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Friday, August 19, 2005

Not Law but Important - Aetna Pilot Site Details Fees Paid to Doctors

NPR's Morning Edition had a piece this morning reporting:

Through a Web site, the health insurer Aetna will disclose how much it pays 5,000 Cincinnati-area doctors for 600 common medical services. The company says patients can use the pilot program to comparison shop.
Here is Aetna's press release. Some quotes (my emphasis):
Aetna (NYSE: AET) today announced the first program of its kind to let consumers find out what they can expect to pay at the doctor’s office before going in for a visit. This means that, for the first time, consumers can better gauge their out-of-pocket health care expenses by having online access to the actual discounted rates for up to 25 of the most common office-based services offered by their own primary care or specialist physician. The program will initially be piloted with information for approximately 600 distinct procedures provided by 5,000 individual physicians and physician groups in Cincinnati, Dayton and Springfield, OH, Northern Kentucky and Southeast Indiana.

“As an industry, we need to make it simpler and easier for consumers to access information that will support them in making well-informed health care decisions,” said Aetna President Ronald A. Williams.“ The biggest impediment to effective consumerism in health care has been the unavailability of relevant data on health care quality and cost. We’ve made great strides in providing consumers with details on quality through our Aexcel high performance networks, Hospital Comparison Tool, and the ‘Rate Your Medical Professional’ survey on DocFind. Now, we are complementing those efforts by taking the lead on opening what is often perceived as the ‘black box’ on physician-specific pricing. * * *

“I applaud Aetna for taking a significant step toward transparency of health care pricing,” said Regina Herzlinger, the Nancy R. McPherson Professor of Business Administration, Harvard Business School. “Consumers should know how much a service will cost them before they make the purchase, and health care should be no exception.”

"The industry has long taken the position that health care pricing is proprietary, and therefore has not shared the true costs of medical services with consumers on a prospective basis -- only after care is received," said Ray Herschman, National Consulting Practice Leader, Mercer Health and Benefits Consulting. "Employers and consumers will be very encouraged by Aetna's pilot program; we believe this important milestone, on the road to a more transparent consumer-driven healthcare marketplace, will lead to more of this important information being shared with consumers."

Of course this is information that those of us with high-deductible health insurance long have been looking for. The free section of the Wall Street Journal Online had this story this morning. Some quotes from this lengthy story:
The growing effort to enlist consumers in reducing health-care costs has been stymied by the fact that most people just don't know what medical care costs.

Private and government health coverage has helped shield them from bills. And even with newer consumer-driven plans that employ Health Savings Accounts, which give people more of a financial stake in the issue, pricing information can be hard to come by.

Now, a major national health insurer is making an effort to change that. Starting tomorrow, Aetna Inc. plans to make available online the exact prices it has negotiated with Cincinnati-area doctors for hundreds of medical procedures and tests. The initiative, which Aetna hopes to take eventually to other parts of the country, aims to give patients the tools to comparison shop and make savvier decisions with their health-care dollars.

Aetna is the first major health insurer to publicly disclose the fees it negotiates with physicians. Some in the health-care industry say the move is likely to push more insurers to follow suit, which in turn would give a significant boost to consumer-driven health plans.

These plans combine high-deductible insurance policies with tax-favored savings accounts that consumers can use to pay for medical care until they meet the deductible. The idea is that because people must pay for a big chunk of their care out of pocket -- and can build up any money they don't spend on health care -- they will be wiser in how they spend that money.

For such an approach to be truly effective, consumers would need to know how much medical treatment costs. In reality, though, that hasn't been the case. Unlike in almost every other consumer industry, from airlines to apparel to restaurants, most health-care pricing isn't readily available for customers to peruse upfront. Reluctance by doctors and health insurers to provide their prices has left many patients clueless about the cost of their care until they receive the bill after the fact -- not just in consumer-driven plans, but in any managed plan where at least some of the cost is borne by the consumer.

To see what health care consumers are facing, here is a 3/13/05 story from the St. Petersburg Times about a woman negotiating the costs of child birth. She was facing two obstacles - one, finding out what prices were being charged, and two, negotiating those prices down -- something that consumers with health insurance don't have to deal with. Some quotes:
TAMPA - Sandra Hughes is on the cutting edge as a health care consumer.

Unable to get maternity coverage for her third child's birth because of prior caesarean sections, Hughes called local doctors, hospitals and specialists well ahead of her February due date and negotiated for lower charges by offering cash upfront.

Whether she realized it or not, her frustrating journey through the business end of medical care could be the wave of the future as insurers try pushing responsibility onto individuals to spend health dollars wisely. Consumer-directed health plans, which put the patient in charge of finding the best care at the best price, are the rage among insurers and employers as they seek ways to control rising costs.

Gary Claxton, vice president of the Kaiser Family Foundation, said although these plans are being aggressively promoted by insurers, no one knows how successful an individual will be in negotiating lower prices for medical services.

"There's a group who think individuals will get the pricing an insurer normally gets," he said. "A smaller camp thinks it may mean an opportunity to be stuck with higher rates. Then there are all the jokes about how good a negotiator you can possibly be when you're not wearing your pants."

Finally, another similar story from the front page of the 4/5/05 WSJ, unfortunately not freely available online, also talked about Mrs. Hughes. Some quotes:
It can be a daunting task, taking on a huge, lucrative medical industry. There are about four million births a year in this country, and while costs vary widely, a typical birth can run anywhere from $7,000 to $12,000, according to various insurance brokers and health experts. Everyone from hospitals to the obstetricians, midwives, radiologists and testing labs has a stake in that business.

The process also can be an emotionally charged one that involves tough trade-offs. Women worry about alienating the doctors who will be handling the birth of their child. Prenatal care and childbirth can involve numerous checkups, tests, sonograms and pain treatments, and women often must ask themselves hard questions about how much care they can or should pay for.

But that is exactly what many employers, health insurers and policymakers want patients to start doing to help control health costs. Many employers are expected to offer some type of consumer-driven plan next year and maternity care is seen as an apt area for this approach because families have months to explore their options, which can include maternity discount cards, prepackaged birth plans or less-expensive nurse midwives. * * *

Patients are learning how to make the complex medical billing system work in their favor. When Sandra Hughes in Florida reviewed a breakdown of what her previous insurer paid for her last pregnancy it showed her the rates were much lower than what the doctors and hospital charged so-called cash patients who pay out of pocket. When she asked for the same deal on her current pregnancy, one obstetrician complied. When she asked another doctor's practice to match it they did, cutting the usual $3,000 fee to $1,900. When she tried the same with the hospital, she met resistance.

Hospital costs are covered on the Aetna pilot site either; hopefully that will be Phase 2.

Posted by Marcia Oddi on August 19, 2005 02:33 PM
Posted to General News