The push for more transparent health care costs
Imagine a supermarket with no price tags and a shopping cart full of items you don’t understand and aren’t even sure you need. The clerk adds a few more, rings it up, but instead of handing you the bill says, “I’ll mail it to you in 30 days.”
That’s still the general state of medical care in the United States, according to one insurance provider. It’s a top-down system that often withholds the tools consumers need to make smart decisions before deciding who to see and what health care to buy. Instead, insurers quietly negotiate various rates with different health care providers, with both groups resistant to divulging prices for proprietary reasons and because they aren’t the same for all consumers. “They don’t have just one price,” says Dr. Jeff Rice, founder and CEO of Healthcare Blue Book, one of the first online pricing tools. “They have a whole bunch of different prices.”
For example, Rice says, in Indianapolis a colonoscopy without a biopsy starts at $800 but can climb to $4,000. A pelvic ultrasound ranges from $105 to $704, and knee arthroscopy from $3,000 to more than $17,000. The same discrepancies show up in doctor’s offices and clinics nationwide. Ask providers how much you’ll pay for services, and typically they can’t tell you.
However, industry observers say old mind-sets are rapidly changing as more consumers demand to know this information upfront. Ninety-one percent of Angie’s List members answering a recent online poll say knowing costs before treatment is important. At the same time, 49 percent of members polled don’t think providers are good about communicating costs unless they’re proactive about requesting them.
“Both the insurance company and the provider should be able to get the prices,” Rice says. “Information might not be right at their fingertips and it’s usually a range. [But] if a provider can’t tell you what their price is, then in general, they aren’t going to be the best value.”
Many insurance companies are following Rice’s lead with tools to help consumers find pricing. Employers, too, are demanding help so employees can keep costs down. Consumers can get costs on most procedures, says David Kelleher, director of The Employers’ Forum of Indiana, which addresses challenges like price transparency. “It can be time consuming,” he admits. “We’ll never have a perfect system, but we can aspire to something better than we have today.”
Why pricing matters
You might ask, “Why should I care? I know what it’s going to cost — a $25 copay and even in a worst-case scenario, my annual deductible is less than $1,000 and I pay just 20 percent after that.” But you should care for many reasons, not the least of which is this: Your low copay, low-deductible health plan is a dinosaur, and extinction looms.
The percent of people with so-called “traditional” health plans — defined as having no deductible or one less than $1,000 — declines every year and now stands at 78 percent, according to the nonprofit Employee Benefit Research Institute. Meanwhile, in seven years high-deductible plans have increased from 10 percent to 23 percent of all plans.
As of January, 10.4 percent of Indiana residents have high-deductible plans, up from 5.1 percent in 2008, according to the Denver-based Center for Policy and Research. Experts expect the trend to continue. “It’s a strategy in the employer community,” says Dr. David Lee, Anthem Blue Cross and Blue Shield vice president of provider engagement and contracting in Indianapolis.
Conscious health care decisions not only have an impact on a company’s bottom line, but they affect family budgets, especially as spending for health care services continues to rise. From 1996 to 2009, Lee says, the average out-of-pocket cost paid by American consumers for medical expenses rose 73 percent to $795. Medical debt also caused 62 percent of all bankruptcies in 2007, a 50 percent increase from 2001, according to a study by researchers at Harvard University and The Ohio State University. Two-thirds of filers were insured when they first became ill or injured, but large medical bills combined with a disabling illness often triggered the loss of jobs, insurance and ultimately, bankruptcy. No one in Indiana tracks why consumers file, says Indianapolis attorney Mark S. Zuckerberg, although he says medical bills are a top reason.
Researchers anticipate the percentage of bankruptcies will grow because Americans are shouldering more of the cost of their care, not because they’re uninsured but because they’re underinsured.
Feeling the pinch
Even those who aren’t facing bankruptcy feel the pinch. For years, Angie’s List member Gary Dolick went to the doctor without considering costs. The Meridian-Kessler resident’s insurance plan through his employer covered all but a small copay. In 2003, at age 50, he retired and purchased private insurance, qualifying for a high-risk, high-deductible plan that costs about $10,000 a year with a $2,500 deductible. “I’m forced to be a bit more frugal,” he says.
In July 2011, Dolick says his doctor — highly rated Dr. Paul Kwo, medical director of liver transplantation at IU Health University Hospital — ordered an ultrasound to check for liver damage caused by the hepatitis C virus. IU Health quoted $863 for a scan, Dolick says. “That seemed excessive, so I looked online and saw [it] could vary in price,” he says, adding the highly rated Center for Diagnostic Imaging in Carmel quoted about $95, the same allowable amount from his insurer Anthem. His final out of pocket cost: $93.97.
“Going to another facility didn’t come up until I asked if it was okay,” says Dolick, who gave Kwo an A based on the quality care he received. “Kwo was not opposed to [me going to another facility] as long as he could get test results back in a timely manner and could read the images.”
The number of patients seeking costs like Dolick is growing, says Laura Stark, vice president of operations in Indiana and Ohio for the Center for Diagnostic Imaging. “If a patient has exactly the type of study they need and can provide insurance information, we can give them a good estimate,” Stark says. “It shouldn’t be a mystery.”
Lauren Cislak, IU Health spokeswoman wouldn’t discuss Dolick’s case, but says higher prices at hospitals cover costs to treat all patients, including the 60,000 uninsured patients that IU Health covered in 2011: “Our hospitals are uniquely designed to take care of complex medical cases which require us to be equipped with the sophisticated equipment and skilled physicians.”
Patients with billing questions before or after procedures can call or use the IU Health website to obtain price estimates, Cislak says.
Caring about costs
Dr. Cathy Yoder says she’s always been thrifty, and now the highly rated family doctor of the Southside Family Medical Group in Indianapolis helps patients be the same. “I know how important the dollar is,” Yoder says. “I talk to patients all the time about health care costs.” People can save most on tests and labs, she adds.
As a private practice, she says, they work with all hospitals, specialists and imaging centers to get patients good care at reasonable rates. The staff meets with lab and pharmaceutical reps three times a week, which gives them intimate knowledge of prices. “Over time, I’ve learned who will work with patients,” Yoder says. Like an increasing number of providers, she offers a discount of 20 to 30 percent on office visits and 40 to 50 percent on lab work to patients who pay up front. But if patients do this, rather than submit a health insurance claim, she adds, it won’t count toward their annual deductible.
After switching to a high-deductible plan, Andrea Hash of Martinsville now sees Yoder and shops around for care whenever possible. The Angie’s List member says she was shocked in December 2010 when she had to pay $1,006 out of pocket for an MRI at highly rated Johnson Memorial Hospital in Franklin. “I went wherever the doctor directed me to go,” Hash says. “It’s my fault for not realizing places had different price lists that aren’t really posted.”
Bill Oakes, chief development officer for Johnson Memorial Hospital, wouldn’t comment about Hash’s case but says in addition to accepting all patients, hospitals stay open round the clock and pay staff overtime or late shift premiums, which costs more. “The pricing of health care is very, very complex, and multilayered,” he says. “It’s highly individualized based on patients’ needs, coverage and ability to pay.” Johnson Memorial doesn’t track the number of patients who ask about costs upfront, he says, adding it’s a small but growing percentage.
Although patients should shop around, they don’t usually have that luxury in an emergency. In April 2011, Janice Everton’s grandson Christopher Wickham, now 14, landed in highly rated Riley Hospital for Children at IU Health for three days with a large blood clot behind his ear. Then piles of bills and statements totaling $37,000 arrived. “I freaked out, and I’ve been a health insurance HR person,” says his mother Paula Wickham of McCordsville, who has a $5,000 deductible. “I couldn’t believe even with my background how overwhelmed I was. There were dozens of doctors in and out.”
Everton, who worked in health care and human resources, has seen bills from the provider’s and patient’s perspective. She organized her grandson’s bills and found charges for lab tests that weren’t done. But, she says, Anthem didn’t alter the charges because they’d already paid the hospital and physicians. “I dropped it,” Everton says. “It was a $37,000 claim, and we’re talking $400 [in errors]. I questioned it because the explanation of benefits lumped all the labs together. I wanted them to break them down.”
Anthem spokesman Tony Felts says the mistake sounds like a billing error, not an insurance error. If this occurs, he adds, patients should contact the provider’s billing department, point out the error and have the claim resubmitted. IU Health didn’t respond to our requests for comment regarding Wickham’s case.
Patient advocate Chris Kraft, owner of MedReview Solutions in Zionsville, stresses the importance of looking at bills. “I find errors all the time,” she says, adding it’s also important to understand your health insurance policy to avoid surprises.
Angie’s List members Kristina and Sean McMillian of Franklin submitted an F review on poorly rated Franklin Chiropractic Clinic after receiving surprise bills. Before treatment in 2011, they say they asked chiropractor Eric Steffey if he took Aetna insurance. He said he did, but four months later they received a $700 bill. “He’s not an Aetna preferred provider,” she says. “We should’ve checked.” When the McMillians complained, they say Steffey reduced their bill to $410. “He did a wonderful job, and he’s a nice guy,” she says. “But he should’ve said, ‘I’m not a preferred provider.’” Steffey didn’t return calls seeking comment.
In addition to checking with providers, ask your insurance company if the provider’s in-network, says Scot Roskelley, Aetna’s Midwest spokesman. “There are times when a provider will say ‘We take Aetna,’ but what they really mean is they can bill Aetna, but they’ll get reimbursed at an out-of-network rate.” Before an emergency, he also recommends checking what hospitals in your area are in-network.
However, advocates warn patients could be seeing an out-of-network doctor, even at an in-network facility. Radiologists, anesthesiologists, pathologists and ER doctors are notorious for this, Kraft says. “Admitting clerks typically don’t know who’s in-network,” she says.
Each Indianapolis hospital system staffs its ER differently. IU Health hires their own employees, while others including Community Health Network and Johnson Memorial Hospital contract physicians’ groups, says Dr. Chris Burke of highly rated Medical Associates, an Eastside physicians’ group that staffs ERs at Community North and East and the Indiana Heart Hospital. Burke works with 10 to 15 patients a week requesting bill reductions, he says, oftentimes because they were charged out-of-network fees. “Most groups are willing to work with patients when they get the bill,” he says.
Employers are perhaps the biggest driving force behind transparency, and insurers are taking notice. According to a 2012 survey by consulting firm Towers Watson and the National Business Group on Health, 15 percent of employers require their health plans to include price information. Another 22 percent plan to do so next year. “All of the major insurers ... have price transparency tools that will be available to their Indianapolis clients and insured during the coming year,” says David Kelleher, of The Employers’ Forum of Indiana. “In addition, the availability of price information will affect how providers price their services. The tools will be improved over time as consumers use them.”
United Healthcare members can search procedures and services online through a free cost estimator tool, says Dan Krajnovich, UHC Indiana and Kentucky CEO. Patients can compare costs, find providers and quality care estimates that are calculated through previous claims analysis. Anthem also offers a similar tool for its members.
This year, Jeff Rice celebrates the fifth anniversary of Healthcare Blue Book, the web-based tool helping consumers find fair local prices for health care. He founded the company after being charged $200 for a simple cholesterol test that should have cost about $20. “As a physician and managed care executive knowledgeable about the system, I still got completely taken advantage of,” he says. “I thought, ‘If I just told patients what I knew about health care, they could save a lot of money.’” To help patients negotiate costs, Healthcare Blue Book analyzes insurance payments to doctors and considers the average of payments for a procedure the “fair price.”
Rice says that getting costs from a health care provider continues to require persistence, however. Two years ago, his son, Jack, needed foot surgery. He knew the surgeon he wanted to use and called the hospital to get an estimated cost. “Once they figured out what my health insurance was and my network, they said it might be between $15,000 and $25,000,” Rice says. He followed up with the surgeon to see if he could do the surgery at another facility outside the hospital, and the doctor said yes. “I called them, and they named the exact price: $1,550.”