Pricing Transparency in Healthcare

“Patrick Fontana twisted his left knee last spring while hitting a drive down the fairway on a golf course in Columbus, Ohio. But what really pained him was the $900 bill for diagnostic imaging ordered by his doctor.

Mr. Fontana, a 42-year-old salesman, has a high-deductible health plan coupled to a health savings account. Since he was nowhere near meeting his deductible, he was on the hook for the entire bill.

So he did something that insurance companies routinely do: he forwarded the bill to a claims adjuster, in this case My Medical Control, a Web-based company that reviews doctor and hospital bills for consumers.

After concluding that Mr. Fontana was not getting the best possible price, the company’s representatives called the imaging facility and demanded a lower one, promptly saving him $200 — minus a 35 percent collection fee.

“I asked before I went in to the clinic how much it would cost, and they just will not tell you,” he said later. “I didn’t know until I got the bill, and at that point I figured I had nothing to lose.”

The savings are possible for one reason: medical care is often priced with the same maddening, arbitrary opacity as airline seats and hotel rooms.

“The average provider — doctors or hospitals — has between 5 and 100 reimbursement rates for the exact same procedure,” said Timothy Cahill, president of My Medical Control (mymedicalcontrol.com). “A hospital chain with multiple locations may have 150 rates for the same procedure. Consumers don’t know this.”...

Over the next decade, health care spending in the United States will double, to more than $4 trillion a year, a fifth of the gross domestic product, according to the federal Centers for Medicare and Medicaid Services. ..

Some critics say these moves toward pricing “transparency” are largely symbolic, an effort to divert attention from the real causes of health care inflation by placing the onus on the consumer with vague talk of “empowerment” and “choice.”

“It’s not consumer behavior that is driving rising medical costs in the U.S.,” said Robert G. Evans, a health care economist at the University of British Columbia. “It is the folks on the supply side, the doctors and hospitals.”...

Extrapolating from federal Medicare data, Vimo (vimo.com), a small Web start-up in Mountain View, Calif., tries to estimate the fees negotiated by insurers for a variety of hospital procedures.

While the price for a cornea transplant at Wills Eye Hospital in Philadelphia is an estimated $15,000, for example, the reimbursement rate negotiated by insurers is likely to be closer to $4,700, according to the Web site..."

- Bargaining Down That CT Scan Is Suddenly Possible

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