Healthcare price transparency can be dangerous in the absence of quality information

Almost a year ago, Aetna's Dr Liss published an article in Physician News Digest discussing trends in healthcare price transparency. "The federal government’s promotion of high deductible health plans is a catalyst for price transparency initiatives, which the Department of Health and Human Services (HHS) says can lower costs and increase quality, while private health insurers say they are offering price transparency systems to meet marketplace demand – because their members want more price and quality information about medical services rendered by hospitals and physicians". As much as above statement is absolutely correct, consumers/patients are yet to get access to trusthworthy, reliable, easy-to-get-and-understand information about their cost of healthcare.

As much as I would like to believe that hospitals and physicians are disclosing price information to their patients, as Dr Liss implies in his article, the only player who is truly trying to promote this trends is the government. Indeed, one can find information on top 30 or so elective procedures on the CMS website (Center for Medicare and Medicaid Service). Furthermore, if you are really in for a deep dive into data, you can go to the National Center for Health Statistics website, and find the government rate for almost any CPT code you enter. An exercise worth the effort? Sure, if you know upfront what CPT code will your physician use at the time of your visit. On the brighter side, there are a few instances where hospitals are supporting consumerism - one of the most recent examples is Premera's Blue Cross new online tool offered to hospitals in Washington (see a story on out-of-pocket estimator that took 18 months to develop). A novel feature of this service is that a patient will know the answer to a simple question "How much will I owe prior to my visit?"

But does it all end with price? Is the information on price alone sufficient to make informed decisions that are based on perceived value (in other words, would patients incorrectly assume that higher priced services are also better in terms of quality and put too much emphasis on price)? In a perfect world, consumers will gravitate towards cost effective options, unless they see benefits that may warrant paying a higher price. This is a reason why having an independent credible information on both price and quality is critical for patients/consumers to make value based healthcare choices, and drive consumer-driven behavior in the industry for everyone involved - employers, payors, physicians, and patients.

Doctors ratings - science fiction or reality?

How many times did you buy something without doing prior research? And I don't mean only big items like buying a car, but also smaller stuff like a camera, book, even a gym bag. I remember spending 30 minutes reading dozens of different reviews about gym bags before I finally bought one. And this was only a $30 investment...

When it comes to doctors, finding anything remotely useful is next to impossible. Have you ever tried browsing your local neighborhood looking for a physician (never mind a specialist, but a simple primacy care doc, for you or your family)? This is what I found on Yelp.com (which has the highest collection of patient-based free physician reviews), "Dr. John Smith is AWESOME! I highly recommend him - a great Internist and a very cool guy" - and you see a 5-star rating. If you are lucky, you might see another 2-3 similar reviews. One might conclude Dr Smith is indeed "awesome" and call up to schedule an appointment. I don't know about you, but this enthusiastic response is simply not enough to warm me up and convince me that Dr Smith has what I am looking from my physician. Will he be able to help me, does he know enough, how easy is it to get an appointment with him, will I like him, can I trust him? These are only a few questions I would like to know before committing to a new doctor-patient relationship.

I also wonder how many of us stay with our providers simply because we "don't know anyone better" and the hassle to change and switch is simply too high without knowing how much is it worth in the end.

And finally, what is it that we look in people who provide care, and who we trust with our health and the health of our children?

Thanks for reading.

Healthcare cost for dummies - what is it and who should care about it?

It took me a while to understand the flow of $1.9 trillion (a currently estimated annual US healthcare spend). Here is how it usually goes (for a regularly employed person): your employer is contracting a service with a health insurance company (also called a payor), a service for which it pays a premium. You (an employee) might be asked to carry part of that premium, but bulk of it is employer's responsibility. Depending on the size of an employer, they are able to negotiate well because the risk is spread over a large population of people (a huge advantage over individual health plans which are by design more expensive as they carry higher risk for the payor). Depending on the type of plan, employees are free to see any physician they want (most common in PPO plans), or are restricted to "preferred in-network" providers (most common in HMO plans).

On the other hand, providers (physicians) are contracting reimbursement rates with various health insurance companies (or simply put they negotiate a "price list" or how much they can charge for each medical service they provide). These services are coded in the CPT (Current Procedural Terminology) system - a list of numerical characters each representing a unique service provided (e.g. a code 99203 referrs to a "new patient, level 3 exam: while code 99213 refers to "existing patient level 3 exam"). Again, translating to plain English implies that depending on the type of provider, a simple visit to your primary care physician (PCP) can cost you (and your insurance company between $80 and $160). This of course doesn't include any lab work or anything else (all procedures are separately coded). I recently learned that a puncture performed when the blood is drawn is charged $20.


If you are tracking so far, the flow of money goes as follows: employer pays premiums to payors, payors pay service fee to providers (physicians), and patients pay providers (co-pays) and employers (premiums). This doesn't include pharmaceutical companies (drug sales). The flow of service is as follows: physicians provide medical service to patient/employee, and payors provide billing service to patient/employee (processing claims, sending explanation of benefits forms post each visit etc).

Most current plans include an annual deductible (like a car insurance, the amount patient is responsible to cover, and is usually $100 per person each year), and a co-insurance or co-pay (again, depending on the plan, patient is responsible to cover part of the cost, usually between 5 and 25% of physician "list price"). So a visit like the one mentioned above could cost you between $4 and $40. And that's just a simple visit. Most of us don't really care about the cost of healthcare that someone else ultimately pays for (but wouldn't it be nice to know if a visit will cost you $4 or $40). And wouldn't it be nice to know that in advance?

As much as we in general don't worry about the cost and ineligible and difficult to understand benefits statements that accompany each physician visit, recent analysis from Hewitt Associates, a global human resources services company, (Business wire, June 28, 2007) indicates that "initial HMO premium rates(1) will increase by approximately 14.1 percent in 2008 -- the highest rate increase in 4 years"

The text further explains: "Employers are considering a number of strategies to help mitigate the impact of high HMO premium increases on their health care budgets this year, including
Shifting Costs to Employees: Historically, employers have relied heavily on cost shifting -- either through plan design or payroll contributions -- to help manage health care rate increases. In recent years, an increasing number of employers have implemented specific plan designs that encourage employees who are over-utilizing or abusing benefits to change their behaviors by increasing costs for those particular services. For example, companies have separated out co-pays between primary care providers and specialists (typically, specialist copay is $15 to $20 higher) to discourage inappropriate use of specialists.

Moving to Self-Insured Plans: As fully insured rates increase in excess of overall medical cost increases, an increasing number of employers plan to further eliminate local HMO offerings and consolidate those plan participants under a self-insured arrangement, in which employers assume the full financial risk for medical claim costs, paying a health plan an administrative fee for services such as claims processing and provider network management. Self-insurance reduces employer administrative costs and allows companies to pay claims based on their own experience rather than health plan book-of-business experience and trend rates. In addition, it enables employers to offer more consistent plan designs and health care programs across their entire employee population, reducing administrative costs and simplifying communication messages to employees during annual enrollment."

Confused enough? Wait until the next discussion on price/cost transparency (or lack thereof).

Thanks for reading,

What to expect from your doctor

How did you find your physician after you graduated from school, moved into another city, or simply needed care you haven't sought before? Called a family member, trusted friend, or browsed the internet hoping you will find something to help you make the decision?
I was lucky enough to have a physician friend who gave me referrals to the care I needed. But even then, getting an appointment within days (even weeks) of the first call was close to impossible, and the nurses/receptionists always tried to offer someone else who "could take you in earlier". That usually felt an awkward feeling, like I've been pushed onto someone who has capacity (does that mean they are no good?), or someone who has just started to practice (why do they have to practice on me??) The overall process is a "black box", and patients are simply spectators who are left to believe they are getting the best that they can.

Even a healthy 30-year old like myself needs a few doctor's visits annualy, just to keep up with the checkups. How many of us are truly satisfied with the quality of care that we receive as patients? As I reflect on the past 2-3 years of my experience with the primary healthcare providers, I THINK I can say I am resonably healthy. I haven't been told that it wasn't (but noone yet explained to me what are the things I should proactively be thinking about/doing). Most of my visits to physicians were underwhelming experiences where I wasn't able to get answers to the questions I was asking - let me pause here and admit that I am also a scientist who knows a little about medicine, so perhaps my bar is higher. Nevertheless, how much time during a visit is dedicated to patient's questions? If you think about it, between filling insurance forms, waiting for the nurse who takes blood pressure (and asks medical history questions which are then revisited with the physician anyway), how much time do we really get with our healthcare provider? And during that time, how often does the doctor sit with you and talk about your condition (whatever it may be) vs typing on a computer, filling medical charts, or simply talking about something you don't really care about?

I have to admit that I met a few doctors who impressed me with their command of the subject, knowledge, and willingness to explain and listen. Wouldn't it be nice to know which ones are like that from that list you get from your Mom/uncle/friend....?