Hidden prices, failure to negotiate rates boost healthcare costs
Healthcare prices are "maddeningly opaque," according to a Center for American Progress issue brief, and lack of price information adds about $36 billion in systemwide spending annually.
Though the United States spends over $8,000 per person annually on healthcare, most patients don't know the prices of procedures, medication or hospitalization, the Center noted. Practitioners also are in the dark, routinely making referrals without knowing what other providers charge or choosing devices without comparing prices.
Concealing costs of healthcare services prevents competition based on price and value, according to the Center. Lack of price transparency is becoming a widespread concern when consumers receive scheduled care. With more doctors participating in accountable care organizations and taking responsibility for patient care costs, access to price and quality data is necessary to guide patients to high-value specialists. And failure to disclose health costs to patients during the informed consent process could put doctors at legal risk, as FiercePracticeManagement reported.
The issue brief lists three keys to patient-level price transparency: Providing full episode costs with patient-specific out-of-pocket expenses, offering a price guarantee so the estimate has value and including quality data. Researchers also called on the Obama administration to be more dynamic in implementing transparency requirements of the Affordable Care Act.
Military healthcare spending offers another example of the dangers of cost passivity. Military health leaders at TRICARE Management Activity (TMA) didn't negotiate prices at 163 overseas healthcare locations and instead paid charges on bills received, according to The Washington Times. Healthcare costs for six locations later rose 203 percent in three years, the article noted.
"Without negotiating rates or implementing other cost containment measures, TMA potentially paid more than necessary for healthcare services provided by overseas providers and missed opportunities to obtain the best value for healthcare services," according to an inspector general report, the Times reported.
Moreover, the military learned the hard way that fraud risk grows without financial oversight. In 2008, the CEO of a Philippine company that received most of the military's overseas healthcare payments was convicted of defrauding the federal government and deliberately inflating prices, The Times reported.
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