Costs at any price?

Comparison tools may be flawed but consumer demand keeps growing.

Online cost comparison tools designed to help patients shop around for treatment are becoming more common, but they are still far from being the Consumer Reports of the health care world. Some critics worry that they might cause more confusion than enlightenment.

Online cost comparison tools are becoming more common but critics worry they might cause more confusion than enlightenment
Online cost comparison tools are becoming more common, but critics worry they might cause more confusion than enlightenment.

Nabil Musallam, who heads clinical operations, managed care and contracting for University of California, Davis Health System, used childbirth as an example of the difficulty of providing specific prices to consumers. “A patient may be hospitalized for a normal vaginal delivery, but some complications or other clinical presentation may require the use of consultants or performance of tests. This makes the costs of clinical cases more difficult to predict,” he said. “The costs of an MRI or a CT scan, or other more defined and predictable services, can be more reliably compared.”

Underlying this problem is that there is no uniform or readily verifiable way in which price information is presented. In some cases, there are specific dollar figures; sometimes a rating system is used. CIGNA, for instance, has a star-based system that focuses on outcome and cost efficiency and also offers a cost range that is individualized to reflect a member's plan. CIGNA members have access to pricing information for more than 29 procedures at hospital and outpatient facilities. UnitedHealthcare uses a three-level rating system for cost in its Hospital Comparison Program that includes the designations lower than average, average and higher than average. The insurer also has a rating system that allows doctors who meet the criteria to earn one star for quality and a second star for efficiency of care, according to claims data. Some sites compare hospital charges, which typically are much higher than what insurance companies end up paying hospitals. In other cases, the numbers presented may be costs, the amount the insurer has agreed to pay the hospital for a given treatment or procedure. And consumers are seldom able to make direct comparisons or reconcile discrepancies between sites.

“On the one hand, transparency in this arena is laudable,” said David Nash, FACP, chair of the health policy department at Jefferson Medical College in Philadelphia. “The insurers recognize that people need to be more engaged in the process. They want people to have an economic stake in the game. On the other hand,” he cautioned, “we can't be fooled into thinking these recent moves to display price are connected to the reality of what it costs and what we're going to pay out of pocket.”

Cost concerns drive trend

Without a doubt, consumers are becoming more interested in the cost of health care, and not just because it's an election year. A federal government report issued in February predicted that health care spending will continue to grow at a steady clip, about 6.7% a year, until it consumes nearly 20% of the nation's gross domestic product by 2017. The Kaiser Family Foundation released a survey in April that found that about four of every 10 people in the U.S. are feeling financial pressure because of medical bills.

For hospitals and physicians, that means they need to be prepared to engage in cost-related conversations with patients who increasingly are unwilling to accept that money is something only the billing office deals with.

“Patients are going to demand that dialogue,” said Barbara Tapscott, vice president for revenue cycle operations at Geisinger Health System in Danville, Pa. “As more and more of the health care dollars are paid by consumers, patients are going to drive the dialogue between the patient and the provider as to the overall affordability of the proposed care.”

The problem is that patients are getting information from many different sources, all with different standards and methods. Even some administrators of the sites acknowledge that the system is imperfect.

The Pennsylvania Health Care Cost Containment Council, for instance, issues reports that include “average charges” (not actual payouts) for 50 medical and surgical treatment categories at hospitals around the state, said Joe Martin, communications director. He noted the shortcomings of using “charges” to compare since “we know that on average hospitals are getting 30 cents on the dollar of charges.” The agency has started a process to collect and report actual insurance payout data in the future, Mr. Martin said.

Nonetheless, the site's heavy traffic so far suggests that consumers are hungry for any information available. According to Mr. Martin, more than 600,000 visitor sessions were tracked on the site last year, although it is not clear how people used the information in making decisions on where to seek care.

Who benefits?

Proponents of the comparison tools hope that patients will begin to pay more attention to the cost of their health care and in turn help contain the nation's ever-growing medical bill. The tools are thought to hold particular appeal for people who have insurance policies with high deductibles or co-payments, as well as those who have health savings accounts.

“The person who is most interested in this is the individual in a consumer-driven health plan,” said Don Liss, FACP, mid-Atlantic regional medical director for Aetna, which offers online price comparison tools listing hospitals and physicians in select markets. CIGNA and UnitedHealthcare are among the other insurers that offer varying versions of Web-based tools. Dr. Liss said people increasingly want to know “what's being paid on their behalf for medical services,” or, looking at it the other way, how much of the bill they will have to foot.

“The price of a service depends on who you are and what type of coverage you have,” said Maribeth Shannon, director of the market and policy monitor program at the California HealthCare Foundation, a philanthropic organization that focuses on health policy. General numbers, no matter how they're presented, don't reveal what it will cost an individual person to get, for instance, a hip replacement, though some insurers' tools attempt to customize information for members, taking into consideration deductibles and copays. Even then, though, there is an unpredictability factor. And for an uninsured person, price comparison numbers can be especially meaningless. “What matters is how flexible a hospital is in terms of negotiating a price,” Ms. Shannon said.

The California HealthCare Foundation recently compiled a fact sheet for health policymakers detailing what is needed to make cost comparison information more useful. Among the suggestions: Price should be linked to quality information; the figures used should reflect the total cost of care before, during and after hospitalization, including tests, prescription drugs, hospital days and physician fees; and information should be presented clearly and in language that consumers can understand.

Works in progress

In the meantime, cost comparison tools are largely “works in progress by insurance companies,” said Mr. Musallam at UC Davis. “The insurance companies are trying to make consumers feel they have more control over what they are going to do… The problem is there really isn't good information patients can use intelligently.” He said he also suspects such tools may be a way for insurers to put pressure on hospitals and doctors to lower fees.

Dr. Nash, a technical advisor to the Pennsylvania Health Care Cost Containment Council, said currently available online price comparison sites are bound to evolve into more sophisticated tools that factor in both performance outcomes and price.

“Price is interesting, but who would buy a car without knowing gas mileage or the safety record? You need to know the value equation, not just the price equation.”