Why We Should Know the Price of Medical Tests

First appeared on the NYtimes

STUART BRADFORD
By ELISABETH ROSENTHAL
AUGUST 5, 2014

20140806-080214-28934177.jpgOne of the common arguments against mandating or providing upfront prices for medical tests and procedures is that American patients are not very skilled consumers of health care and will assume high prices mean high quality.

A study released Monday in the journal Health Affairs suggests we are smarter than that.

The insurer WellPoint provided members who had scheduled an appointment for an elective magnetic resonance imaging test with a list of other scanners in their area that could do the test at a lower price. The alternative providers had been vetted for quality, and patients were asked if they wanted help rescheduling the test somewhere that delivered “better value.”

Fifteen percent of patients agreed to change their test to a cheaper center. “We shined a light on costs,” said Dr. Sam Nussbaum, WellPoint’s chief medical officer. “We acted as a concierge and engaged consumers giving them information about cost and quality.”

The program resulted in a $220 cost reduction (18.7 percent) per test over the course of two years, said Andrea DeVries, the director of payer and provider research at HealthCore, a subsidiary of WellPoint, which conducted the study. It compared the costs of scanning people in the WellPoint program with those of people in plans that did not offer such services.

Better still, Dr. Nussbaum said, the exercise in price transparency had a ripple effect: Hospitals in areas with the program lowered their prices too, because “they were beginning to lose patient referrals.”

Tests like M.R.I.s show some of the widest price variation in American medicine, studies show, often varying by a factor of 10 even in the same city. Hospital scanners tend to charge the highest prices, a practice that in part reflects higher overhead but also reflects hospitals’ power in a market. Physicians affiliated with a hospital often refer to the hospital’s radiology department. In some cases, this is because hospitals require them to do so; in others, it is a matter of familiarity and convenience because the results will turn up more rapidly on their office computers.

After two years of the price transparency program, price variation between hospital and nonhospital facilities was reduced by 30 percent in areas where it was implemented, the Health Affairs study found.

The study also suggests that patients are more vigilant custodians of cost than their doctors. Several years ago, WellPoint gave physicians similar price information on scanning providers in their practice area but did not see a change in referral patterns, Dr. Nussbaum said.

The newer study did not delve into patient motivations. Some patients probably chose the cheaper scans because their insurance plan required a 20 percent copay, so it made a huge different if the scan was billed at $300 or $3,000. But others had probably already met their annual out-of-pocket maximum, so choosing the cheaper site was merely a matter of principle, Dr. DeVries said.

From experience, I can say that shopping for scans is not always easy. When I learned the price a hospital was charging for an M.R.I. a neurologist had recommended for one of my children, I scheduled the test at an outside center that was two-thirds cheaper. The upside was much better value for my health care dollar. The downside: The hospital and the radiology center would not communicate with each other, though they could have easily done so electronically. I had to go to the center and pick up a disk with the scan and carry it to the hospital neurologist.

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