The Price is Right

Shilpa Iyer in the Health Care Blog has a post on an interesting idea to try and teach Resident Physicians the cost of the care their patients are receiving. (the post was originally in a blog called Cost of Care).

With further discussion we realized that none of us knew the hospital charge, or the cost to our patients for routine workups we routinely order in our gynecology clinic. We really had no idea.

After asking around, I realized that I was not alone in my lack of knowledge, or the idea to play The Price is Right with hospital charges. A couple of years prior the Massachusetts General Hospital Internal Medicine residents had played a similar game with the goal to create awareness of the costs associated with routine workups.

The moved to create game that would meaningfully teach Residents about the cost of services. The most interesting part of the post for me is how hard it was to find out how much things cost (even leaving aside the difference between charge, payment, cost).

I started with our gynecology clinic practice manager (after she overheard me discussing where to find these numbers). She had some information on the visits to our gynecology clinic and hospital charges for the technical end for procedures. But, I soon realized that no one really knows how the hospital charge value is arrived upon, or if and how it changes year to year. And while she could tell me the charge for a RN intramuscular injection fee, she told me to contact the pharmacy for the drug charge. After asking around, I resorted to calling the individual labs/departments to find the appropriate costs. People were often willing to tell me as few people even ask. I called the pharmacy, hematology lab, microbiology lab, emergency room billing, hospital billing, the nurse practice manager for the family planning clinic who coordinates with the nurse in charge on labor and delivery, and a separate operating room billing manager. Because OR costs are determined in increments of 15 min, they are provider and case specific.

Interesting story. It would be useful if the cost of care was more transparent to all involved. Determining how to use information about cost and effectiveness is trickier; Aaron was writing about this yesterday with respect to new guidance from the American College of Physicians. Paul Kelleher weighed in as well.

You can see from comments to Aaron’s post, that there are many strong feelings about the role of doctors in using cost information to guide treatment.

DT

About Don Taylor
Professor of Public Policy at Duke University (with appointments in Business, Nursing, Community and Family Medicine, and the Duke Clinical Research Institute). I am one of the founding faculty of the Margolis Center for Health Policy, and currently serve as Chair of Duke's University Priorities Committee (UPC). My research focuses on improving care for persons who are dying, and I am co-PI of a CMMI award in Community Based Palliative Care. I teach both undergrads and grad students at Duke. On twitter @donaldhtaylorjr

5 Responses to The Price is Right

  1. Don, I’m very glad you wrote about this. When I read about “The Price is Right” yesterday, I was wondering about this: ” He directed me to use hospital charges which are standardized across patients and not specific to the insurance company or patient.”

    I’ve learned from Uwe Reinhardt (http://nyti.ms/zU8opI) that hospitals have a “Charge Master” of universal fees that can then be discounted heavily in global negotiations with each insurer. (Uninsured individuals are left without anyone to negotiate for them and often face the original undiscounted prices).

    I wonder then if using the Charge Master’s prices in the game is a good idea here. If we want residents thinking about how much things costs so that they might think twice in diagnosis and treatment, the Charge Master’s price, which is often not the price charged, will be a data point that systematically tilts the decision against care.

    Of course, I may well be barking up the wrong tree.

    • Don Taylor says:

      @Paul Kelleher
      Even the fact that there are charges, payments and costs is worth providers and others knowing. I have been doing some work with Duke cost data (what Duke claims to be the actual resource use incl a share of debt financing) and the relationship to charges (roughly, fantasy, what we wish we were paid) and payments (money flows from third party) differ quite a bit by hospital service. Maybe another post

  2. Mark Spohr says:

    It’s good that you are bringing up this issue. Most doctors don’t have a clue about the cost of the tests and procedures they order (except in the case where they benefit directly such as doctor charges or referrals to their MRI scanner).
    The point about the hospital “charge master” is also important. The same situation exists for doctor and lab charges where there is a very high “list price” which is heavily discounted depending on payer.
    I personally wrestled with this problem last year when we had a period without health insurance and medical expenses (and no chance to get insurance until the “condition” was resolved). I tried to find the cost to have a common abdominal surgery procedure from the doctors and the hospital and no one could give a straight answer. This was compounded by the fact that there would be a surgeon, assistant, anesthesiologist, hospital, lab, radiology, pathology, etc. None of these people would give me anything more than vague estimates. In total, it looked like the “list price” would be approximately $70,000. I finally contacted a well respected international hospital and received a firm price of $7150 for the entire procedure, tests, etc. We ended up having the surgery there and found the facilities and quality of care to be better than anything we have ever experienced in the US… and the total price turned out to be exactly as quoted… $7150.
    We now have insurance to partially protect us from this scam but it is a symptom of much of what is wrong with health care in the US.

  3. Corey Mutter says:

    “Which pricing?” would be a good question of course.

    As someone currently going through the appeals process with Rex of a $25K bill for a hysterectomy they themselves estimated at $6K and with OPPS of $4K, I’m getting a kick.

  4. Jonathan H says:

    I work for a large insurer and naturally we know a lot about the costs. Not just the fee per service (both the initial charge and the “par” rate accepted) but also the cost for procedures that typically happen together by using grouping logic (as for an inpatient surgery), and on top of that the typical out of pocket costs once benefit rules are applied.

    Your insurer’s website may have quite a bit of information that is sitting underutilized. Its tricky for docs to use this, though, because the costs change for every patient based both on the insurer and the specific plan.

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