Effects of New Medical Costs Law Still Being Diagnosed

Finding out the cost of colonoscopy or a hip replacement got a little easier in Massachusetts last fall thanks to a law that requires insurers to provide medical costs to consumers immediately upon request.

Proponents who say that price transparency can save consumers money and lower prices for everyone add that the law, which took effect Oct. 1, 2014, is an important step toward pulling the curtain back on health care costs.

As many employers know, helping consumers understand what those costs mean is not so simple, said Steve Wojcik, vice president of public policy at the National Business Group on Health.

“In addition to price variability within hospitals or physicians’ practices, we’re also seeing the variability for the same service across different sites,” he said. “As employers adopt consumer-driven health plans, and increasingly, as the only type of plan, those plans rely on the ability for employees to shop around for prices. Employers are pushing the health plans to offer transparency tools so they can compare prices.”

In fact, nearly three-fourths of large employers currently have or plan to offer price transparency tools in 2015, according to a recent NGBH health plan design survey.

But online tools can only go so far in helping employees determine “the actual cost” of delivering a particular service, according to Steve Kelly, founder ELAP Services, a health care cost-management firm. He said that consumers need to understand the difference between what a service really costs and how much they are being charged for it.

“A provider may charge $40,000 for a hip or knee replacement, but they might accept $10,000 from Blue Cross,” he said. “It’s important to know if the price the employee is seeing is the cost of the service or the accepted rate for that service.”

Good luck getting that information in an understandable format, he added.

“Medical providers are not prepared or willing to provide this information so it’s difficult to get a straight answer,” Kelly said. “Equally difficult is that most employers are already baffled by the health care system.”

He recommends that employers start by offering price comparisons for a few common diagnostic procedures like mammograms and CT scans.

“Just turning the workforce loose on the provider community to get this information is going to be problematic.”