Readily available procedure pricing may be the key to reducing healthcare costs in the country, according to new research from the University of Michigan Ann Arbor (UM).
Price transparency in healthcare is a hotly debated topic and just recently, CMS announced its eMedicare Initiative that aims to provide beneficiaries with cost and quality information. Under eMedicare, patients can take advantage of the price transparency tools to compare national average costs of certain procedures. The Trump administration has also pushed for price transparency, requiring hospitals to post prices online and potentially forcing pharmaceutical companies to publish prices in TV advertisements.
Zach Brown, PhD, assistant professor of economics at UM, sought to study the impact of the availability of pricing information before procedures—specifically within imaging. The average prices of an MRI and CT scans in the United States are $1,200 and $228––more than double the amount in other developed countries.
“While the price of healthcare procedures varies widely across medical providers, these prices are often difficult for patients to observe,” Brown said in a prepared statement issued by UM. “Consequently, individuals often choose providers without comparing prices.”
Brown examined how a state-run website, HealthCost, that provided information about out-of-pocket costs for a number of imaging procedures in New Hampshire would impact medical imaging visits. Privately insured individuals had access to the site.
The HealthCost website reduced the cost of medical imaging procedures 5 percent for patients and 4 percent for insurers, equaling to a savings of $7.9 million for individuals and $36 million for insurers over a five-year period. By the 5th year, out-of-pocket prices were 11 percent lower for patients.
“If healthcare is to be left to market forces, then I believe that those markets should be transparent and competitive,” Brown said. “Reining in health care costs will require bold solutions that lift the veil on prices.”
While such a model works for imaging and perhaps other less complicated procedures, it’s important to note price transparency tools may not be as effective on procedures, including surgeries, that have prices which are determined individually.