Healthcare pricing still a struggle for consumers
Californians are still struggling to get straight answers about the cost of common medical procedures despite state efforts aimed at lifting the veil on medical pricing.
As consumers shoulder a larger share of their healthcare costs, the ability to comparison shop is key to keeping that care affordable. Medical costs borne by U.S. employees have more than doubled since 2002 to more than $8,000 a year, while the median household income has dropped 4%.
Under a state law that took effect in 2006, hospitals must publish their average charges for the most common procedures on a state website. But relatively few take the extra step of listing prices on their own websites, where people are more likely to be looking for pricing information, according to healthcare experts.
David Dranitzke, 40, of San Francisco, recalled his frustration when he tried to get prices on a battery of blood tests for his 15-month-old daughter from three different hospitals and lab companies.
He gave up after spending more than 10 hours calling, waiting on hold and faxing information, all the while having to decipher arcane medical terminology and billing codes.
“It’s more difficult to get a price on blood work than remodeling your kitchen,” said Dranitzke, a visual-effects producer. “At some point you just throw in the towel.”
Dranitzke, who was unaware of the state website, ended up paying more than $700 out of pocket under his insurance plan for his daughter’s tests.
To see what consumers were up against, The Times contacted 10 California hospitals and asked for the cost of a routine gallbladder surgery for someone with a high-deductible insurance policy.
Seven of the hospitals offered at least partial estimates, but the quoted prices ranged widely — from $1,200 an hour for the operating room to a $8,687 facility fee. None included the cost of the doctors, although California Pacific Medical Center in San Francisco did say that the total cost for hospital services, including a room, drugs and other supplies, could be $37,217.
One hospital, Desert Regional Medical Center, didn’t return calls. Contacted later, spokesman Richard Ramhoff apologized and said Desert Regional “strives to make sure everyone with a question about rates gets an answer.” Another hospital said it would take 10 business days to get an estimate, and another required detailed insurance information before discussing prices.
“This really highlights how impossible it is for consumers right now with high-deductible plans to effectively shop for care,” said Ateev Mehrotra, a policy analyst for Santa Monica-based Rand Corp. and an assistant professor at the University of Pittsburgh School of Medicine.
Mehrotra’s Rand study in 2009 produced similar results in California. Only 28% of the state’s hospitals responded to a request for an estimate from a fictional uninsured patient and less than 3% offered detailed price quotes including hospital and physician fees.
The California Hospital Assn. says consumers should work with their doctors and insurance companies to figure out estimated costs because each patient’s medical situation is unique.
“An auto shop can give an estimate for a brake job, but people are not cars,” said Jan Emerson-Shea, vice president of external affairs at the California Hospital Assn. “It’s very difficult to get a random call from someone saying, ‘I need gallbladder surgery, so tell me what it costs.’ ”
Yet some hospitals do make it easier. On its website, Huntington Memorial Hospital in Pasadena allows people to select several common procedures and get an instant price quote, including an estimate of the patient’s share after plugging in their deductible and coinsurance. But even those numbers exclude the thousands of dollars that physicians, anesthesiologists and other specialists would tack on for most surgeries.
“We are working diligently to make publicly available both cost and quality information,” said Stephen A. Ralph, Huntington Memorial’s chief executive. “The need for pricing transparency in healthcare services has taken on increasing importance for citizens.”
People tend to turn first to medical providers when hunting for prices. In a recent California HealthCare Foundation survey of 1,528 consumers, 26% said they had looked for information on the cost of a medical procedure in advance. Thirty-nine percent of those surveyed said they contacted a healthcare provider, 30% looked online and 8% turned to their insurance company, according to the foundation.
Policymakers and economists have said for years that one way to help slow the rising cost of healthcare was for consumers to have more of their own money at stake.
A report issued earlier this year by the market research division of Thomson Reuters estimated that $36 billion could be saved annually if the 108 million Americans with employer coverage did some comparison shopping on more than 300 common medical procedures.
In 2006, California was among the first states nationwide to require hospitals to publish average charges for some of the most common procedures. The state Office of Statewide Health Planning and Development lists this information for specific hospitals online.
The trouble is that no one actually pays these billed charges, not even the uninsured. Insured patients would be responsible for a reduced price negotiated by their insurer, and the discount would vary based on the company. David Byrnes, a spokesman for the state planning office, said his agency doesn’t have the authority to request additional hospital data beyond the billed charges.
Dario Frommer, former state Assembly majority leader and a lawyer in Los Angeles, sponsored the bill requiring hospitals to disclose more cost information. At the time, he expected it to help consumers shop for the best hospital prices and not be shocked afterward by huge medical bills. “There may be some bad apples, but my experience is hospitals are trying to conform with the law and make information available,” Frommer said.
Insurers have tried to come to the aid of patients by rolling out new online tools allowing members to get a range of prices among network providers. Other sites such as fairhealth.org and healthcarebluebook.com offer consumers average prices by ZIP Code for many common services and tips on managing out-of-pocket costs.
Nonprofit Blue Shield of California launched a new “treatment cost estimator” on its website last month, accessible to its members with preferred-provider plans. It shows, for instance, that a shoulder arthroscopy at three specific hospitals in Northern California varies in price from $7,523 to $11,534 at the company’s negotiated rates; a hip replacement ranged from $18,306 to $45,766 at three Los Angeles-area hospitals.
However, the detailed data with specific names of hospitals or clinics can’t be shared with the general public under the terms of most contracts between insurers and medical providers. California Insurance Commissioner Dave Jones said he would like more consumers to have access to that pricing information. “Consumers don’t really know the health-cost consequences of their decisions,” Jones said, “and they have more of their money at stake.”
Some California lawmakers say hospitals can do more. State Sen. Ted Lieu (D-Torrance) has filed a bill that would require hospitals to disclose all potential charges, including all physician and lab fees, in certain cases. The legislation is scheduled for a second Senate hearing later this month.
“The burden should be on the hospital, not the patient, to figure this out,” Lieu said. “Patients should have the right information so they can choose to go forward or not.”
Both the California Medical Assn., which represents physicians, and the state hospital trade group have concerns about the legislation. For one, they say, hospitals shouldn’t be responsible for supplying physician charges because doctors are independent contractors and can’t be employed by hospitals under state law.
The physicians’ group calls the legislation an “unworkable solution” and says insurance companies are in a better position to assist members with questions about out-of-pocket costs. “We have to ask whether we want physicians focusing on paperwork or treating patients,” said Molly Weedn, spokeswoman for the California Medical Assn.
In January, Anthem Blue Cross rolled out a service in Ventura, Orange and San Diego counties in which it calls members who are referred for an MRI, CT scan or other imaging test and informs them of the lowest-cost option in their area. Anthem said it started the service because the cost for these scans can vary from $350 at outpatient centers to more than $2,000 at hospitals with little difference in quality.
Dranitzke sought help from Anthem, his insurer, but representatives there only advised him whether a service was covered or not by his plan.
He decided to call around for the best prices. His family of four has a $3,500 deductible, and his out-of-pocket costs can reach nearly $12,000.
Healthcare policy experts say that such price-shopping could be a brake on rising healthcare costs, by forcing medical providers to be competitive. But as Dranitzke found, it’s not like shopping for the best deal on a set of tires.
“If I could have saved 10% off the cost, that would have been a big chunk of change,” he said. “But it’s nearly impossible to figure this out.”