimate patient responsibility for most insured patients.

The first question alone, what the insurance company has agreed to pay the doctor, is not easy to answer. Every insurance company negotiates separate contracts with each provider, and these agreements are challenging to interpret and “translate” into software accessible by medical staff or physicians due to the many unique exceptions and rules.

The question of the patient’s plan benefits can be even more challenging to answer: each insurance plan can have different deductibles and policies, and the patient often doesn’t know the status of their benefits. Do you know your deductible balance at this moment?

Coupling these two pieces of information quickly, and the time of service when a physician is with a patient, can be daunting.

There are some alternatives to providing a precise estimate to the patient. One alternative is a simple price list akin to a “rack rate” at hotels, or a generalized estimate regardless of the patient’s insurance company or benefits. Some organizations have chosen to post their charges online, but they are unfortunately not reflective of what the insurance companies actually pay and ultimately become a patient’s responsibility.

This all begs the question: who ultimately should be responsible for providing this information, accurately, to patients?

Who can deliver?

The most convenient answer has usually been that it is the patient’s responsibility to determine what their service will cost. This belief has spawned a number of websites, most of whom use some variation of freely available Medicare data, to deliver a generalized estimate of payments for care. This approach makes two leaps of faith – first, that patients will take the initiative to research healthcare prices, and second, that it is good enough to know a regional or national average instead of a precise, customized answer.

The next group, insurance companies, have made some strides in price transparency. The trend, however, is for insurers’ patient portals to not specify their rates for specific physicians, but rather use regional estimations. Furthermore, this information is non-standard, and usually only available to patients (and the more web-savvy ones at that), not others in the industry.

That leaves us with the providers as the ideal group to enable price transparency. The physician-patient relationship is the base for the entire healthcare system, and layering the cost dialogue into that existing, trusted discussion stands to reason. Physicians and other providers sit in the unique position of being able to translate pricing questions for patients into a language that makes sense in the context of the care delivery model. If correctly enabled, this could change the way physicians and patients approach medical decisions about the benefits of performing services that may have marginally more benefit for disproportionately higher costs.

So, how can they do it?

Some of the rudimentary methods above – using base charges, some variation of Medicare pricing, or payer-driven information – can be serviceable in limited situations, but not ideal in today’s more demanding, high-deductible environment. Practice Management Systems have made limited progress in the price transparency areas, but their offerings tend to work best in the most basic situations when intuitive user interfaces are not required.

Fortunately, as technology improves, recent advancements are opening new doors. For example, MD Clarity’s web-based software can be delivered as a service via the web and mobile devices to make accurate information available within seconds rather than spending unnecessary time tracking it down or, worse yet, settling for data that isn’t entirely accurate. The newest, most sophisticated software combines payer-and-plan-specific information for results that are completed customized to the provider’s practice and the patient they are dealing with. Most of all, this complex software puts the price transparency discussion squarely within the physician-patient relationship where it belongs.

Mike Albainy is a Founder of Minneapolis-based MD Clarity, a firm providing web-based solutions enabling physicians and their staffs to provide accurate patient price estimates. The software allows physicians and office staff to confidently engage in a more informed dialogue about the cost and benefit of medical service options.

Cost Awareness Anecdote: Fraction of the Pie

The following anecdote is from Eric Lespin, a patient from Alaska.

A torn meniscus. It did not disable but it impaired, and unpredictably. My stomach learned quickly to tighten at the sound of A.’s peculiar whimper in response to a crippling pain that would shoot through her at seemingly innocuous movements of the afflicted leg. We have health insurance of sorts, the type that will help you keep your home if tragedy strikes, but that does not shield you from the brunt of what most of day-to-day health care cost is about. We’re well practiced in deferring and foregoing care. Here however, we reluctantly acknowledged that a hospital would need to be visited and a doctor consulted.

Tests and a physical examination made clear that an operation was unavoidable. The doctor was a thoughtful man who conscientiously went through what the operation would entail. Surgery would take half a day, then back home by afternoon, convalescence over the following few weeks, with complete recovery the usual outcome. While not painless, the procedure seemed reassuringly routine. His tone was caring and his outlook about our case optimistic.

The admirable candor with which medical personnel have learned to speak about difficult topics concerning our bodies and our care did not extend to the costs involved. The question of what the procedure would cost, gently broached, initially baffled the staff, eliciting answer-deflecting counter-questions about the adequacy of our insurance coverage, but resulted in no quotes or estimates. With my insistence on the point, an assistant promised that a figure could be determined, if we needed it, once the surgery was scheduled. “But not before?” I was now the baffled one.

A person who linked dollar amounts to medical procedures was eventually found and I was seated at her desk. She required a billing code however, and without a scheduled surgery there was none to offer. As we danced around that issue, my concern over the cost of repairing A.’s knee was replaced by another curiosity: “Is what I’m asking not routine?” It was not. A billing code was finally lifted from the paperwork of a previous operation, and after some minutes a dollar number was produced. It was a sizeable figure, but less than what I’d been led to believe such things cost, at least in the United States. I suspected something still was not clear. “This is then what I’ll pay, roughly, to have the procedure done?” I asked in a half questioning, half confirming tone. “No, that’s just our part of it, the hospital has their charges, of course.” “But we’re in the hospital and I’m asking you for an estimate of what this operation will cost.” She explained, with some frustration, that the operation itself was only a fraction of the pie; she had no way of knowing what the hospital might charge.

This was not actually true – she was far better situated than I to know what the hospital charges would be. It was if I had asked for the price of a new car on a showroom floor and had been told by the car salesman that only the engine could be quoted – other components’ prices would need to be discovered separately, by me. In the real world, the total price for most services and products are conveyed to the consumer by the seller or provider at the end of a long chain of added values. In this case, the multiple components of the medical care provided a shield to simultaneously obscure the cost and justify its lack of availability. The billing person scribbled down a number for me to call, then asked if there was any other matter where she could be of assistance.

Hoping for a face-to-face conversation, I asked at the hospital information desk for directions to the office matching the telephone number scribbled on the scrap of paper. “That’s not in the hospital”, the information desk attendant declared, “but the call is toll-free”. We went home. For some reason, the inability to locate a price anywhere on the hospital premises for an operation that would take place there shook us as much as would have an encounter with a manifestly incompetent doctor. Though A. and I talked only briefly of the cost, or rather the opaqueness of it, we were both invaded with a foreboding that a thing so untethered to its own cost would be in some unspoken way unreliable, dangerous. That night, A. announced that she wanted to do the procedure overseas . . . anywhere but here.

Debating price transparency

Ever wonder how prices are set for healthcare services? If you've ever received a medical bill and wondered why it can't be simpler to understand, then you're asking the right question.

While there are many reasons why healthcare costs are spiraling, one of them is that nobody really knows what anything costs. Providers get paid through a multiplicity of insurance-company contracts and billing schedules that change from patient to patient, depending on the type of health plan. Recently a New York Times article covered the issue of 'balance billing'. A situation where doctors and other health care providers receiving discounted payments from the insurance company — an amount less than the fee they want to be paid — bill the patient for the 'balance'.

How are consumers expected to make well informed decisions if they have no idea what to expect with treatment costs? More importantly, what kind of treatment decisions should consumers be making themselves? The overall consensus however is that with consumers being asked to pay larger proportions of their medical costs, they should know what they are paying for.

That is precisely what the Congress is debating over: How much transparency in prices do we want in healthcare? The Health Subcommittee of the House Energy and Commerce Committee held hearings last week on three different bills—all designed to make prices in healthcare markets more transparent. A Wall Street Journal blog does a great job of summarizing the hearings highlighting leading points in the long-running debate over price transparency. Another article by Julian Pecquet of The Hill adds useful details on the democratic vs. the republican bills.

There are strong arguments for and against price transparency. An article in the American clearly summarizes the polarized arguments. On the one hand we have economists who believe that in the healthcare market, price transparency could result in higher, not lower prices, with providers charging as much as their competitors, thus defeating the purpose of transparency. On the other hand, we have proponents of consumerism, who believe that once American's, currently insulated by insurance, are made aware of the healthcare tag price – they will consume less.

In conclusion, while the price transparency legislation is off to a slow start, there are several unanswered questions. How will price transparency affect costs? Does transparency really affect consumer-consciousness in the healthcare market?

 

Price Transparency in Boston

A few weeks back, we contributed a blog post to the Institute for Healthcare Improvement Open School.

Check it out and leave a comment :)

http://ihiopenschool.blogspot.com/2009/05/price-transparency-in-boston.html

Putting Prices on Your Doctor's Menu

Over the last four years, I’ve had the opportunity to work at the best academic medical centers in the country, alongside some of the most competent and caring doctors one can imagine.

These doctors made every effort to address the needs of their patients, diligently and compassionately attending to each physical symptom.

But even the best doctors neglect something critical: the bill.

In a time when tightening belts and pinching pennies has become especially important, we too often pay exorbitant amounts—enough to bankrupt two million American families a year—on medical care we may not even need. As patients, we’ll spend hundreds of dollars on a medication we are prescribed, even when a generic version is available that contains the exact same stuff and is 90% cheaper. We might pay thousands of dollars for an MRI, even when its results are unlikely to be informative.

The reason is painfully simple. Information on the prices patients face is rarely available to doctors when they are deciding which tests and treatments will go on the bill. A 2003 American Medical Association study showed that fewer than one in five doctors understands how much their patients pay for care.

In fact, healthcare is the only sector in our market economy where we routinely contract for services without knowing what the costs are or even exactly what we are buying. For good reasons, we trust doctors to make purchasing decisions for us. But when doctors are looking at menus without prices, it’s easy for them to order filet mignon at every meal—even when their patients are the ones picking up the tab.

True, when we are sick, certain tests and treatments may be appropriate no matter how much they cost. Doctors weigh several factors when ordering tests, including how sick the patient is and how good the test is. However, the Congressional Budget Office has estimated that the United States spends $700 billion (an amount comparable to our total spending on the Iraq War) each year on medical tests and procedures that do not measurably improve health outcomes.

Given this evidence of wasteful spending, and the impact it has on Americans, it would be sensible to also make costs part of that calculus.

This is especially true given the potentially catastrophic impact of the rising costs of health care. Today, spending on health care is approximately 16% of GDP, up from 8% twenty years ago, and 4% twenty years before that. In the near future, Medicare and Medicaid, which account for half of this spending, will become unsustainable. Investment in other things that matter to us—roads, schools, security—will be crowded out.

To add insult to injury, we’re not even getting much bang for our buck. A 2008 Health Affairs report compared health care spending in the United States to other countries in the Organization for Economic Cooperation and Development (OECD). Per capita, the U.S. spends double the amount everyone else does, but we rank in the bottom half of developed countries for most health quality indicators.

Debates about this cost-quality discrepancy are inevitably abstracted to the population as a whole—the millions who cannot afford coverage, the staggering percentages of GDP. The underlying problem is often framed as an irreconcilable tension between the interests of individual patients to have everything possible done and the collective interests of all of us to have a sustainable system.

But there may be a simple solution.

Doctors are trained to focus entirely on the patient in front them. Unlike policymakers, they are not trained to assume responsibility for entire populations. And rightly so. If you were sick, you would want your doctors to make decisions about your care based on their assessment of you, and only you.

It’s no wonder that high-level policy discussions about the macroeconomic implications of health care sometimes fall flat at medical conferences. The debate must be reframed in terms of the potential financial burdens a doctor’s decisions may impose on the patient in front of them. The availability of price information at the point of care would do just that.

Putting prices on doctors’ menus offers an opportunity to move beyond the apparent tension between individual and collective interests. In the end, doctors, policymakers, and patients can all agree that we don’t always need to order the filet mignon.

Neel Shah recently completed the requirements for his medical degree and is the Executive Director at Costs of Care, a nonprofit organization aimed at preventing medical bankruptcy by providing doctors with price information.