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?

 

Transforming the Delivery System

On June 4, 2010, Costs of Care will be a featured exhibitor at Transforming the Delivery System, a Massachusetts Health Data Consortium sponsored conference focused on payment reform.

We'll be reviewing our progress to date, future plans, and discussing ways information technologies can be leveraged to help health care providers lower the costs of care.

Register here

Reducing Health Care Costs Using Lifestyle Interventions

Health care costs in the United States are rising to epidemic levels, and there is no simple solution to this problem. Advancing technology, an aging population, and lack of point-of-care pricing information are partially to blame. Lifestyle habits also have been shown to have an effect on many of the expensive disease conditions in the United States. An article recently published in the May 1 issue of American Family Physician, titled "Diet and exercise in the treatment of hyperlipidemia" by Robert B. Kelly, discusses how lifestyle changes can lower our risk for hyperlipidemia, a disease linked to heart attacks, stroke, and other costly ailments. It is worth our money and time to review some of the points made in the article and how they apply to diseases in general.

Some of the changes discussed in the article include increasing certain foods and supplements in the diet, such as tree nuts, mono- and polyunsaturated fats, and low amounts of alcohol, as well as decreasing overall fat and carbohydrate intake. Regular aerobic exercise of 120 minutes per week also reduces cholesterol levels.

Lifestyle-focused interventions are often associated with a high level of inconvenience; however, this article shows that many of them require minimal effort and may simply require checking a food label or making an additional purchase. Also of note is that the recommendations are quite specific: for example, it is not enough to run for a random amount of time per week; rather, 120 minutes per week provides the most benefit.

How does this information reach the general public? There are many community-based programs across the nation that promote lifestyle changes in a fun and educational manner. Physicians are being increasingly urged to promote lifestyle changes rather than over-relying on expensive prescription drugs. And consumers are making more of an effort to learn about healthier habits on the TV and Internet.

As health care costs are projected to rise over the upcoming years, lifestyle modifications will become an important, cost-effective way of improving overall health without tipping the bill. Dr. Kelly's article is an introduction to how simple changes can lead to large health benefits across all states.

Vikas Kumar recently completed his medical degree at the University of Pittsburgh School of Medicine.

Costs of Care in the National Press

As the director of Costs of Care and a practicing doctor, I occasionally have the opportunity to offer public commentary on healthcare costs from the doctor's perspective.

I recently spoke with national media about the role (or lack there of) of costs in medical decision making. I'm quoted in last week's New York Times, for a great article entitled "Teaching Physicians the Price of Care".

The same article was syndicated here on National Public Radio, here on Kaiser Health News, as well as several regional newpapers and radio stations around the country. The quote that was used was also picked up for paraphrased versions of the story throughout the blogosphere.

Lastly, an op-ed I wrote aimed at doctors, called "Paying Attention to Patient's Pockets" went online yesterday.

Looking forward to your feedback/comments!

Neel

Cost containment and unfinished business

While the contentious healthcare reform bill enables access to health insurance for 32 million Americans, what about costs and efficient healthcare delivery?

The often-heard criticism of the 10-year, 1 trillion healthcare reform plan is that it simply does not do enough to rein in the cost of treatments. According to a government report released in February this year, healthcare spending grew to a record of 17.3 % of the GDP in 2009, $ 134 billion more than 2008, marking the largest one-year jump in its share of the economy since the government started keeping such records half a century ago.

The question then is, how does ObamaCare plan to deal with the American view of more care is better care? Given that the new healthcare overhaul requires the government to now pick up more of the healthcare tab, can we cope with that? Moreover, how do we convince patients and providers that new procedures, tests, drugs or devices that might save or improve lives really are not always necessary or worth the exorbitant prices?

A stark example of the inefficiency in the system was brought to bear in a recent study published in JAMA about the rise in unnecessary back surgeries. Despite the growing evidence that it does not really work well for patients and increases the likelihood of life threatening conditions like heart attacks, strokes and pneumonia, complex back surgeries have increased 15-fold between 2002 and 2007. In essence, more complex procedures mean higher payments for surgeons. The misaligned financial incentives, the paucity of patient education about less invasive treatment options and the trying-and-everything mentality in medical practice even if we’re not sure it works are all part of the problem.

And it’s not just more back surgeries. More CT scans pose a problem too. A recent study demonstrated the significant overuse of such scans, projecting that 15,000 people die in a given year due to the radiation received from CT scans. Caesarean births have become more common, with little benefit to babies and significant burden to mothers. Men who would never have died from prostate cancer have been treated for it and left incontinent or impotent. Cardiac stenting and bypasses, with all their side effects, have become popular partly because people think they reduce heart attacks.

Overall, the consensus is that culture change is needed to move away from wasteful spending to more efficient healthcare. They include new making doctors more sensitive to costs of care, establishing new payment methods for doctors, more comparative- effectiveness research and penalizing hospitals for inefficiency. The hope is that the Patient-Oriented Outcomes Research institute established by the healthcare Bill, charged with setting the national agenda for the comparative- effectiveness studies, as well as providing more money and disseminating results, will bring some order into the chaos of practicing medicine.