Healthcare consumers ask: How much will this cost me?

Providers, health plans, employers and government are all part of the price transparency equation

It seems simple: How much will this healthcare service cost me? But answering this question is not so simple.

The challenge requires pulling together information from different sources – benefit plan coverage, personalized benefit accumulators, provider networks and contracts. Payers, providers and patients all hold a key to the information. Despite tomes of data, it can still be difficult for patients to get personalized, meaningful cost estimates to inform care decisions and plan for their expenses.

Today, almost half of insured Americans are in some type of high-deductible health plan, which means patients have more financial responsibility for their care [1]. Unfortunately, without transparency, many of us have experienced surprises when receiving a healthcare bill.

3 key determinants of what healthcare consumers will pay

Over the past decade, many payers added cost estimators to their member web sites. To further encourage transparency, a new ACA rule requires hospitals to publish their chargemasters, which are comprehensive lists of all services and associated fees. While well intentioned, this is like costing out each ingredient to a complicated recipe instead of providing a clear price for an entrée.

Further, the most important determinants of what a consumer will pay are not addressed in this rule. The three biggest factors influencing a consumer’s payment are:
1) What do my insurance benefits cover?
2) Where am I on my deductible and out-of-pocket maximum?
3) What is the contracted rate for the service between my health plan and my provider?

The reason this is so important is that there can be enormous variation in price based on where we receive care.

Let’s look at an example where a patient needs an MRI. In an urban area, this service might range anywhere from $250 to $450 in a free-standing radiology clinic. That same service at a hospital might range from $350 to $1,000 [2]. This information is really important to get into the hands of consumers before making an appointment for the service.

The ideal situation for healthcare consumers

As a consumer, I want to be able to research my healthcare decisions just as I would other services such as travel. I want to know where I can go to get the highest quality care at the lowest price and also consider convenience. Having engaged consumers, who are aware of costs and ask hard questions about that big variation in costs, will add necessary and positive pressure to pricing. Providers, health plans, employers and government agencies are all part of the equation.

The good news is that with technology we can integrate health data in ways that provide holistic views despite our fragmented system. Integrated data combined with powerful analytics can enable more straightforward answers to the question: How much will this healthcare service cost me? Moving from ‘it depends’ to a clear answer is what will empower consumers to more effectively manage their own costs and their own care.

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[2] IBM Marketscan database, 2019.