You probably browse around to compare prices before paying for a service, like a house repair or a plane ticket, for example. But because of the way our healthcare system is set up, you can't do that for medical services. Until the bill comes, you frequently don't even know how much your health insurance will cover or how much is your obligation.
The new federal Transparency in Coverage rule, which goes into effect in January 2021, aims to address this issue. The Centers for Medicare and Medicaid Services issued the rule, which requires hospitals to: (1) publish the prices for every good and service they provide; and (2) create a user-friendly interface so that patients can estimate their expected costs for common tests and procedures.
Clear and varying prices
Clarifying the true costs related to diagnosis and treatment makes sense because cardiovascular disease is the most costly chronic disease for the American health care system. To achieve that goal, researchers at the Harvard-affiliated Beth Israel Deaconess Medical Center's Richard A. and Susan F. Smith Center for Outcomes Research made use of information made accessible by the new transparency rule. They were able to compare costs for six common heart tests and operations by browsing the websites of 20 of the best hospitals in the United States. These costs are the outcome of discussions between an insurance provider and a hospital or healthcare organization. Wide price disparities were uncovered by their research, which was published in the September 2022 issue of JAMA Internal Medicine.
According to lead author Dr. Rishi Wadhera, "The variation in prices for identical cardiovascular tests and procedures across different hospitals was, quite frankly, stunning." There was a 10-fold variation in the median cost of an echocardiogram (a cardiac ultrasound) between institutions. Prices varied even further for procedures like pacemaker implantation and percutaneous coronary interventions, which include minimally invasive techniques like stent placement to unblock blocked heart arteries.
Depending on which commercial insurance company a patient had, there were significant price variations within the same hospital. According to Dr. Wadhera, the cost of a stress test varies fivefold in one facility.
Stakeholder influence, not healthcare quality
Dr. Wadhera notes that given that the team looked at top-rated hospitals based on their yearly ranking in U.S. News & World Report, it is difficult to argue that these pricing disparities represent differences in the quality of care.
Instead, it's more likely that the costs reflect which stakeholder—the hospital or the insurance company—has more clout in the boardroom. Location, size, and popularity are just a few variables that affect both entities' power dynamics, which in turn affect the market dynamics that determine prices.
According to Dr. Andrew Oseran, the principal author of the study, one justification for the transparency requirement was to offer insurance companies more negotiation power to reduce the costs asked by hospitals. Another was to encourage competition and give consumers more control. They found that 20% of the hospitals they surveyed didn't publish any price information, and retrieving the cost data is currently difficult. For those who did, it was quite difficult to browse and understand the material.
The costs that hospitals and insurance companies agree upon are never disclosed to patients. Naturally, the specifics of your insurance, including co-pays and deductibles, have a significant impact on what you actually pay. However, Dr. Wadhera notes that when insurance companies must pay hospitals hefty fees, the expenses "likely trickle down to patients in some shape or form."
Considering the future
"The ultimate goal of our work is to better understand the extent to which high prices are driving the more than $350 billion spent on cardiovascular disease every year and find ways to reduce it," claims Dr. Oseran. The quality of the data now restricts the kinds of queries we can respond to, he claims, but researchers and decision-makers are focusing more on this issue. "We're optimistic that in the future, high-quality price data will be readily available, enabling us to address some of these crucial policy issues," the statement continued.
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