Consumers Face Obstacles in Obtaining Costs for Health Services Prior to Care

Will transparency in health care price information help consumers anticipate health care costs? It is difficult for consumers to obtain meaningful price information prior to receiving care, but it is not impossible, Linda Kohn, a director in the Government Accountability Office’s (GAO’s) Health Care team stated in an audio interview. The GAO issued its report on health care price transparency issued an October 24, 2011. GAO found several health care and legal factors that make it difficult for consumers to obtain information on the complete cost for health care services.

Kohn noted that, typically, a patient goes to his or her provider, hospital, or physician; receive a service; and weeks latter find out what is owed, the price to the consumer. She went on to describe a situation in which she asked a physician’s office what a particular treatment would cost and was told to contact her insurance company. The insurance company could not provide an answer without knowing how the doctor would code the treatment and how it would be submitted. She went back to the doctor’s office and asked how the physician what the code would be and how it would be submitted.  The physician’s office said it could not tell her until after the treatment is furnished.

GAO’s study.  In light of consumers’ increased responsibility for paying for the costs of their health care and efforts aimed at making price information transparent, Congress asked GAO to study the extent to which health care price information is available to consumers. GAO examined how various factors affect the availability of health care price information for consumers and the information selected public and private health care price transparency initiatives make available to consumers. GAO reviewed price transparency literature, interviewed experts, examined a total of eight selected federal, state, and private insurance company health care price transparency initiatives, and anonymously contacted providers and requested the price of selected services to gain a consumer’s perspective.

Health care factors. Among the health care factors that may make it difficult for consumers to obtain price information for the health care services they receive, GAO identified (1) the difficulty of predicting health care services in advance, (2) billing from multiple providers, and (3) the variety of insurance benefit structures. As an example, when GAO contacted physicians’ offices to obtain information on the price of a diabetes screening, several representatives said the patient needs to be seen by a physician before the physician could determine which screening tests the patient would need. Provider association officials said that consumers may have difficulty obtaining complete cost estimates from providers because providers have to know the status of insured consumers’ cost sharing under health benefit plans, such as how much consumers have spent towards their deductible at any given time.

Legal factors. GAO was told that legal factors that may prevent the disclosure of negotiated rates between insurers and providers, which may be used to estimate consumers’ complete costs include (1) contractual obligations with providers that may prohibit the sharing of negotiated rates with the insurer’s members on their price transparency initiatives’ websites, and (2)  providers and insurers may be concerned with sharing negotiated rates due to the proprietary nature of the information and because of antitrust law concerns.

According to Kohn, GAO took a consumer view when it looked at eight different public and private price transparency initiatives that make price information available to consumers. Among the eight initiatives, one was a federal initiative sponsored by HHS, five were done at a state level, and two were done by national private insurance companies and were available to the people covered by those plans. Only two of them, provided complete price information—meaning that it included the negotiated rate, not the bill charge; it included all or most associated costs, hospital, physician, lab, etc., the mix of services; and it identified a person’s estimated out of pocket costs, the price to the person. One of these was a private insurer and one of these was a state sponsored initiative, Kohn explained. GAO chose these initiatives because they provide information on specific health care service by provider. The initiatives vary in the price information they make available to consumers.

Recommendations. As HHS continues and expands its price transparency efforts, it has opportunities to promote more complete cost estimates for consumers, GAO concluded. It recommended that the HHS determine the feasibility of making estimates of complete costs of health care services available to consumers, and, as appropriate, identify next steps.