Price Shopping for Healthcare: Theory & Reality Ateev Mehrotra Harvard Medical School
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“When consumers apply pressure on an industry, whether it’s retailing or banking, cars or computers, it in invaria iably ly pr produce duces s a surge ge of in innovation ion that in increa eases es pr produ ductiv ctivit ity, , red educes es pr pric ices es, , impr improves es quality, and expands choices.” -- Regina Herzinger, Harvard Business School, Market-Driven Health Care 3
Patients are engines of change Judicious use of Freedom of low-value care choice Preferential Bear greater fraction of costs selection of low- cost, high-quality of their care providers Transparency of Market forces will costs and quality drive providers to improve value
Lots of money to be saved if patients switched to lower-priced providers? Model scenario if patients who received care which cost above the median price switched to median price facility in their community Focus on commodity services Yearly y spendi nding ng How much ch would d be saved ed La Labs 270 136 13 Imagi aging ng 436 436 254 254 Durabl able e Medical cal Equi quipmen pment 61 37 Tot otal al 767 427 58% savings! 5
Joining CDHP has at most modest effect on prices paid Among 8 out of 9 services prices paid by CDHP did not differ (Sood, 2013) No impact on prices (Brot-Goldberg, NBER) Entry into CDHP did have modest effect of switching from brand name to generics (Huckfeldt, NBER) 6
Relatively small differences also in self-reported price shopping Deductible During your last health care None $1-1250 $1251+ encounter: Know your costs before? 86 61 48 13 11 15 Actively seek cost information? 7 10 10 Consider other providers? Consider other providers AND 1 3 4 compare costs? Sinaiko, JAMA IM, 2015
Is the problem lack of price data? 8
Enthusiasm for Price Transparency Over half the states have passed laws requiring either payers or providers to disclose pricing information to patients Component of president’s health care agenda 9
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Study design Intervention group: two large companies offered Truven Cost Calculator Control group: similar employees of other companies not offered tool Outcomes ◦ Change in outpatient spending ◦ Switching from hospital outpatient setting 13
What Did We Find? Findings ◦ No decrease in overall spending ◦ No shift in care from hospital outpatient setting ◦ No decrease in spending among those with higher deductibles Concerns ◦ Tool is not well designed ◦ Tool was poorly marketed ◦ Too broad of a focus on outpatient spending 14
2 nd Study Intervention group: all CalPERS individuals in a PPO in California Control group: all non-CalPERS California Anthem members in PPO plan with a deductible ($250-750) To address differences between the intervention and control population we used propensity score weighting Outcome: Smaller set of services for which people use the price transparency tool 15
Impact of Offering Transparency Tool Spending on “Shoppable Services” 900 850 Control ntrol 812 800 788 756 750 Offere ered d price ce 728 transp nspare renc ncy y tool ol 700 650 600 Year before Year after 16
Price Paid by Those Who Searched $1,400 Non- Searchers searchers $1,200 -14% $1,000 $800 $600 $400 Non- Searchers searchers Non- $200 Searchers searchers $0 E&M Lab Imaging 17
Fraction of services received preceded by a search All employees Among those offered tool who signed up Labs 0.3% 2.2% Office visits 1.0% 7.5% Imaging 1.0% 7.0% 18
Summary Theory is that combination of higher deductibles and price data will drive consumers to lower-priced providers Evidence is that neither high deductibles alone or deductibles + price transparency has had meaningful effect on prices Why? ◦ Is theory wrong? ◦ Other barriers exist that limit patients from being price shoppers? 19
• Ateev Mehrotra • mehrotra@hcp.med.harvard.edu
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Relatively Few Offered the Tools Signed Up Truven tool ◦ 10% of households signed up for tool ◦ But only 2% used it over time Castlight tool ◦ 24% of households signed up for tool ◦ 12% used it for a price search ◦ But only 4% had sustained use (3x use with 2x separated by 90 days) ◦ 60% of use was in first four months of aggressive marketing 23
Why Isn’t Price Transparency Decreasing Spending? Small fraction of people are signing up for tool Even among those who sign up, few use the tool before seeking care When they do use the tool, for most services searchers do not choose a lower cost provider 24
But why? 25
To answer this question National survey of adults who received care in last year Interviews with employees offered a price transparency tool 26
Not an explanation: Patients Do Not Care About Prices Tell us they are very interested ◦ 3/4ths said that out-of-pocket costs were very important when they chose a provider “It’s just like going to get a car: [if] people are out looking around, trying to get the best price, [dealers] are going to drop the price for you because they want your business. I don’t think health care will be any different.” 27
Not an explanation: Belief Higher Prices = Higher Quality Only 20% said that it was likely or very likely costs were related to quality “I don’t think that it hurts to get an idea [of price] if you’re going to get…comparable quality care at a location that’s gonna cost you a little bit less.” 28
Not an explanation: Just increase deductibles Fracti tion on of people ple who actively ely se searched hed out ut price ce data 18 16 14 12 10 8 6 4 2 0 $0 $1-500 $501-1250 $1251-2500 $2501+ 29
Awareness & Salience Do not know where to find data Hard to access Not sure if the data they see on these websites is relevant to their care 30
Complexity of Billing Strange codes o CPT/HCPCS/ICD10 Division of costs o Single ED visit could mean many bills o Facility, Lab, radiologist, ED physician, Post-hoc nature of billing o I got some stupid GI bug…in May. I was in the ER twice, and…missed 6 or 7 days of work. And holy crap, that bill is insane. It would have been cheaper to have been admitted. Seriously. o All of a sudden, [my husband] took an insulin shot in the hospital and it cost me $500. If I had known that, I would have brought the insulin myself and given it to him. So all of a sudden I get this bill for $500 that I have to pay, and there's no way out of it.
Obtuse Nature of Health Care Billing
Most popular aspect of Castlight were looking up bills and benefits Use of tool % Research benefit-design 16 Look up prior claims 14 Finding a provider/facility 11 33
Deductibles only reward shopping for lower-cost care Percent Searches by Price Category % Searches $2500+ 37% $1250-$2500 16% $500-$1250 15% $100-$500 19% $0-$100 12% I was looking into [the price of arthroscopy on tool]… but it didn’t matter because I had already exceeded my deductible for the year, so really it wasn’t out -of-pocket at that point 34
Other factors more important than cost Rely ly on referral: erral: We pretty much go with the recommendation of whatever the physician says…I’ve counted on my primary physician to make the quality check” Litt ttle choice ce: : Here in Redding we only have like two places in town that you can actually get an MRI, so, we don’t have a whole lot of choice Loyalty yalty to PCP/ P/spe specialis cialist: For example our pediatrician, his quality is amazing. We would not, I can’t imagine searching [for] our pediatrician [based on price]…I mean, there’s three doctors I can think of that I would not go elsewhere for 35
Tools themselves • Most said they were satisfied with Castlight tool • Yet low net promoter score and few used it more than once.
How to move forward? 37
Key takeaways Great potential for savings by shifting to lower-cost providers Price shopping still more theory vs. reality Transparency is fundamental yet little evidence that current efforts are increasing shopping and empowering members Some potential ideas on how to move forward 38
Why aren’t people price shopping? Current benefit design makes it irrelevant for a large fraction of care “Search friction” ◦ Price data hard to find and understand ◦ Complexity of the billing system ◦ Tools themselves Limited circumstances to price shop ◦ Not everything is “shoppable” ◦ No alternative choices ◦ Do not want to disrupt relationships ◦ Physician recommendation is key 39
Involving Physicians Physicians care because their patients care Physicians care because key way to decrease spending is to refer to lower-cost providers But physicians do not have this information easily accessible Make it easier for them to give a price quote
Focus on select clinical areas Lab tests Imaging Acute care 42
Profile physician groups and individual PCPs using price-indices 43
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