Price Transparency Should Be a Healthcare Norm

Price Transparency Should Be a Healthcare Norm

As consumers, we expect price transparency. That is, we expect to know the price of something, before we commit to buying it. For example, every big-box store clearly lists the prices of every item it sells, from laundry detergent to flat screen TVs. Restaurant menus tell you how much a burger and fries, quinoa salad, or lobster thermidor will set you back. If prices aren’t readily apparent, we may feel justified to take our business elsewhere.

But as consumers of healthcare (i.e., patients) (a.k.a., every single one of us), we typically have no easy way to learn the cost of our care until after we’ve received it. The lack of price transparency means we often must make decisions about the healthcare we receive without any foreknowledge of the financial consequences of those decisions.

As an example, consider the case of Benjamin Hynden. As reported by NPR, Hynden, a resident of Ft. Myers, Florida, had been experiencing pain in his abdomen. Hyden’s doctor sent him to a local imaging center for a CT scan, which revealed nothing unusual. Several weeks later, Hynden received a bill for the scan: $268.

Months later, Hynden was again experiencing pain. He called his physician’s office, but the doctor was not available. Concerned that Hynden might have appendicitis, the nurse practitioner he spoke to over the phone recommended that he go to the emergency room. Hyden took the NP’s advice, and went to Gulf Coast Medical Center, one of several hospitals owned by Lee Health in and around Fort Myers. The triage nurse at the emergency department told Hyden that he didn’t have appendicitis, but recommended additional testing.

Again following the advice of a medical professional, Hynden submitted to another (non-emergency) CT scan, identical to the scan he had received months earlier, as a hospital outpatient. Except this time, when the bill came, the billed cost of the CT was $8,897—approximately 33 times more expensive than the previous service.

To provide some context: Healthcare Bluebook, an online pricing tool, advises that the “fair price” for a CT scan of the type Hynden received, in his geographic area, is approximately $600.

In attempting to understand the huge price disparity between the first and second CT scans, NPR reporter Alison Kodjack received a number of explanations. She was told that care in the ED is especially expensive, due to the 24/7 nature of the facility and the requirement that EDs treat all patients in need, regardless of the ability to pay. The owner of the imaging center where Hyden had received his first CT scan (the $268 one) lamented that small, independent facilities such as his don’t have bargaining power with insurers, and therefore must submit to whatever price the insurer is willing to pay (typically, the rate paid by Medicare, which is the lowest rate allowed by law). By contrast, Lee Health has consolidated many of the area hospitals and healthcare practices under its control, and therefore has greater leverage over insurers (it’s worth noting that by squeezing independent providers, insurers may reduce competition and their ability to bargain with consolidated healthcare systems; thereby, further driving up costs).

All of the above are important factors, certainly, but one vital point was overlooked: Hynden simply didn’t know how much the CT scan was going to cost. If he had known that service was going to cost almost $9000, but was available elsewhere for a much (much) lower cost, he very likely would have made a different decision. Such a lack of transparent pricing both exploits patients’ relative lack of information and erodes the faith they have in healthcare institutions, while simultaneously undermining the benefits of “free market” healthcare.

You might protest that Hynden’s case was an anomaly, but that doesn’t diminish the lesson we can learn from it. Receiving medically-necessary care, recommended by a trusted provider, should never be a financial roll of the dice.

To argue that no one really pays “sticker price” for healthcare services only confirms that the current pricing system is arbitrary and opaque. If there is no “real” price, how can we know if we are ever treated fairly, as patients? Or, whether providers are compensated appropriately for their effort?

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Until greater price transparency becomes the norm—at least as it relates to non-emergent services, supplies, and diagnostic testing—we (as individuals and as a nation) will continue to see healthcare costs rise. As consumers, we need to “put our foot down” and demand greater cost transparency from healthcare providers and systems, of all types. As healthcare professionals, we need to be more forthcoming with patients about both the potential costs of care and the availability of less costly alternatives.

John Verhovshek

John Verhovshek

John Verhovshek, MA, CPC, is Managing Editor at AAPC. He has covered medical coding and billing, healthcare policy, and the business of medicine since 1999. He is an alumnus of York College of Pennsylvania and Clemson University, and a member of the Asheville-Hendersonville AAPC Local Chapter.
John Verhovshek

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John Verhovshek, MA, CPC, is Managing Editor at AAPC. He has covered medical coding and billing, healthcare policy, and the business of medicine since 1999. He is an alumnus of York College of Pennsylvania and Clemson University, and a member of the Asheville-Hendersonville AAPC Local Chapter.

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