Can’t lower costs when you don’t know them

Get health care expenses under control by educating doctors, patients

April 30, 2010|By Peter Beilenson and Ken Kochmann

Some of the most contentious arguments in the recent health care reform debate were over the presence or absence of cost controls in the reform proposals. Reasonable people can disagree about how much the reforms will rein in health care costs. However, one avenue was not adequately addressed: getting health care providers to look critically at their prescribing and ordering practices by making the prices of medications and tests more transparent.

When a typical busy physician writes an order in a patient's chart for a blood test or imaging procedure (like a CT scan), he or she frequently has no idea how much that procedure costs. This is partly because the ordering sheets or catalogs needed to order a lab test from the major national laboratory companies generally do not come with prices. There can be tremendous variation in prices among very similar tests, from tens to hundreds of dollars depending on the test. As an example, there are multiple types of Pap smears, ranging in price from $95 to $317. For some particularly high-risk patients, the more expensive test may be most appropriate, as it looks for genetic material indicating certain types of infection. However, for many patients, the most expensive lab test is completely unnecessary. Similar examples abound with imaging procedures — MRI scans may be ordered when a less expensive CT scan, ultrasound or X-ray may be sufficient at much less cost — but again, doctors generally lack price information on the cost of these tests.

If physicians were clearly informed of the costs of different tests, they could make a more reasoned decision on what labs or imaging procedures should be ordered: specifically, whether more-expensive tests would truly give them better information needed to provide the best care to their patients.

Likewise, aside from general knowledge that generic drugs are less expensive than brand-name drugs, most physicians have little idea of the cost of prescriptions (either the actual cost or the cost borne by the patient), partly because of the extraordinary variation in pricing schemes employed by different insurance companies. If, before writing a prescription, the physician had this information readily available, he or she could make an informed decision on whether a more expensive medication is actually more effective than a less expensive one. This knowledge would also make it more likely that the patient would comply with utilization of the medication; if the physician knew that the patient's share of the cost of the drug was prohibitive, a suitable, less expensive alternative could be found, increasing the likelihood that the patient would actually take the medicine prescribed.

How can this level of transparency be provided in a simple and easily usable format for the busy provider? As recently reported in The Wall Street Journal, some providers are buying inexpensive e-prescribing software that upon entering the name of a medication, automatically displays a variety of alternative medications (including generics) and their prices. There is no reason similar data-sharing systems could not be developed for procedures and lab tests as well.

In addition, Medicare, Medicaid and private insurers ought to require that the national laboratory company code books used by physicians and other providers to request lab tests display costs so the prices of tests can be easily seen and compared. These same third-party payers should also regularly send information on radiological test costs and medication prices to providers. The doctor would still have the choice of ordering whatever test or drug he or she desires, but at least it would be an informed decision.

Similarly, taking advantage of widely used technology, an application for smart phones could be developed that would also prompt a physician with potentially more appropriate alternatives for the test or medication typed into the phone. This is not much different from the currently available app for iPhones that allows a consumer to find the site offering a product at the lowest price. To inform the provider of the total cost of a test or prescription to the patient in terms of co-pays, insurance companies' pricing schemes could also be downloaded.

We would be remiss if we did not mention two significant barriers to the use of pricing information by medical providers. First, despite explaining their rationale in not recommending certain procedures, physicians will be faced with some patients demanding to get that test. Physicians need to work with these patients over time to educate them that "more is not necessarily better." Second, many physicians might have liability concerns if they did not order everything the patient desired in case a diagnosis was missed. However, by following the standard of care and developing a good rapport with their patients, many frivolous lawsuits will be avoided.

By making clear the costs of various medical tests and medications, we could go a long way to quickly reduce health care costs in the country by helping providers to think critically about whether expensive tests are called for, or whether less-expensive tests and treatments are actually better medicine.

Dr. Peter Beilenson is the Howard County health officer. His e-mail is pbeilenson@howardcountymd.gov. Dr. Ken Kochmann is in private practice in Cockeysville in family medicine.

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