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Giving Price Information to Consumers can be confusing

May 13, 2006 • Health Care News • Larry Benz

A few days ago, USA Today ran a headline article “Shopping For Health Care Pricing Can Be Pretty Confusing”.  If you haven’t heard, a movement to put pricing information in the hands of the consumer so that they can make the right choices has been gaining steam for the last several years.  Some pundits even call it the “cure” for health care (no pun intended).

In general, the article highlights some very good points regarding the significant differences that insurers pay for various procedures.  Some insurers, are even publishing in certain markets the costs of various inpatient and outpatient procedures.  You can easily see the huge discrepancy between the cost of a total knee procedure ($16,900 to $34,000 depending on the hospital).  Unfortunately, USA Today does not present the provider side of this equation and that is where the article falls short and perhaps a little misleading.

It is hard to argue against the notion of putting more power and choices into the hands of patients in the decision making process with regards to prices (a little like trying to argue against clean air).  However, the fact of the matter is that regulations and essentially price caps by CMS make it almost impossible to provide this information in a way that patients would find helpful.

Some things to consider:

-medicare sets our fee schedule establshing a quasi socialized system and price caps.  Through CMS’ bizarre set of ridiculously restricting guidelines, a work component of modality/procedures is established for us (which by the way essentially puts the maximum value of a therapist around $60,000 per year-if anybody wants to see the math, let me know.  Imagine if they did this to plumbers).  So, we can provide the CMS fee schedule list to patients as the “prices of physical therapy procedures” but it would be meaningless for non-medicare patients.

-in outpatient PT, we get roughly 50-55% of what we bill BUT that percentage is determined by each payor separately.  Again, we can provide the gross fee schedule but it is more confusing then instructive.  We are in a business where nobody pays full retail.

-you can’t get creative when it comes to pricing like you can in most consumer oriented businesses.  Easy example.  Let’s suppose that in order to increase business during the down hours of 1-3 on Tuesday’s and Thursdays, you advertise that you will waive copays.  Unwittingly, you have just committed 2 crimes-advertising fees and waiving of copays (I know that there are a lot of unscrupulous providers out there that routinely waive copays but that is a different story).

How would one begin to answer the question “what does physical therapy cost?”.  Here are some approaches:

-The list approach.  A full fee schedule is provided.  It would raise more questions and cause more confusion than not having a list to provide. This was demonstrated in our state (KY) several years ago when all providers were forced to provide such a list of their top 20 procedures in the waiting room (they even regulated the exact height that the list had to be).  It was thankfully abandoned within a year due to causing more problems than alleviating (unintended consequences of misguided directives).

-The retail approach.  Before you can do modality/procedure, you tell he patient the exact cost of the procedure and then let them decide whether they want it or not (again, you would have to know their insurance, the amount of expected reimbursement by the payor per their contract, and the amount that the patient is responsible).  This would make health care great fun!  Don’t laugh, it wouldn’t surprise me if this is thrust upon us and don’t forget another piece of paper that each patient will sign attesting that we went thru this drill with them (think HIPAA addendum).

-the estimate approach.  Borrowed from the auto industry and one that will most likely be perfected by plastic surgeons some day, you will provide the patient an estimate of the charges based on their diagnoses, acuity, and other clinical issues but then you will have to take into account their insurance companies coverage (and your contract), copays, etc. etc. which will make this whole thing an 30 minute exercise that will probably scare needy patients into going to a personal trainer.

See what a straightforward issue that price transparency is in health care?  Thoughts?


Larry Benz

Dr. Larry Benz, DPT, OCS, MBA, MAPP, is the President/CEO of Confluent Health. He is nationally recognized for his expertise in private practice physical therapy and occupational medicine. Dr. Benz’s current areas of interest include conducting research and integrating empathy, compassion, and positive psychology interventions within physical therapy. He will be releasing a book in...

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