Person-Centered HealthCare: Cost Transparency Helps Patients Shop For Medical Care

Two relatively new services are facilitating a market for medical services — with price and quality competition, as well as transparency. We have previously reported on MediBid, which takes a Priceline approach to medical care. Another service, Healthcare Blue Book (HCBB), offers a free service for patients — showing the average price for various procedures in almost every zip code in the country.

Two relatively new services are facilitating a market for medical services — with price and quality competition, as well as transparency. We have previously reported on MediBid, which takes a Priceline approach to medical care. Another service, Healthcare Blue Book (HCBB), offers a free service for patients — showing the average price for various procedures in almost every zip code in the country. Moreover, both businesses have created new tools that are valuable for employer plans — especially those with high-deductible health insurance.

MediBid for Patients. U.S. patients willing to travel and able to pay upfront can take advantage of the online service, MediBid. Here’s how it works. Patients register and request bids or estimates for specific procedures on MediBid’s website for the services of, say, a physician, surgeon, dermatologist, chiropractor, dentist or numerous other medical specialties. MediBid-affiliated physicians and other medical providers respond to patient requests and submit competitive bids for the business of patients seeking care. Patients can choose from medical providers in the United States and even some providers outside the country. MediBid facilitates the transaction but the agreement is between doctor and patient, both of whom must come to an agreement on the price and service.

Business at the site is growing. For example, last year the company facilitated:

• More than 50 knee replacements, with an average of five bids per request and some getting as many as 22. The average price was about $12,000, almost one-third of what the insurance companies typically pay and about half of what Medicare pays.
• Sixty-six colonoscopies with an average of three bids per request and some getting as many as six. The average price was between $500 and $800, half of what you would ordinarily expect to pay.
• Forty-five knee and shoulder arthroscopic surgeries, with average prices between $4,000 and $5,000.
• Thirty-three hernia repairs with an average price of $3,500.

Healthcare Blue Book for Patients. The cost of a medical service can vary by a factor of five or even 10 times in a geographic area or within an insurers’ provider network. [See the figure.]

Using Healthcare Blue Book, patients can unveil some of the mystery surrounding what is a reasonable medical price. Healthcare Blue Book tracks a range of prices in each zip codebased on claims from its health plan clients. Although individuals cannot see the specific price each hospital and clinic charges for each service, patients can see the average or reasonable price within a given area. For instance, if the Healthcare Blue Book recommended price for a colonoscopy in the area represented in Figure IIis $1,300, patients know that is a fair price that is widely available. Moreover, patients know that up to one-quarter to one-third of area providers actually charge less.

MediBid for Employer Plans. Following the MediBid model, employers cover no more than the median cost — requiring the employee to pay excess charges if they choose a provider who charges above the median. Take a colonoscopy for example. The price in a large city varies considerably — and the upper estimates approach $9,000 if the procedure is done at an out-of-network hospital. Health plans negotiate network discounts that are lower, but prices can range from $900-$3,600 for a colonoscopy in the following example that was taken from a Midwestern city. [See the second figure.]

In this example, the Healthcare Blue Bookrecommended price is $1,300 — which is roughly the average price in the area. In health plans that MediBid designs, the employer only covers up to the recommended price. If the employee chooses a higher cost provider, the employee pays the extra out of pocket. When MediBid gets the employee a price that is lower than the HCBB recommended price, the savings are shared between employee and employer. MediBid (who uses the HealthcareBlue Book service) reports it often helps patients locate colonoscopies prices at less than half of the HCBB recommended price.

Healthcare Blue Book for Employer Plans. Healthcare Blue Book is a valuable tool that helps workers identify specific clinics, hospitals and facilities that have the best prices on medical procedures. Health plan enrollees can look up medical procedures by zip code online (including specific procedure billing codes ordered by a doctor). Healthcare Blue Book displays the median price and a bar graph comparing how costs vary among area hospitals and clinics. In the second figure, enrollees needing a colonoscopy could see that a hospital (identified in this graphic as Case 5455) charges $3,600 compared to an ambulatory surgery centers (ASC) that charges less than $1,000. Employees having a colonoscopy at an ASC could realize savings of $2,500 compared to the most expensive facilities.