It’s tough to determine the cost of health care

Filed under: Health Care |

The costs of health care — and quality information about hospital performance — are difficult to obtain, and are often meaningless, according to a study from the National Center for Policy Analysis.
The study says the only area of health care marketplace where price and quality are easily available is where patients pay for the service themselves.
“The primary reason no one knows what doctors and hospitals charge prior to treatment is that they do not compete for patients based on price,” said NCPA President John Goodman, who co-authored the study. “When they don’t compete on price, it turns out they don’t compete on quality either. In a very real sense doctors and hospitals are not competing for patients at all.”
Since the fees are usually paid by employers and insurance companies, there is little incentive for patients to find out the actual costs of care, and providers have little reason to make the information public, the study said. Lack of competition for patients has a profound effect on both the cost and quality of health care, since insurers typically do not pay for many services that would lower health care costs and improve the quality.
As a result of the lack of competition, the study found doctors do not provide integrated care, providing care for a single disease such as diabetes — taking responsibility for the entire treatment, instead of fragmented parts of the treatment.
Education also is lacking for patients with chronic conditions, who could manage much of their own care. Doctors do not perform telephone or e-mail consultations, which have the potential for better and less-costly care through modern communication devices. Only a fourth of doctors surveyed use e-mail at all to contact and consult with patients.
Despite studies showing electronic medical records can reduce costs and improve quality, only one in five doctors store medical records electronically.
The study showed major differences in markets where patients pay for the services directly.
For example, patients are offered package prices for both cosmetic and Lasik surgery, forcing the real price down at the same time technological improvements are rampant.
In some cases, cash-paying medical tourists receive a package price that includes travel outside the United States, all costs of treatment, airfare and post-operative hotel accommodations.
Prices are one-third to one-fifth as much as American treatment and quality is typically high.
Walk-in clinics in the United States — located in drug stores, shopping malls and big-box retailers — post prices and minimize wait times. Often staffed by nurses, they use computer software to follow treatment protocols, store records electronically and order prescriptions online.
“We are likely to see more of these challenges to traditional health care in the future because patients are increasingly paying more costs out-of-pocket or through a health savings account,” Goodman said. “This consumer-driven health care revolution gives individuals the opportunity to benefit financially from being wise health care consumers.”

Seniors face coverage loss

Millions of seniors and disabled Americans covered by Medicare could face benefits cuts or risk losing their coverage if Congress makes changes to the program based on the conclusions of the Medicare Payment Advisory Commission (MedPAC) report.
The report, which was released this month, compares the costs of covering beneficiaries under the Medicare fee-for-service and the Medicare Advantage programs.
Karen Ignagni, president and CEO of America’s Health Insurance Plans, said the MedPAC report underestimates the costs associated with covering seniors through basic fee-for-service while not accounting for the better benefits and lower out-of-pocket costs available to seniors who choose Medicare health plans.
“Medicare health plans are improving the health and well-being of more than 8 million beneficiaries,” Ignagni said. “With a nearly 60 percent increase in Medicare Advantage enrollment since 2003, Congress shouldn’t take away benefits for seniors who depend on this program.”
The MedPAC analysis underestimates Medicare fee-for-service costs by not including key components such as administrative costs and graduate medical education payments that Medicare provides to teaching hospitals, she said.
The Centers for Medicare & Medicaid Services says that comparisons of Medicare Advantage rates to Medicare fee-for-service expenditures “should be undertaken cautiously, and the results should be interpreted with a proper understanding of certain limitations.”
Ignagni said that comparisons, such as those included in the MedPAC report, do not account for the full value of the array of services provided by Medicare health plans.
Medicare health plans offer vision, hearing, dental, fitness, mental health, and alternative health benefits such as podiatry and chiropractic services that are not offered under the basic Medicare program.
Medicare health plans also offer zero-premium comprehensive drug coverage, wellness programs, and disease management and care coordination programs that also are not offered under the basic Medicare program.
The Centers for Medicare & Medicaid Services says that Medicare Advantage enrollees are saving an average of $86 per month through improved benefits and lower out-of-pocket costs and that Medicare Advantage plans are returning an additional $26 each month, or about $2.1 billion in 2006, to the government in savings by bidding below benchmarks.
Amy Gillentine covers health care for the Colorado Springs Business Journal.