A new trend is developing in American health care: patient demand for price transparency. Minnesota is leading the way nationally in cost transparency efforts; however, our community, along with most other states, has significant work remaining to truly engage patients in this way.
As the cost of health care increases, patients are being asked to shoulder a larger portion of the costs. This shift has resulted in a growing number of patients comparing costs prior to obtaining care. Despite this, many misconceptions about health care cost persist. For example, a recent study showed more than half of Americans don’t realize variation in costs exists between providers.
This increase in patient engagement is one critical component to driving smarter health care choices – and reducing health care cost overall – but readily available and easily understood cost information is also critical.
Public Agenda, supported by the Robert Wood Johnson Foundation, recently released a study that found 56 percent of Americans have sought health care price information and 21 have compared prices across providers prior to getting care. Of those, more than half said comparing prices saved them money.
The majority who had not compared prices said they’d be interested in doing so and would likely choose lower-cost providers, but they were unsure where to find the information.
The study reinforced that the increase in health care cost burden to patients is driving the escalating interest in cost. Americans with higher deductibles in their health insurance coverage were considerably more likely to seek price information. For instance, 74 percent of patients with a deductible of $3,000 or more sought price information before getting care, compared to 48 percent with no deducible. “A deductible of $500 seems to be the threshold beyond which many more people try to find price information,” according to the Public Agenda study.
Similarly, a recent survey of patients with employer-sponsored health insurance coverage found that those with annual households incomes of $125,000 to $149,999 only 31 percent inquired about the price of medical procedures compared to 48 percent of employees overall.
Over the past five years, Minnesota has been a national leader in health care cost evaluation and public report – both the cost of individual procedures and the per-patient annual cost of medical care.
In 2010, MNCM worked with Minnesota’s largest health insurance plans to aggregate and report comparable prices for about 60 common medical tests, procedures and types of doctor’s visits. This information was refreshed and expanded in 2013 to include about 80 procedures. And this fall, it will be refreshed and expanded once again to include nearly 100 common procedures.
On MNHealthScores.org, patients can compare prices by medical group to find, for example, that the doctor’s fee for a circumcision runs from $148 to $254 depending on where it’s performed. Or that the cost of an uncomplicated vaginal childbirth can differ by $1,800 based on the medical group.
While evaluating the cost of large medical expenses is important, there are also price differences between providers for virtually every medical procedure, including routine expenses such as lab tests and office visits. As patients begin to foot more of the bill for every medical expense, these little differences add up. For instance, a rapid strep test can cost $19 or $47, and a 15 minute office visit can cost $83 or $130, depending on where you get care.
Patients who haven’t met their deductible would likely pay the full cost of that visit or lab test, while others may just pay a percentage based on their health plan benefits. The information can help answer questions for patients seeking an estimate of their out-of-pocket expenses for certain types of care.
Additionally, Minnesota was the first state in the nation to release comparable information on patients’ total cost of care by medical group. Total cost of care takes all the expenses that patients accumulate in a year – clinic, hospital, lab, pharmacy, etc. – and create an average for each medical group. The costs are evened out to account for the fact that sicker patients have more expenses, and some clinics treat a higher percentage of very sick patients. This allows an apples-to-apples comparison across medical groups in our region, which allows consumers to see the average monthly cost for a patient receiving the majority of their care at that medical group.
The variation in cost is eye opening. From the highest to the lowest cost medical group, a difference of more than $550 per month exists. And even between the highest and lowest “average” cost medical group, there is a difference of $1,500 per year for patients.
These dollar amounts won’t help a patient figure out the exact cost of a certain procedure. But they do allow patients to see which medical groups tend to be more expensive across the board and which tend to be less expensive.
The medical groups’ total cost of care results are also displayed on MNHealthScores side-by-side with their quality rankings. Consumers can also see patient experience rankings by clinic on MNHealthScores to further inform their decision making. Together, these provide consumers with important tools to make care choices.
More work to be done
Cost transparency is gaining momentum, but there is still considerable work to be done in Minnesota and nationally to make it accessible, understandable and meaningful for patients.
Half of Americans who haven’t tried to find price information say it’s because they don’t know where to get it, according to the Public Agenda study. And while Minnesota is leading, we’re not very far ahead. A recent study showed that Minnesotans are more aware of provider performance rankings than other states, but awareness still stands at 22 percent among chronically ill patients – and even less among other patients.
And despite these many cost transparency efforts in our community, the 2015 Report Card on State Price Transparency Laws that was released by Health Care Incentives Improvement Institute and Catalyst for Payment Report last week gives Minnesota, along with 44 other states, a failing grade. The 2014 report praised our non-governmental efforts, but noted that Minnesota still lacked state laws related to price transparency.
As the demand for health care cost information increases, MNCM will continue to partner with our community to make it publicly available; enhance awareness of its presence; and to increase its usability for consumer decision making.