Patients Need to Act More Like Consumers (and Providers More Like Competitors)

A Crisis of Confusion is proving costly for American health care consumers. Dylan Scott of Vox Media wrote about how health care consumers don’t, won’t or can’t navigate the health care system in ways that could save them money. He is correct. About six years ago I participated in a point-counterpoint opinion piece for the Wall Street Journal called, “Can Consumers Be Smart Health-Care Shoppers?” I took the position that consumers could shop for health care, at least to some degree. Most of the 87 comments – and all of the people who emailed me – told me I was wrong. About 20 years ago I authored a policy report for the National Center for Policy Analysis titled, “Shopping for Drugs,” where I encouraged people to act like consumers when procuring their prescription medications. A policy analyst from a left-of-center think tank emailed me and basically said, “Yeah it’s possible but that’s too much trouble.”

I often relay the story of the time my wife contacted a hospital outpatient department to have a CT scan done. Prior authorization was all that saved her from a $2,700 bill (her share, not the entire bill). As an aside, I’m somewhat favorable of prior authorization because it creates an opportunity for health care consumers to discover their cost. When my wife told me about the CT scan’s estimated cost-sharing I quickly found a free-standing radiology clinic that would perform the same test for $403, her health plan’s negotiated price. The radiology clinic was literally next door to her physician who had ordered the test, so it wasn’t like she would need to travel out-of-state.

It’s bad enough to face a medical bill in the hundreds or even thousands of dollars. My conversation with my wife would have gone very differently if she had actually gotten the CT scan only for me to inform her she could have saved $2,300 elsewhere. She had no idea prices vary and that you can shop around for a better price. I often tell people, after you receive care, you’ve lost all your advantage and most of your leverage.

Vox points to surveys that found between 30% to 40% of patients never find out how much their care costs after it was received. Presumably a much higher proportion never found out prior to receiving care. Providers often claim it’s too difficult to quote prices in advance. They claim there are too many prices, a different price for multiple payers, and too many CPT codes that make up a procedure. This is a predicament of their own making, indeed of their own design for their advantage.

Medical bills are notoriously inaccurate. Perhaps one reason is because the bill (a voluminous multipage accumulation of line items with CPT codes) is not usually expected to be paid. Health plans pay a negotiated rate that is about 60% off the list price. Almost nobody pays list prices, except wealthy uninsured patients who don’t know any better. There is more than one cash price. There is the cash (list) price after care is received then there is the cash negotiated price prior to care.

Vox also points to surveys that found less than one-third of patients (30%) have appealed against a medical bill even though 70% of those who have tried were successful in reducing the balance. Increasingly patients are being sued for care they received but could not pay. One reason patients sometimes refuse to pay outstanding medical bills is because they believe their insurance company owes the bill. Another reason is that patients do not understand their bill. I have often said some medical bills are not paid because patients think they bill unfair (one hospital charged $18 for a baby aspirin). Finally, some patients cannot pay because they just don’t have the money and need to keep a roof over their head and food on the table.

The No Surprises Act has helped patients avoid some medical bills that were purposely designed to entrap them (in my opinion). The Public Health Services Act (Section 2718e) mandates hospital price transparency, which should help as well. However, compliance is elusive. These measures will have little effect until patients learn to use them. Insurers are partly to blame for consumers’ lack of awareness. Health plans do little to assist their enrollees. When my wife checked on a CT scan at a hospital outpatient department her health plan approved it. Nobody from her health plan sent her an email or called her and asked why she wanted to have a CT performed at the most expensive place. In fact, her health plan was the only entity that knew the cheapest place to have it done. It could have helped her.

Consumers need online tools to help them compare medical prices. Also, patients need protection from doctors employed by hospitals, which is increasingly common. Hospital-employed doctors could send a CT order directly to their employer’s radiology department, giving patients no choice. Blood tests could be drawn in the office with the tests (performed by Lab Corp or Quest Diagnostics) billed at sky-high hospital prices rather than the bargain basement, Walk-in Lab prices I’m used to paying.

There is much that Congress, consumers and health plans could do to reduce health care spending. They all need to work together, but first all stakeholders need an incentive to do so.