National

Sep 20, 2009 8:31 AM by Associated Press

Cost of surgery? Secret prices confound patients

Flower shop owner Bob Hausheer would like to know why he can't walk into a doctor's office and see a list of prices.

The 45-year-old suburban Chicago man has a $5,000 deductible, meaning he pays for his health care - including a $7,500 back surgery last year - mostly out of his own wallet.

Until he got the bill, he didn't know what the surgery would cost him.

"At a coffee shop, you can see that your latte is $2.50 and your grande is $3.50," Hausheer said. But not in health care. "This is the only industry that I know of that does things like that," he said. "Prices are not understood upfront."

Until now, the push for price transparency hasn't played much of a role in the national debate over health care reform. However, the Senate Finance Committee version of health care overhaul would require hospitals to list their standard charges for services.

The bill, unveiled Wednesday by committee Chairman Max Baucus, D-Mont., also would require health plans to report how much of each dollar paid in premiums goes to items other than medical care.

President Barack Obama supports creating an insurance exchange where consumers and small business owners could shop for health insurance. But it's unclear whether such an exchange would promote publishing prices for procedures, said Elizabeth McGlynn, associate director of Rand Health, a nonpartisan research program. It's also not clear that provisions in the Baucus bill would offer useful information for consumers, McGlynn said.

"Health reform may offer an opportunity for that agenda to be pushed forward on a broader scale than it would be otherwise," McGlynn said. "One of the biggest challenges people face is getting access to information that makes them smart shoppers."

Finding out how much a medical procedure costs is more difficult and mysterious than buying a new car. With a new car, there's a sticker price. With health care, there's no starting line for haggling.

The dealmaking happens behind closed doors long before patients get involved. Insurance companies make agreements with hospitals and doctors about what they will pay for knee surgeries, tonsillectomies and hernia repairs.

For the uninsured, the hospital and doctors charge more - sometimes much more - than what they charge insurance companies. Medicare, the government plan for people 65 and older, sets its own rates, generally lower than what commercial insurance is able to negotiate.

"The pricing model is ridiculous," said Brad Myers, who helped found Pensacola, Fla.-based NewChoiceHealth Inc., an online tool for consumers who want to compare prices in health care. The site is based on estimates derived from Medicare data.

In parts of the country, some commercial insurers and nonprofit groups do post average costs for certain common treatments online. Two states - Maine and New Hampshire - also have online cost comparison tools that are even more accurate because they're based on insurance claims paid for procedures on patients in those states. Consumers can use prices posted on the sites to shop around or to strike better deals.

A few clicks on Maine's site finds that one hospital charges the uninsured $1,326 for a colonoscopy. People with commercial insurance pay the same hospital from $800 to $950 for the same procedure, depending on their insurance company. And Medicare pays the same hospital $793.

There are vast regional differences too. One insurance company is paying providers in Maine from $559 to $4,526 for a colonoscopy.

"The consumer might look at this and say, 'Wait a second! We're getting ripped off!'" said Al Prysunka, the Maine government director of the program.

More states are following Maine and New Hampshire, Prysunka said, and there's an effort to encourage uniformity in the new online tools to make comparisons between states possible.

"This is information that ought to be available on a more widespread basis," said Anne Elixhauser, a senior research scientist at the Agency for Healthcare Research and Quality, a federal agency supporting research on health care including price transparency.

Increasingly, consumers have an incentive to shop around because of high deductibles that require them to open their own wallets before insurance kicks in. A growing number of employers are shifting more costs to workers through these high deductible plans.

This year, 22 percent of all covered employees had annual deductibles of at least $1,000, according to a report released Tuesday by the Kaiser Family Foundation and the Health Research and Educational Trust, a nonprofit research group affiliated with the American Hospital Association. That was an increase from 18 percent last year and 10 percent in 2006. Those working for a small business are likely to have a high deductible.

"People who have high deductible plans are learning it's very difficult to get this information before they show up for the procedure," said Patrick Miller of the University of New Hampshire.

If health care were a retail store, there would be no price tags, Miller said, and you wouldn't find out how much you paid until your credit card statement arrived.

"We say we have a free market. But we really don't if you don't know what the price is," Miller said.

Don't expect lifting the veil on prices to magically restrain health care costs, said Ha Tu, a senior health researcher for the Center for Studying Health System Change in Washington.

If a hospital system is powerful in a market, just making prices public doesn't give insurance companies enough leverage to work out better deals, Tu said.

And patients may not have much choice in the network of providers approved by their insurance companies, Tu said. Patients dislike asking doctors about cheaper prices and, without good ways to compare quality, patients can't know whether paying more is worth it or whether paying less is worth the risk, Tu said.

Besides, people who need health care aren't in any condition to haggle.

"Someone who is about to undergo surgery is not going to try to bargain with the anesthesiologist," Tu said.

 

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