Mass. Launches A Grand Experiment: Pricing Health Care

BOSTON — There’s a grand experiment underway in Massachusetts and we are all, in theory, part of it.

Here’s the question: Can we actually list prices for childbirth, MRIs, stress tests and other medical procedures, and will patients, armed with health care prices, begin to shop around for where (and when) they “buy” care?

One of the first steps in this experiment is a new requirement that hospitals and doctors tell patients who ask how much things cost. It took effect Jan. 1 as part of the state’s health care cost control law and we set out to run a test.

Our sample shopper is Caroline Collins, a 32-year-old pregnant real estate agent from Fitchburg who is trying to find out the price of a vaginal delivery. Her first call is to the main number at Health Alliance Hospital in Leominster. From there, she is transferred to the hospital’s obstetrics department. A receptionist there tells Collins to call the billing office at UMass Memorial Medical Center in Worcester, which is part of the same hospital network as Health Alliance.

Caroline Collins: Medical Shopper (courtesy)

Caroline Collins: Medical Shopper (courtesy)

Collins doesn’t mind this transfer. She had intended to get a price from UMass Memorial anyway.

“Hey, I was just calling to find out the cost of a vaginal delivery,” Collins says to the first person she reaches. “I’m due in June and my husband and I have pretty minimal coverage, just a really high deductible, so I just wanted to check and see what the cost would be.” Collins’ deductible is $3,000 a year.

Collins is directed to a woman named Cathy, who apparently has the price list for services at UMass member hospitals.

“Hi Cathy, this is Caroline Collins, I’m calling because my husband and I have a higher deductible plan,” Collins says, beginning her introduction for at least the fourth time. She leaves a message because Cathy will be out for two weeks.

Collins tries another number in the billing office at UMass Memorial, and leaves another message. She moves on to Emerson Hospital where she’s transferred from the main switchboard four times before leaving a message for a woman who has not called back after two days. The only place where she reaches a person who gives her a price after one call is a natural birth center called the Birth Cottage. Their price is $3,000 to $5,000 for a normal vaginal delivery.

Into her third day shopping by phone, Collins gets a return call from a woman at UMass Memorial.

“She did give me an average price,” Collins says. A vaginal delivery would cost between $10,000 and $16,000. If her delivery turned into an emergency C-section, the cost would be between $20,000 and $30,000 “depending on the operation and how it went,” Collins says. For a more exact price, Collins is told she will need a CPT code — a number assigned to any test or treatment you may need.

Collins is told she will probably only have to pay her $3,000 deductible of whatever the price is in the end, but she’s not sure. She’s getting conflicting information about what is and isn’t covered from her OB, hospitals and her insurer. (By the way, insurance companies had to start providing prices last October.)

“The main thing I wanted to find out was whether I would have any surprises,” Collins says. “I kind of wanted to be prepared for that. It sounds like I will be OK, but you never know until it’s over, so I guess I’ll find out.”

Collins is used to the challenge of searching for health care prices because she was uninsured for a while in her 20s. So does she feel like anything has changed now that hospitals and doctors are required to quote patients a price within two working days?

“The experience was pretty frustrating from beginning to end,” she says. “It was definitely surprising how many machines I spoke to within the last few days.”

This is the world in which Collins is supposed to become a savvy health care consumer, making informed decisions about where to get the best care at the best price.

Both Emerson Hospital and UMass Memorial Health Care say they are committed to making prices easily available for patients. A spokeswoman for Emerson says she was dismayed that Collins did not receive a prompt response.

UMass says it is “working through some challenges in the early days of the new requirements, and some interactions have clearly been less than optimal. This will change. In the coming weeks we will be providing a phone line and establishing new policies and procedures to support this new requirement.”

No one said this would be easy. Each hospital negotiates prices with each insurer. Sometimes the hospital and physician charges are separate, sometimes they are not. And then, what the patient pays on top of their premium varies if they have a deductible or coinsurance.

“It’s very different from, you go into Best Buy, you want to buy a refrigerator,” says Karen Granoff, the senior director for managed care at the Massachusetts Hospital Association. Granoff says her members are working with insurers to nail down prices that hospitals can quote patients.

“They know they need to do this,” Granoff says. “They are not opposed to the transparency. I think they are worried about the challenge of getting the information to the patient.”

Doctors are also now required to give patients the price of anything they need within two days of a patient’s request. Some large physician groups such as Harvard Vanguard have software that can calculate exactly what your expense will be based on the details of your insurance plan. But my doctor, who runs his own two-exam-room office, had never heard of this requirement and laughed when I asked if he thought he could comply. The state has no authority to make physicians participate.

Dr. Ron Dunlap, president of the Massachusetts Medical Society, says giving patients prices is a good idea, “but I think this project is somewhat of an overshoot. It’s just too broad, there are too many different procedures. My thought is that we should focus on the most frequently used expensive procedures and that’s where most of the savings could be achieved.”

There are no plans to revise the pricing requirement. The state’s undersecretary for the Office of Consumer Affairs, Barbara Anthony, says the time has come to put price tags on health care.

“It’s kind of, ridiculous, is the word that comes to mind, that we’re actually talking about the pros and cons of whether consumers should know how much their health care costs,” Anthony says. “I mean what other commodity or service do we ever debate whether or not a consumer should know the price of a service before purchasing? You can’t even name one.”

OK, but many doctors and other providers will tell you that health care is not like any other commodity. Will that change? Or will this experiment just not work? If you are participating, please let us know how it goes.

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  • Jonathan Kaplan, MD

    Martha, as a Board Certified Plastic Surgeon, I have been an advocate for price transparency in healthcare before it became a “buzzword.” So much so, that I created a website/app to provide consumers itemized price estimates on the cost of plastic surgery. After perfecting the technology, we expanded out to all other specialties where consumers are paying out-of-pocket expenses. We just signed on a family practice doctor in San Francisco. Getting hospitals on board would be HUGE. I’m working hard to find the right contact people within the different hospital chains.

    • Marto

      It is the same stupid things like any insurance in USA. Everything is for money.Nobody cares about the people.I think in future only the reach people will survive from any viruses and science tests.

  • BostonBizPerson

    The real scam is that the hospitals appear to charge individuals higher prices than they charge insurers. So one trip to an emergency room for stitches and a sprain could cost you $3,000, but if it happens again then the insurer only pays the hospital $600 due to a “group rebate”. The effect is to make certain they eat up all of your deductible! It’s not fair that individuals pay MUCH higher prices when billed directly than their own insurers do when billed for the same procedure.

  • crescentfang

    Every car repair shop expects to quote prices and get authorization for a repair. The medical industry has become accustomed to refusing to answer these questions and they have a strong incentive for continuing to do so.

  • Nancy Beckley

    Perhaps a missing element – what control does a patient have over consultants that are called into the case? What if any information is provided about “required physicians” (anesthesia and others) that don’t participate in your health plan – so patient fee (after high deductible) is 100%? What about pre-op/delivery tests at provider-based or non-provider based facility and difference in fees. This story is a great start to the discussion. Thank You.

    • Martha Bebinger

      Great questions! This makes me think we should put up some kind of a guide for patients. Can we help simplify or will the process just get more complicated?

      • Nancy Beckley

        A guide is good “in general”, especially where there is a decision (go to non-provider based lab/diagnostics without facility fee) and to know those where there is no decision (you can’t bring your own anesthesiologist). The patient example in story is only $3,000 deductible and a “happy event” wherein she can plan. For many patients hospital visits may be unexpected or emergent – the emerging crisis may prevent price shopping/negotiating, or alternatively with high deductible plan may cause someone to not seek care at first dollar.
        Summary – a guide is good.

  • Christine

    Unless a patient is obligated to pay coinsurance, I don’t understand what the incentive is to find out or negotiate on price. I see the benefit to insurance companies and theoretically to lowering premiums eventually. But in Collin’s case, isn’t the price tag to her that $3,000 deductible and wouldn’t it be the same regardless of where / how she delivers?

    Insurance companies need to monetarily reward their customers for going with the lower price option if they really want to incentivize this change in mindset. In my experience, they don’t even always cover the ‘cheaper option.’

    For example, I could have delivered my second child in the same hospital where I had my first which cost my insurance company approx. $30,000 (according to the claim sent to me by Cigna). It would have cost ME nothing as I had no deductible with that plan. Instead, since my first son was born about 90 minutes after I arrived at the hospital, I elected to have my second son delivered at home by a midwife.

    Cigna wouldn’t cover the home birth midwife at all on the grounds that she didn’t have OB backup, an impossibility in the state of MA due to our midwifery laws. So that cheaper option for my insurance plan was in fact the more expensive one for me (my midwife charged $3500). In the end I went with what felt like the better healthcare choice for me but it felt hugely unfair that I had to pay for insurance that didn’t support the healthcare decisions I made, even when those choices appeared to benefit their bottom line.

    I think there are similar scenarios when it comes to using osteopaths or chiropractors in place of physical therapists and RX. It just feels like the system is rigged towards encouraging specific types of healthcare consumption because from a patient’s perspective, one choice looks free if it’s covered by their insurance.

  • pcl

    Well, it was a nice try, but it’s not going to work this way for most people. Hospitals have every incentive to put as many obstacles in the way of anyone seeking pricing information as they possibly can, and it looks as if they’ll be able to get away with it. The real fix for this is to require them to keep a complete price list, with human readable item descriptions, on the web site. Not THEIR web site, mind you, but the state’s health connector site. Even then, there would be plenty of room to pad the bill, so consumers would also have to shop by reputation, but they’d at least have a starting place for any inquiries. If health care providers were actually required to price their services honestly and charge everyone the same price, it would break a lot of the kludges that make up our “safety net” in this country, so I’m not holding my breath.

  • John Luciani

    Now, are these big round numbers before or after the negotiated rate with whatever insurance provider? In my experience, you might have a hospital stay and surgery that cost about 50k but when it is submitted to insurance. That number drops to less than half because of the contract signed between the Insurance company and a particular network of hospitals

    • Martha Bebinger

      Hi John – you raise a good point, but in Caroline’s case we don’t know. The woman she spoke to did not have any details about the range of prices.

  • J__o__h__n

    Does this do anything to address the issue of inflated prices like the sling that WBUR had a report on that cost much more than its actual price? Since everyone is now required to have insurance, can hospitals still stick customers with these costs?
    We should have government health care. All of the factors that the market uses to set prices in every other industry have one excuse after another why they aren’t appropriate in health care. One could only conclude that the marketplace is not the right manager.

    • crescentfang

      We can’t get prices down without competition and that is impossible as long as the prices are hidden. The basic mistake was relying on insurance to “cover” all of the bills. The prices started rising rapidly the moment we did that.

      Except for the veterans administration, there is no “government health care”. Private companies provide the care everywhere and keeping their prices under control is a problem for everyone. We are just worse at it than everyone else.