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Cost transparency reduces price of MRIs, says study

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A new study in Health Affairs underscores why we've undertaken #PriceCheck, our collaboration with KQED in San Francisco and, focusing on health cost transparency.

The study included more than 60,000 Blue Cross and Blue Shield members, whose employers participated in a price transparency program. People in the study were informed of price differences among similar-quality MRI facilities, and given the option of selecting lower-price facilities.

The authors write:

"As a result, the price transparency program greatly reduced the average price level, shifted patients away from hospital-based facilities, and reduced the price variation between hospital and non-hospital facilities in the intervention group."

They say that the benefits of the transparency project spilled over onto those not involved in the study, noting that people not included in the study saw an average decrease of $57 per test, compared with a $99 decrease in the employer groups participating in the study.

They write:

"In fact, after the implementation of the price transparency program, more than thirty hospital-based imaging providers reportedly negotiated to lower prices, to stay competitive.

"This study demonstrated that a price transparency program can effectively trigger provider competition that goes beyond the participating members."

They conclude that the price transparency program resulted in a price reduction of nearly 19 percent per MRI test.

"This suggests that a price transparency initiative involving direct member outreach with integrated quality information can successfully reduce health care costs."


I shared a great article about this study on PriceCheck's Facebook page yesterday.

"Well, DUH," wrote Casey Quinlan in response. "And to be crystal clear, the 'DUH' is aimed at Anthem [Blue Cross]. I'm gobsmacked at their cluelessness."

And Judy Kettenhofen, another member of our Facebook group, commented: "Hey, isn't that what capitalism is based upon… having competition in the market."

You can join our Price Check community on Facebook, and be part of these discussions!

$1,085 savings, 11 minutes away

But as we've reported again and again through PriceCheck, this type of price transparency is not the norm in the health care industry.

My colleague Lisa Aliferis has been sifting through the crowd-sourced data we've received regarding back MRIs.

Here's one striking example: She reports that one contributor paid the self-pay price - $575 - at Health Diagnostics in San Francisco’s Financial District. Another contributor went to Radnet Medical Imaging in San Francisco’s Laurel Village and paid $1,660 out of Health Savings Account funds.

On KQED's State of Health blog, Aliferis writes:

"I wonder if the person who went to Radnet and paid $1,660 knows that Health Diagnostics and its $575 rate was an 11-minute drive away?

"Probably not. We know from this project that consumers do not have a history of shopping on price for health care tests and services — but people are starting to."

Despite that wide variation in price, Aliferis writes that there's little correlation between cost and quality in health care. So, she asks, do you really want that bargain price MRI?

" really becomes how much you want to save money. These are personal decisions, but we believe consumers can make informed decisions only when they have all the facts."

Our transparency experiment

As we've mentioned, we're running our own health costs transparency experiment. We're asking you to grab your Explanation of Benefits (here's how to read it!) and head over to PriceCheck. Once you're there, you can submit three pieces of information about your MRI: the amount charged, the amount insurance paid, and the amount you paid.

By sharing your experience, you can help illuminate this wide variation in health care costs. And maybe, like this experiment, you can make a small impact on the choices of consumers, providers and insurers.

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