Price transparency expected to encourage competition among healthcare providers, including medical laboratories

Before consumers visit a clinical laboratory, they can now check the “fair” price of medical laboratory tests. New websites have sprung up that make it easy for consumers to find what experts consider to be fair market prices for each type of lab test, as well as for other medical procedures and healthcare services.

Pathologists should think of the well-known “Kelly Blue Book” that has been the price authority for prices of new and used automobiles for decades. These new medical price websites are easy to use and make it quick for a consumer to find “fair” prices for common clinical laboratory test and medical procedure.

These new web-based companies are organized to serve the needs of consumers who are enrolled in high-deductible health plans (HDHP). For an individual, an annual deductible can be as high as $2,500—and as much as $5,000 for a family. Thus, clinical laboratory managers should not be surprised that consumers are actively price-shopping before they visit their laboratory to have a specimen collected.

Price Transparency for Clinical Laboratory Test Prices

This trend is another step on the pathway to price transparency in healthcare. The Wall Street Journal (WSJ)ted in a recent story that employers are encouraging their employees to consult the growing number of online medical transparency services that deliver information about provider quality and provider prices. Employers want their employees to compare prices charged by different medical labs, physicians, and hospitals in order to better budget and control their medical expenditures.

Pathologists and clinical laboratory managers may be surprised at how many companies are competing to inform and educate consumers about the prices of clinical laboratory tests, medical procedures, and healthcare services. It took only minutes for Dark Daily to locate the following websites devoted to transparency in healthcare prices:

“Traditionally, individuals have been very passive participants in managing their health care,” stated Toby Cosgrove, M.D., Chief Executive Officer of the Cleveland Clinic, in a story published by iMedicalApps. Cleveland Clinic is among Castlight’s financial backers.

consumer price transparency by west health policy organization

Before consumers visit a clinical laboratory, they can now check the “fair” price of medical laboratory tests. New websites have sprung up that make it easy for consumers to find what experts consider to be fair market prices for each type of lab test, as well as for other medical procedures and healthcare services.

Because employers are requiring their employees to meet higher annual deductibles, there has been an explosion in the number of consumers that find themselves responsible for a larger share of their healthcare costs.

These consumers are increasingly motivated to shop the prices of healthcare procedures before they select a provider. In turn, this is driving a need for better information about quality and cost-effectiveness of healthcare services.

Multiple Stakeholders Are Promoting Healthcare Price Transparency

Medical price transparency websites take the mystery out of health care pricing, asserted Jeffrey Rice, M.D, J.D.. He is Founder and Chief Executive Officer of Nashville, Tennessee-based Healthcare Blue Book. He was quoted in a press release. “To get fair prices, patients must look up the accepted, average local prices and then make sure their provider agrees to that price before they get care,” said Rice.

In 2010, Healthcare Blue Book teamed up with consumer review company, Angie’s List. In its press release, Angie’s List said it conducted a nationwide online poll of its members. Of those responding, 85% said healthcare providers should publish their prices. Significantly, 61% of Angie’s List members said they would shop around if they knew the prices area providers charged. Only 25% of respondents said they made price inquiries before agreeing to treatment.

WSJ also reported that a growing number of employers, insurers, states, and even hospitals and doctors are creating online price databases. These include insurance giants:

Several states have set up detailed websites which show medical procedure prices that are based on claims. Consumers can see what Medicare pays doctors for their services on a website provided by the American Medical Association.

Pricing Data Needs Further Clarity

In the case of Healthcare Blue Book, its “fair price” for each medical laboratory test and clinical procedure is based on the negotiated price that health plans pay to their network providers for a service in a specific market. Still, insurance company data don’t include 100% of all the healthcare providers or medical procedures. Also, they typically only give price ranges, noted the WSJ in its story, “How to Research Health Care Prices”.

Some healthcare price sites list “sticker prices,” typically much higher prices than insurers pay. Others focus on insurance claims data or Medicare. The WSJ writer cautioned that the websites can be unclear about whether the prices listed account for all costs—including such costs as anesthesiology or laboratory testing—associated with a procedure.

Price variations for the same service within a given geographical area can vary dramatically. Pathologists and clinical laboratory managers will not be surprised to learn that this includes clinical laboratory testing. For example, for a 25-hydroxy vitamin D, it is known that one national laboratory company  has charged its patients as much as $240. Medicare Part B Laboratory Test Price reimburses labs at about $40. The Healthcare Blue Book fair price for this Vitamin D test is listed at about $35.

It remains to be seen whether or not medical pricing transparency websites prove to be a giant leap forward in the effort to empower consumers to choose cost-effective healthcare providers and products. Going forward, clinical laboratory leaders and pathology groups will want to assure that their pricing strategies are aligned with the same “fair pricing” data that consumers are using to guide their healthcare purchasing decisions.

—Pamela Scherer McLeod

Related Information:

How to Research Health Care Prices

Lifting the Veil on Pricing for Health Care Web Sites Help Patients Shop for Medical Services; Cutting Surgery by $3,000

Get Informed on Prices

Meaningful Price Information Is Difficult for Consumers to Obtain Prior to Receiving Care

Preventive Care under the ACA: Cost Transparency Offers Opportunities for Healthcare Consumer Empowerment

Clinical Pathology Labs Should Plan on Greater Transparency in Test Prices and Patient Outcomes

Medical price transparency service Castlight Health raises massive $100 million round