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đź’°âś… Price Check
Daphnee Gipulan
April 30, 2024 • Estimated Reading Time: 6 minutes
If any of you have been following the NBA playoffs, the Lakers have just been eliminated from contention for the 2024 championship. It’s worth noting that some of the defining players from the 2010s - Curry, Lebron, and Durant - have all been eliminated. Nevertheless, the league is undoubtedly in good hands, and there are still exciting match-ups to look forward to.
For today’s email, let’s talk about Healthcare Price Transparency.
Story time.
A friend of mine has been experiencing neck and back pain after falling while snowboarding. She went to her primary care doctor, who recommended seeing a physical therapist.
For context, my friend maintains a healthy lifestyle. She has no pre-existing medical conditions (apart from occasional stomach discomfort caused by her love for spicy food).
After her initial visit to see a physical therapist, she was billed $125. However, to her surprise, she received a $250 bill after her second visit. Confused about the increase, she requested an itemized bill and a copy of her after-visit summary.
Although she saw a different therapist during her second visit, her after-visit summary suggests that there were no significant changes in treatment.
So why the $125 difference?
Anxious about asking for an explanation, she let it go and canceled her remaining appointments, fearing the unknown costs.
Mind you, she has healthcare insurance.
How much is what now?
Healthcare pricing (or lack thereof) has been an issue for patients. It’s surprising (okay, maybe not) that healthcare is the only industry that does not post the price for its services.
In addition to a lack of transparency, variations in prices for the same services, even in hospitals in the same regions, are also a persisting problem in the industry.
The same MRI or imaging tests can cost $453 in one hospital and $637 at another hospital blocks away.
A study conducted by the Kaiser Family Foundation (KFF) found that knee or hip placement surgeries, and imaging tests can have significant variations.
Average allowed charges for in-network joint replacements for knee and hip surgery in large employer plans from KFF
Average allowed charges for in-network joint replacements for knee and hip surgery in large employer plans from KFF
What is price transparency in healthcare?
Acknowledging price disparities and lack of available information about healthcare services pricing, Healthcare Price Transparency was born.
This new transparency regulation mandates that each hospital disclose its gross charges, discounted cash prices, and charges negotiated with third-party payers.
In addition to hospitals, most health plans and insurers must also disclose pricing information.
Why should you care?
In reality, patients face limited incentives to “shop around” for healthcare services. This is mainly because they only pay a portion of the total cost, while their insurance companies cover the majority.
This arrangement has created a situation in which patients are unaware of what they or their health plans actually pay for.
As a result, patients do not compare prices or quality of care when seeking healthcare services. They rely on healthcare providers and experts for medical services and their insurance to cover most of their expenses, which can be a disadvantage in terms of making informed decisions about their healthcare.
Have you ever heard of car commercials that offer “Good driver discounts”?
Even if patients “shop around” for healthcare services, they don’t receive any financial incentives to seek lower-cost alternative care settings.
However, out-of-pocket costs are increasing, putting more financial burden on consumers. Some patients even forgo care completely because of cost.
A recent report found that more than a third (36%) of insured Americans skipped a healthcare visit within the last year due to financial reasons.
Healthcare operates differently than other industries, where consumers dictate prices and markets. However, enabling patients with decision-making tools can help us achieve that goal.
We spend so much time shopping around for cars and other goods and services. I personally spent over two weeks shopping around for a new laptop.
Why can’t we do the same for our healthcare?
Knowing what services costs in advance can give us power as consumers, and help fix a broken system.