Price check: Smarter shopping in health care could reduce patient costs

Every day, millions of Americans walk into healthcare facilities unaware of the cost of their visit. Only 20 percent of Americans in a recent survey knew the price of a routine physician visit. Many services have large variations in price across geographic regions, while legal constraints on health insurers leave patients unable to see negotiated rates. These factors make it harder for patients to determine if they are getting the most value for their healthcare dollar.

It is critical to arm consumers with price information, as more Americans enroll in high-deductible health plans (HDHPs). A higher deductible means that consumers need to pay more out of pocket before the insurer begins to pay for services. HDHPs often make consumers deposit money into savings accounts to defray these costs. Consumers in high-deductible plans thus have a strong incentive to spend their money wisely and get the most “bang for their buck” from care.

In a new study, “Association Between Availability of Health Service Prices and Payments for These Services,” Christopher Whaley and colleagues examine the impact access to price data before care has on healthcare spending. The evidence suggests that providing this information lowers payments for care. In particular, knowledge of MRI and CT scan prices display an association with a strong decrease in spending.

The team looks at 18 large, self-insured companies that gave their employees access to a Castlight Health price database as part of their health plans. The database allows employees to search for specific procedures and receive personalized cost breakdowns. The study focuses on three services: laboratory tests, MRI/CT scans, and physician office visits. These services are some of the most commonly sought outpatient services, and they also tend to be non-emergent, meaning that the patient has more freedom to make choices about when and where to have them.

Researchers group patients by whether they used the platform to search for one of the services within two weeks of claim submission. The researchers look at both patient and employer spending in order to capture full healthcare spending. The team also compares spending patterns between “cost sharing” and “no cost sharing” groups, defining “cost sharing” for patients as contributing more than five percent to the total cost of care. This tests if patients responsible for a larger share of their healthcare costs are more likely to shop around for better-value care.

The study finds that those who searched for services before receiving care saw drastic reductions in costs. Users’ claims payments were at least 13 percent lower for laboratory tests and MRI/CT scans, and payments were approximately one percent lower for office visits. These figures correspond to an approximate decrease of $3.50 per laboratory test and $125 per MRI/CT scan.

Patients facing cost sharing saw an even greater reduction in costs when searching the platform. Users facing cost sharing for MRI/CT scans had reduced payments of almost 15 percent, while those who did not have cost sharing saw reductions of just 13.6 percent. While this difference may seem small, it supports the researchers’ hypothesis that cost sharing encourages patients to seek better-value care.

The authors note the need to conduct further research examining patients’ motivation to seek more efficient care. A reduction of $3.50 per laboratory test seems minuscule, but the team suggests that patients who switch could have chronic conditions that need more frequent lab tests. As a result, small savings per test could yield large savings over time. The study provides insights into consumer choice in healthcare. Through access to price information, policymakers and employers can help make consumers savvier healthcare shoppers. Contractual limitations between insurers and providers continue to block full price transparency. Still, this evidence suggests that informed consumers can make better decisions and reduce costs.

Article Source: “Association Between Availability of Health Service Prices and Payments for These Services,” Whaley et al, JAMA, October 2014, 312(16): 1670-1676.

Feature Photo: cc/(Mercy Health)