Why and how you can and should understand your healthcare costs

As a consumer when I make a new purchase, the price is clearly marked, whether it is a washing machine, bar of chocolate or menu item in a restaurant. The price is fixed and not negotiable. Indeed the .com era heralded many price comparison websites such as: pricegrabber.com pricewatch.com  shop.com etc….

Two exceptions: (1.) the car market, where “sticker price” varies – what you finally pay after haggling (2) the housing market which is also driven by offers and counter-offers until a deal is signed. But in both cases, the consumer at least has a starting price point.

So why is the price of a healthcare procedure unavailable to the patient?

When a patient goes to the doctor there is no discussion of price. The patient (and often the Dr) have no idea in advance what the visit and procedures will cost. Charges and payments are “contracted” or negotiated between the healthcare provider and the various insurance companies. Often the patient only finds out the cost after the bill has been submitted to the insurance and the patient is faced with a deductible, co-payment or co-insurance or worst case no insurance!

Imagine this…. before going to see the Dr you have access to this information:

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Before a Dr visit, I believe the patient should be entitled to know:

  1. Cost of the visit to the Dr office
  2. Cost of associated procedures such as labs, blood tests, xrays
  3. Amount insurance will pay
  4. Amount the patient is responsible to pay.

This would allow the patient to shop around for prices and not accept the de-facto charge. (Of course this only applies to patients with a PPO insurance, not HMO)

There are efforts to provide healthcare cost transparency:

  • AnthemBlueCross does not have a cost estimator.
  • United Healthcare has a cost estimator
  • Cigna has cost estimate application (login required).

Here is a non-partisan effort to allow patients to shop for healthcare by price: http://www.fairhealthconsumer.org/

Patients – understand the breakdown of your healthcare bill and how you can shop for alternatives and even negotiate the cost. When you shop for a car, you learn to understand miles per gallon, frequency between oil changes, road handling; if you buy a washing machine you may want to know gallons/liters of water used per load.  

Thus you should learn the terminology and key terms used in medical costs.

Medical professionals use numerical codes when they diagnose patients and write up the diagnosis or medical procedure. Everyth diagnosis has a code from a dental filling to a heart transplant. There are two major codes in use, CPT and ICD. 

  1. CPT codes – Current Procedural Terminology.
  2. ICD-9 – International Classification of Diseases.

Armed with this information you the patient can understand your healthcare costs as follows using a CPT lookup. Ask your healthcare provider for the CPT code of the procedure, then before undergoing the procedure find out from your health insurance how much they cover and what you owe. Use the CPT code to shop around from other providers and get the best price.

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