The cost of care

MARY REICHARD, HOST: Coming up next on The World and Everything in It: making healthcare more affordable.

Starting January 1st of this year, hospitals must publish their prices online. This is all part of an effort to encourage competition in healthcare with transparency in pricing. The ultimate aim is to cut costs.

JILL NELSON, HOST: But right now, price lists—also called “charge masters”—aren’t really useful to consumers. That’s because they use medical codes and jargon that the average person won’t understand. Price lists are so detailed, it’s hard to figure out the total cost for even a routine operation.

REICHARD: Even so, patient advocacy groups say the pricing publication requirement is a good first step toward affordable healthcare. WORLD Radio’s Leigh Jones has our report.

LEIGH JONES, REPORTER: When Sandra Bragg’s doctor ordered an ultrasound to investigate some unexplained stomach pain she was having, she immediately called the local hospital to make an appointment. She wasn’t too worried about the cost. She’d had ultrasounds during her pregnancy and they were only a few hundred dollars.

BRAGG: And then they called me back with the estimate of $1,800, for an ultrasound of my stomach. And I’m like that can’t be right. Like are you looking at the right code?

Bragg hung up the phone and immediately called her insurance company, convinced the hospital had it wrong.

BRAGG: And I start talking to my insurance and they’re like, no, that’s right.

Faced with a huge bill she couldn’t afford, Bragg considered skipping the test. But the insurance company representative had another suggestion.

BRAGG: She said if you can avoid going to the hospital to get a procedure done, avoid it. It will always cost more at the hospital. She’s like, unless it’s an emergency or something, only the hospital could do, find a standalone facility.

So that’s what Bragg did. The bill? $149.

Bill Kampine hears stories like that all the time. He’s the co-founder of Healthcare Blue Book, a company that researches and publishes medical pricing information.

KAMPINE: And so for consumers, whether you have insurance or you don’t have insurance, prices vary, right? They vary by two to 10 times depending upon what building you walk into for your care.

In principle, Kampine supports the new price posting requirement.

KAMPINE: If you do not have insurance, there is some value, I think, to this information because if you don’t ask about the price and you don’t negotiate the price upfront, then you are likely to receive a bill from a hospital that is based on their bill charges and that can be an astronomically high price. And so there’s some value so that consumers who don’t have insurance can compare the price at different hospitals.

But Kampine says consumers with insurance will find the newly posted price lists much less useful, even if a third-party provider develops a way to make them easier to read.

KAMPINE: As a consumer, the actual allowed amount that you’re going to pay in your network in many times bears no relationship to the published billed charges. Right? So the billed charges could be different at each hospital, and the allowed amount for the negotiated discount could be very different at each of those hospitals depending upon your network. So it really doesn’t give you a lot of valuable information.

Dr. David Stevens heads the Christian Medical and Dental Association. He says that while pricing transparency is good, getting healthcare and buying a used car should not require the same approach.

STEVENS: And that’s what many people are advocating. Well, take this data and go bargain with the hospital. That only works if you have an elective procedure and time to do that. But most people end up in the hospital or the emergency room because it’s an urgent or emergency issue. And so they have no opportunity to go shopping.

But bargaining is at the heart of the American healthcare system, even for providers like hospitals.

STEVENS: The reason the chargemaster rates are so high is because they know they’re going to be required to discount. And so they have a lot of their money coming from insurance companies or the government. In fact, the vast majority of it is. So they jack those rates up, um, so that they can get what they think is adequate compensation for what they’re doing after they’re negotiated down.

That leaves the people without insurance stuck paying artificially high list prices, unless they do their own bargaining.

Stevens says if the government really wanted to force a change in the industry, it would require insurance companies to pay the chargemaster rates.

STEVENS: And they would fall immediately because they wouldn’t do it.

Despite its limitations, Stevens calls the price list posting requirement a good first step.

STEVENS: I’m not for government control, but I think we’re definitely going to need more government scrutiny and regulation because the trajectory we are on with cost is unsustainable in this country.

Bill Kampine with Healthcare Blue Book believes reducing healthcare costs could be the one thing to unite the deeply divided Congress.

KAMPINE: Because it doesn’t matter what side of the aisle you’re on, everyone can get behind consumers getting better value and not getting ripped off. So I would anticipate a lot of interest in this area.

In the meantime, Kampine supports anything that increases consumer awareness.

KAMPINE: If the end result of this regulation is that it raises attention to how astronomically high these charges are, I think that’s a good thing for public awareness and for consumers.

Reporting for WORLD Radio, I’m Leigh Jones.

(Photo/Creative Commons)

WORLD Radio transcripts are created on a rush deadline. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of WORLD Radio programming is the audio record.