As we were getting ready to step out for brunch a few weeks ago, my wife complained of sharp abdomen pains. I scoured the internet in an effort to diagnose her condition. But as the pain grew unbearable, I knew we needed expert help. My first instinct was to head to an urgent care clinic. But which one? What if we needed to go to a hospital? While my car’s navigation system can direct me to the cheapest gas within a five-mile radius, I had no idea what it might cost to get my wife’s symptoms checked out. Everything turned out fine that day, but we were flying blind when trying to decide where to seek care.
My wife and I are among the millions of people enrolled in a health plan that includes a high deductible. About 40 percent of people who receive health benefits through work are now enrolled in a high-deductible health plan (HDHP), according to a 2017 report from the National Center for Health Statistics. While many patients are taking on a bigger share of their health expenses, hospitals, physician offices, and health plans usually don’t know what a procedure will wind up costing the patient until after service has been provided. Although many hospitals are able to get bills out more quickly than they did a couple of years ago, it can still take a month for a bill to arrive in the mail. Physician offices tend to be a little quicker, sending out statements within a week or two.
The combination of large out-of-pocket costs, opaque prices, and billing delays can lead to unpaid medical bills1 and uncompensated care.2 Since 2000, the nation’s hospitals have written off more than $500 million in uncompensated care, according to the American Hospital Association. (A portion of this is required by law due to charity care regulations for non-profit hospitals.)
The calculus of estimating health care costs
How much a patient will owe can depend on a host of variables: the benefit design, the rate negotiated between the health system and the health plan, the patient’s annual deductible, the amount already paid toward that deductible, the coinsurance level, and the out-of-pocket maximum. With so many factors influencing the final price, it can be impossible for a billing office to tell a patient what a procedure will cost them. For some procedures, unforeseen events or findings could impact the final cost.
With the growth of HDHPs, patients’ own resources now represent a growing percentage of the revenue stream for hospitals, physician offices, and other medical groups. The burden to collect typically becomes more difficult once the patient walks out the door. But if the front office can tell patients exactly what they will owe for an upcoming procedure, the patient can budget for that expense, or make financial arrangements.
Although medical price calculators have been available for years, the results typically aren’t personalized to the individuals’ own coverage. Estimation tools, however, have come a long way over the past couple of years.
Some commercial health plans have launched price-estimator tools that help members compare prices for various procedures by health care facility. Several companies are developing solutions that could help hospitals, physicians, and other provider groups determine how much a patient will owe weeks or months before a procedure is scheduled. This can help to improve the overall patient experience by eliminating surprise bills that appear long after a patient receives services.
Here’s a look at a few organizations that are working to help solve this challenge:
- Sheen Health: This Connecticut-based company works directly with medical groups. Through a cloud-based web portal, a billing department connects to the patient’s health plan. Based on the patient’s benefit and claims history, the analytics can determine a patient’s likely out-of-pocket costs in real time. This allows a physician practice to have a fact-based conversation about the patient’s financial responsibility and collect payment before a procedure. Some health plans are offering this tool to their network providers.
- States: A growing number of states are gathering medical and pharmacy claims data from commercial health plans, as well as from Medicare and Medicaid, to help improve price and quality transparency. On June 29, Washington state announced that it had launched an all-payer claims database. Through the Washington HealthCareCompare website, patients or their family members can determine how much a procedure might cost based on where it is performed, according to a press release from Governor Jay Inslee (D).3 While 20 states have launched claims databases, Washington is one of only six that have made online access available to the public, according to the statement.
My wife’s health bills began arriving a few weeks after our visits to the urgent care center and the hospital. Rather than receiving a consolidated bill, the charges showed up in dribs and drabs.
From my perspective, one of the biggest problems in health care isn’t the care at all…it is how we pay for it.
- The American Hospital Association fact sheet, December, 2017: https://www.aha.org/statistics/2018-01-03-uncompensated-hospital-care-cost-fact-sheet-december-2017-update