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Price Transparency in Health Care: Fad or Future?

HealthDay News -- Advocates of "price transparency" want consumers to be able to shop for physician services like any other good or service.

Determining the prices of physician services and procedures, however, isn't as cut-and-dried as surfing Amazon for the best deal on an MP3 player.

"The state of price transparency tools available to consumers about physician services is still very much in its infancy," said Ha Tu, a senior health researcher at the Center for Studying Health System Change in Washington, D.C.

What price information is out there comes mostly from large health plans, based on their own data, and is not usually physician-specific.

Aetna Inc., the first large health insurer to begin disclosing doctor fees, makes doctor-specific pricing available to members for as many as 30 common services and procedures in more than four dozen markets.

There are isolated examples of doctors and medical groups that have posted prices on their Web sites. And a couple of Web-based start-ups are seeking to aggregate prices of routine healthcare costs.

Overall, much of the available data lacks precision. For example, a health plan might publish the average cost for an office visit in a geographic area or make a physician fee schedule available.

Fee schedules aren't very user-friendly, though, because they contain "thousands of services and consumers aren't likely to know which ones they'll need," said Tu. Even if prices were organized as bundled services or episodes of care, the information could be misleading if it fails to capture a physician's patient mix or practice style, she said.

"All of these are very thorny issues," Tu added. "It, in part, explains why there is not that much useful information out there on physician prices."

The push for price disclosure responds in part to the growth of consumer-directed health plans, designed to incent patients to make cost-effective healthcare purchases. But these plans account for less than 10 percent of all employer-based insurance coverage. Most Americans are in plans with co-payments or coinsurance and deductibles that provide little motivation for patients to shop around for doctors if they stay in-network.

The medical community has mixed feelings on the subject. Nearly three quarters of members surveyed by the American College of Physician Executives (not affiliated with the American College of Physicians) agreed that patients should be able to price shop for treatments and procedures as they do for other goods and services. But close to 49 percent said they only provide prices if patients inquire, and only 9 percent provide a list of prices to patients.

President-elect Barack Obama may energize efforts to boost healthcare transparency as part of the massive effort to reform healthcare. During his campaign, he proposed requiring providers and health plans to provide information on quality and price.

Medicare already discloses what it pays hospitals for certain surgical and non-surgical procedures.

So what's in it for doctors? In a word, business, said Jaz-Michael King, a senior director at IPRO, a Lake Success, N.Y.-based quality improvement organization.

"If you're part of an industry that's becoming more transparent, whether you like it or not, the train has left the station; to do business you will have to adapt to your marketplace," he said.

January 6, 2009
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