Sunday, August 4, 2019

Transparency in Health Care Costs - New White House Proposal


Opaque:  adjective, not able to be seen through; not transparent

Medical pricing is beyond opaque.  It’s a riddle wrapped in a mystery inside an enigma.  Many readers will recognize that this clever phrase is not my own.

Throughout my career, I have been unable to provide an accurate answer to the perennial inquiry, how much does a colonoscopy cost?  Patients, of course, find this to be baffling.  This ignorance is certainly not restricted to my specialty of gastroenterology.  Does it make sense, for example, that the same medication may have wildly different pricing at different pharmacies or in different cities?   In contrast, we would expect to find a similar price for a gallon of milk among supermarkets. 

My strong suspicion is that seemingly irrational, inflated and complex medical pricing is all by design to serve those on the billing end – hospitals, pharmaceutical companies and pharmacy benefit managers.  Before you accuse me leaving physicians off of this list of Greed & Shame, may I remind you that we physicians do not set our own prices; they are all dictated by the payors.  When we send you a crazy bill, it is all according to your insurance company requirements and policies - not us.  Same for the copays patients fork over when they come to see us.  While we are the target of griping and sniping, these cash extractions are mandated by your insurance companies.

The medical arena is unique.  It does not allow consumers to utilize price comparison as they do when purchasing appliances, vacations, private schools,  apartment rentals or an apple.  It is unlikely that one would sign an apartment lease without being told what the monthly rent charge would be.   But, we will proceed to a CAT scan examination without knowing the cost or if a nearby competitor can provide the same service for less.


Fairly Easy to Determine the Cost Before the First Bite


Recently the White House launched an initiative to require physicians and hospitals and insurance companies to inform patients of the costs of medical care in advance.   Of course, this concept should be welcomed and applauded.  Push back against it was locked and loaded before the new policy was announced.   Who’s against price transparency?  Hospitals and insurance companies and drug companies are united in their opposition.  They claim, among other things, that they would be forced to surrender proprietary information,  that medical prices would actually increase and that the public would not be well served.   I am not an economist, but I surmise that exposing the buried secrets of medical pricing will empower the rest of us in making better choices.  Real and open competition will bring prices down, as is true in all other spheres of commerce.

Some economists are warning that this issue is extremely complex and that the outcomes may be paradoxical.  I'm willing to take a chance.

My goal before I retire years from now is to be able to tell a patient how much their colonoscopy will cost.  

Transparent: adjective, allowing light to pass through so that objects behind can be distinctly seen.

2 comments:

DR C said...

Dr Kirsch,
Thank you for your article. I would note that in Psychiatry we more often than not (in Nashville) set our own pricing. There is a long history of payer under payment in our community (low prices set by insurers which forced cllnicians to do lower quality care - med checks or go out of network and charge for time). Clinicians (often via their CEO or staff) do set their own prices, but often clinicians contract with the insurers for lower rates to get access to the insured patients. I concur with your implication that the rates are ridiculous, in psychiatry sometimes half of what things it costs to do quality care.

There are means for patients to find pricing transparency. I often refer my patients to Healthcare Bluebook, and GoodRX to compare cash prices for procedures, and medications. It is very enlightening for patients to see what things cost.

I believe this transparency in pricing would be a start, but our government has allowed this chaotic system for decades, and insurance companies are crafty in their means to conceal their profits. A good transparency step start would be to require the big companies that manage Medicare dollars-- all these private companies receive taxpayer dollars to distribute for healthcare, but most make huge profits from the system. Asking what each of the companies (Palmetto, Cigna, Nordian, etc) upper level of management receive in income and stock options yearly would be a good start? Setting the rates for clinicians clearly and having regular salary increases to established rates is another.

I could go on all day on this issue, but I have to work and make my overhead today.

Michelle Cochran, MD, DFAPA

Sarah Soisson said...


Dr. Kirsch,
Thank you for your article. Price transparency is instrumental to keeping Patients healthy. It allows them to judge affordability and plan for Healthcare expenses. It also enables Legislators to address unwarranted price disparity and can incentivize high-cost providers to lower their prices to align more closely with industry rates. Price transparency is a vital missing factor in our healthcare system. At ClaraPrice, we stand in support of Dr. Kirsch and Physicians everywhere that back lifting the veil on Healthcare pricing.

Sarah Soisson
COO | ClaraPrice
512-413-2512
sarah@claraprice.com

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