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Research Letter |

Availability of Consumer Prices From Philadelphia Area Hospitals for Common Services:  Electrocardiograms vs Parking

Jillian R. H. Bernstein1; Joseph Bernstein, MD2
[+] Author Affiliations
1student at Haverford High School, Haverford, Pennsylvania
2Department of Orthopaedic Surgery, University of Pennsylvania, Philadelphia
JAMA Intern Med. 2014;174(2):292-293. doi:10.1001/jamainternmed.2013.12538.
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Most people in the United States are shielded by third-party payers from the marginal cost of their health care consumption. It has been suggested that removing that shield would foment concern about price and, in turn, create market pressure to keep prices down.

Nevertheless, however concerned about prices they may be, consumers cannot act on their concerns if prices are not easily available. This point was raised by Rosenthal et al,1 who attempted to find the price for hip replacement and discovered that “many health care providers cannot provide reasonable price estimates.”

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Availability of Consumer prices
Posted on January 3, 2014
Michael S. Ellis, MD, FACS
Tulane School of Medicine
Conflict of Interest: None Declared

While I appreciate the efforts by the Bernsteins, Rosenthal, et al in pointing out the difficulty patients experience in trying to learn the "actual cost" of health care by all types of providers, other than the quote by Rosenthal that “many health care providers cannot provide reasonable price estimates,” they did not address "why" this problem exists.The reality is that the “charges” by health care providers are essentially meaningless for determination of actual “cost” to the payers or patients, because patients with any form of “coverage” will have underlying (invisible) “allowables” that determine the true costs of the provider.They did state that "people . . . are shielded by third-party payers from the marginal cost of their health care consumption," but without elaboration.The reality is that most providers themselves don’t know what their third party contracts ultimately “allow” their ultimate reimbursable “charge” to be.Other than for cosmetic surgery or other “non-covered” expenses, providers are hesitant to provide a “cash” amount, because they may subsequently learn the patient did have some coverage that requires the provider to recalculate its “charge”.Sadly, federal and state government (Medicare & Medicaid) REFUSE to release contract “allowables” for all healthcare costs (allowables) EXCEPT for physicians’ fee schedules, which are available on the internet; and private insurers REFUSE to release their “allowable” costs for ALL providers (including physicians, who basically are signing “blind” contracts) citing “proprietary” and “contract” reasons.Providers therefor artificially increase their "charges" to assure they are above the "best allowable," and fear that if a lower price is learned by any payer, it will be labeled their "real" charge and their reimbursement will be reduced to that amount.Additionally, our legal system encourages “high charges” by providers because the “awards” by the courts for injuries is based on “charges,” which inures to the benefit of both the injured party and their attorneys, even if later actual payments to those providers is greatly reduced by “cash” discounts, or deciding not to have the treatments. The only way that consumers will ever know the true “costs” to them/payers is if laws or regulations REQUIRE that all third party payers make available, upon request by physician or patient, the contracted discounts (allowable) for any medical providers (hospitals, imaging, lab, DME, medications, physicians etc.).Armed with this information and augmented by “incentives” to truly “shop” for prices, including Health Savings Accounts for payment of deductibles and co-pays; as well as “premium adjustments” - lower premiums for healthy lifestyle choices (weight, annual examinations and tests, regular exercise, etc.), and higher premiums for poor lifestyle choices (smoking, alcohol, obesity, vaccinations, poor compliance with prescriptive medications, etc.), - an actual improvement in cost and health could result. Michael S. Ellis, MD, FACSProfessorTulane Dept. of Otolaryngology-Head & Neck SurgeryNew Orleans, La 70112-2600msellis@tulane.eduCELL: 504-666-9990

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