Households may find medical bills absorb an increasing share of their income, but as consumers, their ability to shop among hospitals and clinics remains limited.
For more than a year, Massachusetts hospitals and clinics have been required to respond within two business days to consumers' request for a price. That proved to be difficult for some Massachusetts hospitals surveyed by the public policy think tank Pioneer Institute, which surveyed 22 hospitals and 10 clinics on the price of a common and uncomplicated imaging service, an MRI without contrast.
Many hospitals could not quote a price within two days. Clinics fared much better, but both results did not shock national organizations that advocate for more transparency prices.
“Generally, most states have very few laws that truly ensure that citizens have access to price information,” said Suzanne Delbanco, executive director of Catalyst for Payment Reform, which will release its third survey of state price transparency efforts this summer.
Massachusetts' price law, one provision of the state's broader 2012 statute to manage health spending, requires hospitals, clinics and health insurers to quote a price or estimate before patients receive care.
Hospitals struggle to do so for multiple reasons, said Delbanco and other transparency advocates. One procedure can combine bills from multiple sources: hospitals, doctors, laboratories and imaging centers. Among those with insurance, the amount patients will pay depends on rates negotiated by an insurance company and health plan deductibles or other out-of-pocket costs. “Price is a nebulous thing in healthcare,” said Steve Wojcik, vice president of public policy for the National Business Group on Health, which represents large employers.
Hospitals have limited experience in retail, and many don't have dedicated employees or technology to overcome these hurdles.
But that much will change, the advocacy officials said. “It doesn't mean that hospitals aren't going to have to figure it out,” Delbanco said. That's because the market is changing as deductibles and co-insurance increase the amount households can spend on care. The percentage of workers with deductibles of at least $2,000 has grown steadily, yearly figures from the Kaiser Family Foundation show. Co-insurance has also eroded household financial security. Workers with co-insurance on average paid 20% of their bills for physician office visits in 2014, according to Kaiser.
“Consumers more and more are picking up a larger and large piece of their healthcare costs,” said Barbara Anthony, a senior fellow with Pioneer Institute and a former Massachusetts undersecretary of consumer affairs and business regulation. “We can't really get a handle on healthcare costs unless they're known to the public. No market can operate in the dark.”
Anthony called some hospitals in the survey and visited each hospital website for price data. “Frankly, I was a little surprised at the significant challenges you had to overcome in order to get an answer to a simple question,” she said. All but one respondent provided prices, but some needed nearly a week and multiple calls to do so. The survey deliberately selected a simple, common imaging service and asked for each hospital's sticker price. That removed the challenge of tracking down rates negotiated by an insurer. “You can't get simpler than that.”
The results suggest that hospitals do not yet have cultures to support price transparency and lack the processes or protocols to meet consumers' needs, Anthony said. She rejected the argument that quoting healthcare prices is too complicated. “That's an obfuscatory response,” she said. “I, for one, don't buy it. If some hospitals can provide it, so can others.” Results also underscore the variation in price that consumers face. The MRI prices ranged as high as $8,000 in downtown Boston hospitals to $5,000 or $4,300 at clinics.
Massachusetts hospitals “have been working diligently” to increase price transparency, said Karen Granoff, senior director of managed care for the Massachusetts Hospital Association.
But compliance is complicated by overcoming the challenge of identifying what care will be needed, what services will be used and what patients will be required to pay under insurance before a price can be quoted, she said.
Granoff rejected the Pioneer Institute's conclusion that hospitals lacked a culture of price transparency. She said the state's hospitals fully support the transparency law.
UMass Memorial Medical Center in Worcester employs three people who respond to consumer price requests by reviewing historical prices and working with patients' physicians to identify what care must be included in price quotes, said Jim Graves, the medical center's senior director of patient financial services. The prices, however, are UMass Memorial Medical Center's sticker price and patients must follow up with insurers to find out what they will owe.
The hospital, too, has an incentive to quote more accurate prices for patients, he said. The hospital must collect more from patients with high deductibles and increasingly seeks to do so before patients receive care or as they arrive for treatment. That requires the medical center to have an accurate bill upfront and UMass Memorial Medical Center is investing in software that will combine financial information from health plans to give patients accurate prices, he said.
Hospitals have grown more sophisticated and aggressive in efforts to collect medical bills from patients, including strategies to collect ahead of non-urgent and non-emergency treatment or employing credit scores to determine patients' likelihood to pay. Some hospitals reschedule procedures with physicians' consent when patients cannot pay.
Transparency may not always benefit consumers, however. David Newman, executive director of the Health Care Cost Institute, said economists fear prices will rise in markets where competing hospitals can see what rivals charge. That could occur in highly consolidated hospital markets, the Congressional Budget Office wrote in 2008. Research suggest that railroad prices increased after prices in that consolidated industry were made public, the CBO said. Nonetheless, the Health Care Cost Institute launched its own price transparency tool this year using data from Aetna, Assurant Health, Humana and UnitedHeatlhcare. The tool publishes average prices in 300 cities and 41 states.