A recent blog post on Health as Human Capital Foundation shares an interesting research summary on hidden health care prices. The research focuses on an employer that analyzed their employee health care costs and spending patterns for MRIs of the knee. They analyzed MRI costs from six local facilities in one metropolitan area and here’s what was identified:
- Amounts paid by the employers two health insurance companies for MRIs ranged from below $700 to more than $2,400
- Amount billed to the employer’s insurance companies (before discounts were applied) ranged from $1,100 to over $4,000
- Approximately 300 MRIs were done annually in this population. If employees were to choose the lowest-cost provider for an MRI instead of the highest-cost provider, it would save the employer about a half a million dollars per year for just one type of diagnostic procedure
- If an individual consumer shops around for the best price for an MRI, they can save themselves hundreds of dollars on this diagnostic test. If all employers/employees in one city shopped around for the best value, imagine how many hundreds of millions of dollars per year could be saved on health care costs just by choosing the lowest-cost providers?
- Why don’t employers simply require their employees go to the lowest-cost provider? The employees don’t know who the lowest-cost provider is. This information is not available. Health plans carefully guard ‘secret’ payment information because they have different negotiated prices with different providers. They don’t want one provider to discover that another provider is being reimbursed more for the exact same procedures. So when an employer chooses a health plan for its employees, the negotiated prices for services are already set. Services provided will be reimbursed at the plan’s negotiated amount (whatever that is).
Other interesting facts
- The rate of MRIs has tripled over the past ten years
- One-third of the MRIs provided are considered unnecessary
- MRIs generate significant revenue for health care facilities. Often there are financial incentives encouraging their use
- Studies indicate that radiology costs (includes x-rays, MRIs, CT scans) have risen faster than any other category of health care costs
Consumers --- do your homework and research prices BEFORE visiting a provider. Use available tools, make phone calls and compare prices and quality before you decide on a provider. You can save yourself hundreds, and possibly thousands of dollars annually.
Employers -- provide comparison shopping tools for your employees to use to help them make informed choices. Employers can also encourage and incent employees to make cost-effective choices. This not only reduces health care expenses for employees, but also reduces employer health care costs. A win-win situation.