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Tuesday, August 25, 2009

Cost transparency--what's not to like?

Cost transparency, that is making sure that patients and providers know what everything costs at a time that is relevant for discussing options, is a great idea. The effects of sharing this kind of knowledge would be powerful. Cost could become part of conversations about what is the most appropriate care. A patient could ask if a particular $3000 test would really change their treatment, for instance. If everyone knew, up front, what things were supposed to cost, billing errors and fraud would be much easier to identify. And when things cost way too much, we could start asking why, and begin the process of making these costs competitive.

There are, however, some pretty serious obstacles to making this information available.

I would like a patient to know, before she even sits down with me, how much her visit will cost. Unfortunately, I don't know. The amount of time and complexity of the encounter, including office procedures that might have to happen, will unfold during the visit. Now the patient could have a sheet that gives costs for various things that might happen, but that, too, gets pretty complex. Here is an example. Just recently we raised our rates for office visits. Now a detailed office visit, which may take about 30 minutes and involve research or consultation with other doctors, carries a price tag of $160. That is the price that all insurance companies and uninsured patients see on their bill. Medicare will pay $86, Premera $127 and Blue Cross about $150. Depending on the patient's specific policy, they may have to pay a part of that as a copay, or even be billed for the difference. The uninsured are discounted according to whether they pay at the time of service, and sometimes, at the discretion of the provider, their financial situation.

For costs to be truly transparent, they must be presented in a way that just about anyone can understand, without requiring that person be computer savvy or able to sift through a packet of insurance materials.

Providers of medical goods and services could be required, at the time of service, to provide a list of costs of the most common items that they offer and provide information on costs for less common items quickly at a patient's request. Insurance companies could be required to produce an easily understandable list with information on how much they pay to be available to the patient at the time they received services. This information could be accessed online or by telephone by the provider's staff.

The trick with all of this is to make the information clear, relevant and to avoid adding a layer of complexity to an already complex system. Processes that require more time per patient inevitably make an office less efficient, and thus more expensive, which is exactly what we're trying not to do.

A single-payer health insurance system would make cost transparency a piece of cake, but maintaining truly independent health insurance companies does make the process more challenging.

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