October 27, 2013

Shopping for better deals on health care? Experts say why not

Insurers, employers and workers alike are all looking – and finding ways – to tame rising costs.

By Tom Murphy
The Associated Press

Paul Freeman drove 600 miles last year to save himself – and his employer – thousands of dollars on his surgery.

click image to enlarge

Dr. Keith Smith, right, of Surgery Center of Oklahoma, prepares a patient for surgery at the center in Oklahoma City on Oct. 10, 2013. Registered nurse Karen Barger is at left. Smith bids often on Medibid requests. He says his physician-owned center can offer better rates than some competitors because it doesnít charge a high facility fee like many hospitals do.

The Associated Press

Freeman’s insurer covered his travel costs and the entire bill because a medical center in Oklahoma City could remove the loose cartilage in his knee for about 70 percent less than a hospital closer to Freeman’s home in Texhoma, Okla.

At first, the community bank CEO hesitated because he thought the lower price would mean lower quality. But he knew if he didn’t make the roughly 10-hour roundtrip trek, he’d pay about $5,000 out of pocket.

“You immediately think, ‘Oh they’re going to take me into a butcher shop and it’s going to be real scary,”’ Freeman, 53, says, noting that instead he had a “wonderful experience.”

People shop for deals on everything from cars to clothes to computers. Why not for health care, too?

Insurers, employers and individuals are shopping around for health care as they try to tame rising health care costs. Companies are doing things like paying for workers to travel if they agree to have a surgery performed in another city where the cost is cheaper. They’re also providing online tools to help people search for better deals in their home market.

And some patients are bargain-hunting on their own. Through a website called MediBid, people who pay out of pocket are soliciting doctors, hospitals and medical centers to bid to perform knee surgeries and other non-emergency procedures.

Patients who shop for care represent a tiny slice of the roughly $2.7 trillion spent annually on health care in the U.S., said Devon Herrick, an economist who studies health care for the National Center for Policy Analysis. But he and other experts expect this trend to grow, especially as more companies offer insurance plans that require employees to pay thousands of dollars before most coverage starts. These so-called high-deductible plans also will be among the cheapest options available on the public exchanges set up as part of the health care overhaul to enable millions of uninsured people to shop for coverage.

Advocates say all the shopping will help control medical spending.

“We waste an enormous amount of money in this country by overpaying for health care,” says John Goodman, an economist and CEO of the National Center for Policy Analysis. “The only way to get rid of waste is to have people compete in a real marketplace.”

Searching for health care deals is a big change for many patients who are used to paying whatever their insurer didn’t. Just figuring out an appropriate price for a procedure can be difficult for the average person.

Surgeries and other major procedures have different prices based on a variety of factors, including whether it’s performed in a big city where care can cost more or in a hospital. And the portion that patients pay can vary widely. A lot depends on the type of insurance coverage and other factors like the leverage a provider has in negotiating rates.

For instance, a patient in Detroit with high-deductible health coverage provided by an employer could pay $920 or $2,791 out of pocket for a colonoscopy, according to research done by health care technology firm Castlight Health. Same patient. Same insurance coverage. Only difference: Where the procedure is performed.

“You can be a highly educated consumer now and still not understand what bill is going to hit you,” says Dr. Giovanni Colella, CEO of Castlight, which designs an application that insurers or employers can give to patients to help them shop for health care based on price and quality.

It’s also tough for patients to measure quality versus price. “You may find something (more expensive), but it doesn’t mean it’s better, safer, or more efficient,” says Arthur Caplan, a medical ethicist at NYU Langone Medical Center.

(Continued on page 2)

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