People will spend hours scouring Amazon AMZN,
Patients who needed MRIs and had access to a price-shopping tool still wound up overlooking cheaper providers and paying more, according to a new report in the Journal of Health Economics.
The findings underscore the limits of price transparency and the influence of referring physicians.
In a review of 2013 claims from a national health-insurance carrier, Yale University professor Zack Cooper determined that consumers traveled an average of 26 minutes for a lower-limb MRI, passing an average of six places offering cheaper prices.
“ ‘People don’t shop for health care the way they shop for other services.’ ”
The policyholders had access to a price-shopping tool, but fewer than 1% of people actually used it, according to Cooper’s research.
The patient and insurer paid a combined $ 851, with the patient footing $ 307 and the insurance company paying $ 544, the research showed. If the patient used the lowest-cost MRI provider within that same travel span, they could have paid $ 222 and their carrier could have paid $ 324.
That’s a combined $ 546 cost, and an almost 36% price cut.
If patients searched and found the best bargain within an hour’s drive, they and their carrier could’ve paid almost 55% less.
What explains the missed chance to save money? Quite possibly, it’s the fact the referral is coming from the person’s usual doctor.
(The American Medical Association, the Association of American Physicians and Surgeons, and American Hospitalization Association did not respond to request for comment.)
Patients are more easily intimidated
“People don’t shop for health care the way they shop for other services,” wrote Cooper, an associate professor at the Yale School of Public Health. The idea of looking around for the best price is “tough, it’s intimidating.” For that reason, he said, patients often defer to the advice of referring physicians.
“Rather than price shopping for lower-limb MRI scans, patients appear to receive care at the usual locations to which their physician traditionally refers patients,” he said. “This key finding underscores how important physician advice is to patient decision-making.”
Many doctors might not be aware of the price variability and might be sticking with the provider they’ve always used, Cooper said. “There’s just sort of this inertia that takes over,” he told MarketWatch.
“ Patients in hospital-owed practices were more likely to go to hospital-owned imaging centers. ”
The “more scary version” of the missed savings has to do with hospitals that increasingly own physician practices, Cooper continued. Doctors in these practices might have an incentive to refer other parts of the hospital-owned business.
Indeed, the research showed patients in hospital-owed practices were more likely to go to hospital-owned imaging centers, where average MRI costs were $ 1,475 versus $ 645 for standalone imaging centers.
The trick may be getting doctors more attuned to potential cost savings, Cooper said. That could be something like an insurance-company widget inside a patient’s electronic file showing the potential costs at varying nearby specialty service providers.
“Let’s target them with the information and incentives, and not beat the patient over the head,” he said.
Cooper purposely looked at information on MRIs because the quality of the procedure does not vary widely, prices do differ.
That could make an MRI the sort of service that people would want to shop around for. But if it doesn’t happen here, chances are good it will not occur in more complex procedures either, he said.
Since 2013, new rules on health-care price transparency have gone into effect. For example, starting this year, hospitals have to publicly list the prices they’ll charge insurance companies and patients who pay cash for procedures.
In 2023, another federal rule is poised to go live that will require insurance companies to offer consumer-friendly rules on prices and rates for various types of care and procedures.
Patient advocates have said clear pricing is well and good, but there’s a limit to what it can accomplish as health-care costs surge.
Other observers say clear and accessible prices can bring real benefits. “Patients haven’t gone shopping because this not easy,” according to Marni Carey, executive director of the Association of Independent Doctors. Even with the new price transparency rules, Carey said it’s still difficult to find the pricing at some hospitals.
Still, she added, “we are moving the ball down the field.”
“Once the Band-Aids are ripped up on all of these prices and they see the light of day, we will shop online,” Carey said.
But Cooper thinks price transparency will only do so much. “I don’t think it will do any harm,” but he didn’t think it will result in “any consumer revolution that will transform healthcare.”
That’s why it’s important to make referring doctors more aware of potential savings.
