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UnitedHealthcare/Zongwei Li/MEDILL

A survey released by UnitedHealthcare found that about 14 percent of respondents use online resources to comparison shop for health care treatments and services. 

Insurance companies help clients compare health-care prices

by Zongwei Li
March 05, 2013

Until recently when someone got sick, he or she went to a doctor, received treatment, waited for the bill and then paid it. Simple enough, right? But one thing most people don’t know is that now the number on the bill can be negotiated.

Some people have done just that including Dr. Andrew Agwunobi, director of hospital performance improvement at Berkeley Research Group in Washington, D.C. He once negotiated for himself as a patient.

After seeing a dermatologist who failed to provide a diagnosis or medication, Agwunobi received “a quite substantial bill.”

“I called up the office and said that I felt like the bill greatly exceeded the value of the office visit because I didn’t get a diagnosis and I didn’t get any medication. And then that doctor’s office actually cut the bill in half,” he said.

As a hospital administrator, Agwunobi also has been involved in price negotiations with patients who can’t afford their bills. “Many patients don’t realize that they can negotiate not just with doctors, but you can negotiate with your hospital,” he said.

This is only the tip of iceberg of what most consumers don’t know about health-care prices.

In 2006 Mike Leavitt, secretary of U.S. Department of Health of Human Services, noted that Americans know the price of almost everything they purchase except health care. And for a long time, doubts and misunderstanding on the issue often turned into a story of “I don’t have a choice” for patients and “It’s just complicated” for doctors.

Many patients don’t feel like taking the initiative.

“Patients are not empowered health-care consumers. It’s very, very difficult for patients to challenge doctors,” said Vicki Rackner, a surgeon and expert in the doctor-patient relations. “There’s just a way that doctors and patients interact. It’s really hard to change that behavior.”

Now some people are trying to change that.

A few insurance companies now provide cost estimates. UnitedHealthcare, one of the nation’s largest insurers, has a product that allows clients to learn and compare prices of different providers through its website or a mobile application before walking into a doctor’s office.

Tori Bogatyrenko, an executive overseeing the company’s price transparency efforts, says the prices are estimates based on current contracts. The website predicts prices for customers in a way that helps them deal with the complexity of a typical health-care bill.

“We’re not just giving you a price for your office visit with the doctor but will include what you pay the lab and what you might have with a radiologist or other preventive screenings that are all part of what you experience in that one visit but, in fact, you are paying a different bunch of people,” Bogatyrenko said.

Since the estimator’s launch in April, Bogatyrenko said half a million people have tried it and 84 percent of them said they would use the tool again.

Health Care Service Corp., which operates Blue Cross and Blue Shield plans in Illinois, has developed the Benefits Value Advisor program. The system compares cost estimates from in-network providers and facilities and also provides patients’ reviews on quality. Company executives say they analyzed data from approximately 2,000 members in Illinois and Texas, and found that those who used the program to choose a different doctor saw an average savings of roughly $2,000 per claim.

In New Jersey a website named allows people to search, read and write reviews about 830,000 doctors nationwide. Visitors get feedback from others who have had similar procedures so they can compare rest times and side effects. The website, created five years ago, now draws more than 100 million patients each year, according to managers.

These tools were rolled out amid long-time calls for price transparency in the health-care industry. It’s trend that never seems to arrive, partially because of weak demand from patients.

However, that is changing, according to Mary Pat Whaley, consultant with Manage My Practice, an online medical management provider. She said with health-care spending soaring, patients are paying more out of pocket.

“We found it has migrated to a point where patients are paying usually between 25 and 30 percent of the total bill carried by the patient,” Whaley said.

An annual census of U.S. health insurers by America’s Health Insurance Plans found that 13.5 million people were covered by high-deductible health plans in January 2012, up from 11.4 million a year earlier. These plans offer patients low premiums but require more money from them when a procedure actually is performed.

“If a patient has a deductible anywhere between $1,000 and $5,000 or more, then they are going to price shop and they are going to care very much,” Whaley said.

But when patients start to ask doctors about price information, they usually find it extremely hard, often requiring many phone calls, voice messages and emails. And eventually when they get access to prices, the amounts vary a lot.

One reason for the discrepancy, according to Rackner, is that doctors don’t know what things cost, especially when it involves medication.

“I was just prescribing an antibiotic for a patient who had a really bad side effect profile. I just had a drug rep come to my office and he told me about this new antibiotic that avoided it, but it was 10 times as expensive. I had no idea,” Rackner said.

She said doctors sometimes don’t have access to how much drugs it will cost their patients because that answer depends on the results of negotiations between pharmaceutical and insurance companies.

And when it comes to medical procedures—a situation where doctors may actually know the base price--it’s still hard for them to figure out the price for an individual patient.

“Posting a price for a procedure is like listing the price of the house. Different houses have different costs. In fact, the same houses in different locations have different sales prices,” Rackner said.

For example, an elective hernia repair in a healthy 20-year-old athlete is different than an emergency hernia repair in a 70-year-old man recovering from a stroke. And the money paid by patients with different types of insurance plans also varies a lot, making it difficult for physicians to post prices.

“I would get as little as $200 from patients on Medicaid and I would get as much as $1,200 dollars for patients with a really good insurance plan,” Rackner said. “What if you have a patient who got to pay $1,200 and they find out that somebody else is getting it for $200?”

Rackner said she loves that insurance companies are rolling out price estimators because they have the best knowledge about health-care bills. Agwunobi, on the other hand, thinks the hospitals and private practices can do a little bit more.

“It will take some work, but hospitals can do better, and simply submitting historical averages of what they have charged,” Agwunobi said. He said that’s happening in the medical tourism industry where patients travel abroad for medical services to save money.

“Those hospitals, both in the U.S. and other countries, that are involved in medical tourism are able to price procedures or at least to give a range of prices for services and procedures that they are going to offer.”

And while Agwunobi also likes the insurance companies’ efforts to estimate costs he also is calling on providers to work out a system that offer more than estimates.

“Hospitals should come together to figure out how to quote prices, actual prices and hold themselves to it, either prices or a price range,” Agwunobi said. Providers should stick to their range even in the case of complications, he added.

Doctors and experts agree that little things are happening in the industry to increase price transparency, but it’s hard to say when patients will have enough information to comparison shop.

“We’re at point A. We want to get to point B, which is complete transparency. It’s going to be a painful transition," Rackner said.