Tags: medical | tests | procedures | comparison | shopping

Comparison Shopping for Medical Tests Can Save Big Bucks

Wednesday, 22 October 2014 12:50 PM

When patients shop for lab tests, scans and other medical procedures, they save money -- an average of $125 on expensive imaging services, for example, according to a study that evaluated consumer price comparisons for U.S. health services for the first time.
It’s a common-sense result that economists have long predicted, yet many U.S. doctors and hospitals have resisted price transparency that could have a meaningful effect on the nation’s health-care spending. While consumers compared prices for some services, the study didn’t determine whether they could evaluate the quality of the providers when making decisions.
Workers who used a price-comparison tool from Castlight Health Inc. (CSLT) saved as much as 14 percent on scans and tests compared with those who didn’t, according to data today in the Journal of the American Medical Association. Researchers said it’s the first scientific study of the savings potential from services such as those from San Francisco-based Castlight.
“In virtually all other areas of commerce, consumers know the price and much about the quality of what they intend to buy ahead of the purchase,” said Uwe Reinhardt, a health economist at Princeton University, in an editorial accompanying the study. Patients, though, go “blindfolded into the bewildering U.S. health-care marketplace, without accurate information on the prices likely to be charged.”
The U.S. spent $2.8 trillion on health care in 2012, 17.2 percent of the nation’s gross domestic product, according to the U.S. Centers for Medicare and Medicaid Services. The study may have implications for workers as employers increasingly shift responsibility for shopping for health-care coverage and paying for it onto their employees.
Shopping Around
Insurance plans featuring high deductibles and savings accounts -- often called “consumer-directed health plans” -- are becoming more common. Without tools to help employees shop for care, they’re little more than rationing, said Neeraj Sood, director of research at the University of Southern California’s Leonard D. Schaeffer Center for Health Policy & Economics.
“If those are the only two features, a high deductible and a health savings account, then there’s nothing consumer-directed about them,” he said. Sood was the senior author of the study, which examined a half-million workers at 18 large employers.
Castlight had sales last year of $13 million. Its 130 customers include Wal-Mart Stores Inc. (WMT), according to data compiled by Bloomberg. The 18 companies included in the study weren’t identified.
Employees saved the most on expensive imaging tests, and much less on visits to the doctor’s office.
Savings of $125
People who used the Castlight tool to price shop for lab tests saved about 14 percent on average, or $3.45 per test. Savings for advanced imaging services were 13 percent on average for people who shopped first, or $125. Savings for physician visits were just 1 percent, or $1.18, for those who shopped, suggesting that patients considered factors other than price when selecting doctors, such as convenience or familiarity, Sood said.
True prices for health services in the U.S. have been obscured by contracts between hospitals, doctors and other health providers and insurers, which often require all parties to keep the information secret. Groups like Castlight, founded in 2008 by entrepreneurs including Todd Park, President Barack Obama’s former chief technology officer, derive prices for care by analyzing claims data provided by large employers.
About 57 percent of U.S. employers intend to implement or expand health plans with high deductibles and savings accounts next year, according to a June survey by the National Business Group on Health, a trade group. It’s unknown how many also plan to offer price-shopping tools.
Looking for Value
“We’re not talking about a small fringe of the market anymore,” Mark McClellan, a former CMS administrator and a researcher at the Brookings Institution, said in a phone interview. “Many people with employer coverage are paying a significant amount out-of-pocket for health costs. It is very important for them to know what they’re getting for what they’re paying.”
Patients may realize larger savings on services for which they have no provider preference, such as labs and imaging.
“In some sense there’s just more room for savings in these commodity services rather than in office visits, where there’s much less price variation,” Christopher Whaley, a data scientist at Castlight and the study’s lead author, said in a phone interview.
The Castlight study had shortcomings. For one, it didn’t look at whether workers compared the quality of different labs, imaging clinics or doctors.
Difficult to Understand
“Even if you have financial motivation to choose lower-cost care, it’s really difficult to understand what treatment options are better for your health,” Carole Gresenz, a health economist at Georgetown University who wasn’t involved with the study, said in a phone interview. That “information asymmetry” persists if patients can’t compare treatment alternatives against one another, she said.
Relatively few people who had access to the Castlight service actually used it. Less than 7 percent of workers look at prices for lab work or imaging before seeking care, according to the study. The searching percentage was higher, 26.8 percent, for physician visits, where the savings were negligible.
Future research will examine whether Castlight’s tool had an effect on the prices doctors and clinics charge, Sood said.
“If it’s easier to shop based on price, simple economic models say you need to lower your price,” he said. “If it’s difficult to shop based on price, it’s easy to keep your prices higher.”

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When patients shop for lab tests, scans and other medical procedures, they save money -- an average of $125 on expensive imaging services, for example, according to a study that evaluated consumer price comparisons for U.S. health services for the first time. It's a...
medical, tests, procedures, comparison, shopping
Wednesday, 22 October 2014 12:50 PM
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