The perils of price lists for private practices

March 15, 2017

The details of what will come when the Affordable Care Act is repealed are not yet finalized, however high on President Donald Trump's list on healthcare reform is the idea that patients should have the ability to compare prices before they decide on a doctor or facility for their healthcare.

The details of what will come when the Affordable Care Act is repealed are not yet finalized, however high on President Donald Trump's list on healthcare reform is the idea that patients should have the ability to compare prices before they decide on a doctor or facility for their healthcare.

 

Further reading: What the Obamacare repeal bill means for physicians

 

But the question remains-can doctors actually provide their patients with a price list?

“Sure we can,” says Ripley R. Hollister, MD, a family physician with a practice in Colorado Springs, Colorado, and a board member with the Physicians Foundation, which provides support and research to help physicians deliver high quality, cost-efficient healthcare. “We all have a pricing schedule-we know what are prices are based on CPT codes. So if I have a health maintenance visit with a patient between the ages of 40 and 64, there’s a code for that. A rapid strep test, there’s a code for that.”

Some practices already post these prices on their websites, but the costs listed are not necessarily what the patient will pay. Patients with health insurance, for example, pay only what the insurance does not cover.

“The most important decision is whether a practice accepts health insurance or not,” says Nitin S. Damle, MD, MS, MACP, president of the board of regents of the American College of Physicians and the managing partner of South County Internal Medicine in Rhode Island.

Not all practices accept insurance, practicing direct pay instead.

“At present, about 5 to 6% of practices do not accept insurance,” he says. “The patients may pay on a pure fee-for-service basis, or there may be a monthly payment irrespective of office visits, or there may be a retainer, or some combination of all of the above.” Many of these doctors make deals with patients on an individual basis, providing pricing one-on-one based on the patient’s specific needs.

 

Blog: The largest cause of medical errors is congress

 

If practices that accept insurance publish their fee schedules, they will not reflect what the patient will actually pay, Damle explains. “So price list is less relevant, in that those are not actual payment in most cases,” he says. “If the practice does not accept insurance, then it is appropriate to disclose the cost of services.”

Next: How to overcome the challenge of creating a price list

 

The challenge of creating a price list

The difference between what the practice charges and what the patient actually pays may make comparison-shopping for medical services particularly complicated. “Patients can try … but if the clinician accepts insurance, patients will not be getting an accurate picture,” Damle says.

 

Further reading: How physicians can deal with policy uncertainty

 

Adding further complexity to the issue, the Physicians Foundation reports in its 2016 Survey of America’s Physicians that only about 33% of practicing physicians are independent practice owners or partners.

“There’s a whole movement among physicians where they are moving away from private practices and being employed by corporations, medical centers and hospitals,” says Hollister.

Those whose practice is part of a larger network may receive their pricing structure from farther up in the organization, so decisions about what to charge are out of the practice’s hands. Whether this creates competitive pricing between medical centers and private practices may become apparent if they are all required to provide pricing schedules to patients.

 

Popular online: Q&A with ACP's Bob Doherty on the future of healthcare

 

Add Medicare and Medicaid to this mix, and providing patients with a realistic picture of what they will spend for medical exams, tests and procedures becomes both simpler and more complex. The Centers for Medicare & Medicaid Services (CMS) has a maximum allowable charge (MAC) for each CPT code, and other health insurance companies use this as a starting point for their own price structure, says Hollister.

“They develop contracts with physician practices, and they develop percentages based on MAC, and that’s your fee structure,” he said. “This is not very patient-centric.”

Next: Price projections vs. reality

 

Price projections versus reality

Patients also need to understand that a price for a single procedure may not be all-inclusive.

 

Popular online: Physicians should rethink their revenue streams

 

“It’s analogous to fixing a car,” says Hollister. “You go into the shop because your clock doesn’t work. The mechanic says, ‘I don’t know what’s wrong, I have to diagnose it.’ The same thing happens in a doctor’s office. I can say that a code includes an evaluation of the problem, and if the solution is very simple, then the pricing is easy. But the patient may require additional lab work, an injection of medication, a prescription, and so on. I think people can understand that.”

As the need for tests, treatment, procedures and therapy grows larger, however, some patients may view each additional requirement as a hidden fee, just as they might view mounting costs at their mechanic’s shop. To find ways to be as comprehensive as possible with patients, some of the pricing techniques used in retail may find their way into medical practices. For example, retailers often bundle all of the potential costs of a product purchase, including the product, service contract, warranty and accessories in one price. Physicians may find a need to do the same.

This is the approach taken by the Surgery Center of Oklahoma, a multispecialty facility in Oklahoma City, where about 40 surgeons and anesthesiologists share ownership. At the center’s website, patients can click on an illustration of a body part, choose the surgery they need from a drop-down menu and get an instant price quote. The pricing includes the facility fee, surgeon and anesthesiologist fees, as well as the initial consultation and routine follow-up.

The website’s disclaimer itemizes the things that are not included in the price as well. “Our experienced surgical staff knows with almost certainty what will be needed to complete your surgery,” it confirms, but if hardware or implants are part of the procedure, they are provided “at invoice cost without any markup whatsoever.”

 

Popular online: How to navigate direct pay successfully

 

As Damle and Hollister note, however, if the patient’s insurance will pay for the procedure, it’s an entirely different story. This holds true for the surgery center, as evidenced by their disclaimer: “If you are scheduled for surgery at our facility and we are filing insurance for you, the prices listed on this website do not apply to you.”

So while physicians know their fee structures and can provide price lists to patients if required to do so, only those who are not covered by health insurance are likely to find this information useful.

“The informed consumer is one thing,” says Hollister, “but when consumers have information, they don’t always know what to do with it. Or if they do, that doesn’t mean they get charged less. What does the patient get for what they’re paying? That’s what is most important.”

 

Randi Minetor is an author and freelance journalist based in upstate New York.