Journalists, researchers, and a growing number of consumers now recognize the often huge variability in the prices different medical laboratories charge for the same lab tests
One step at a time, the Medicare program, private health insurers, and employers are putting policies in place that require providers—including clinical laboratories and pathology groups—to allow patients and consumers to see the prices they charge for their medical services. Recent studies into test price transparency in hospitals and health networks have garnered the attention of journalists, researchers, and patients. These groups are now aware of enormous variations in pricing among providers within the same regions and even within health networks.
Now that hospitals’ medical laboratory test prices are
required to be easily accessible to patients, researchers are beginning to compile
test prices across different hospitals and in different states to document and
publicize the wide variation in what different hospital labs charge for the
same medical laboratory tests.
Journalists are jumping on the price transparency bandwagon
too. That’s because readers show strong interest in stories that cover the
extreme range of low to high prices providers will charge for the same lab
test. This news coverage provides patients with a bit more clarity than
hospitals and other providers might prefer.
Shocking Variations in Price of Healthcare
Services, including Medical Laboratory Tests
The Health Care Cost Institute (HCCI) in conjunction with the Robert Wood Johnson Foundation (RWJF), examines price levels of various procedures and medical laboratory tests at healthcare institutions across the United States in the first release of a series called Healthy Marketplace Index. According to the HCCI website, “a common blood test in Beaumont, Texas ($443) costs nearly 25 times more than the same test in Toledo, Ohio ($18).”
In April, the New
York Times (NYT) made the wide variation
in how clinical laboratories price their tests the subject of an article titled,
“They Want It to Be Secret: How a Common Blood Test Can Cost $11 or Almost
$1,000.” The article discusses the HCCI findings.
The coverage by these two well-known entities is increasing the
public’s awareness of the broad variations in pricing at clinical laboratories
around the country.
Aside from the large differences in medical laboratory test
prices in different regions, the HCCI found that there are sometimes huge price
variations within a single metro area for the same lab tests. “In just one
market—Tampa, Fla.—the most expensive blood test costs 40 times as much as the
least expensive one,” the NYT notes.
In other industries, those kinds of price discrepancies are
not common. The NYT made a comparatively outrageous example using
ketchup, saying, “A bottle of Heinz ketchup in the most expensive store in a
given market could cost six times as much as it would in the least expensive
store,” adding, however, that most bottles of ketchup tend to cost about the
same.
The graphic above is taken from the New York Times article on test price discrepancies in healthcare. The range of prices for the medical lab test known as a comprehensive metabolic panel are for metropolitan areas only. The data is sourced from the Health Care Cost Institute study. It’s easy to see why patients would be confused by clinical laboratory pricing that varies so widely. (Graphic copyright. The New York Times.)
The CMS mandate designed to make the prices of medical services accessible to healthcare consumers has, in many ways, made things more confusing. For example, most hospitals simply made their chargemaster available to consumers. Chargemasters can be confusing, even to industry professionals, and are filled with codes that make no sense to the average consumer and patient.
“This policy is a tiny step forward but falls far short of what’s needed. The posted prices are fanciful, inflated, difficult to decode and inconsistent, so it’s hard to see how an average person would find them useful,” Jeanne Pinder, Founder and Chief Executive of Clear Health Costs, a consumer health research organization, told the NYT in an article on how hospitals are complying with the mandate to publish prices.
In addition to the pricing information being difficult for
consumers to parse, it also may lead them to believe they would need to pay
much more for a given procedure than they would actually be billed, resulting
in patients opting to not get care they actually need.
Why Having a Strategy Is Critically
Important for Clinical Laboratories
Clinical laboratories are in a particularly precarious position in all of this pricing confusion. For one thing, most hospital-based medical laboratories don’t have a way to communicate directly with consumers, so they don’t have a way to explain their pricing. Additionally, articles and studies such as those in the NYT and from the HCCI, which describe drastic price variations for the same tests, tend to cast clinical laboratories in a somewhat sinister light.
To prepare for this, medical laboratory personnel should be
trained in how to address customer requests for pricing and how to explain
variations in test prices among labs, before such requests become problematic. Lab
staff should be able to explain how patients can find out the cost of a given
test, and what choices they have regarding specific tests.
In 2016, Dark Daily’s sister-publication, The Dark Report (TDR), dedicated an entire issue to the impact of reference pricing on the clinical laboratory industry. In that issue, TDR reported on how American supermarket chain Safeway helped guide their employees to lower-priced clinical laboratories for lab tests, resulting in $2.7 million savings for the company in just 24 months. Safeway simply implemented reference pricing; the company analyzed lab test prices of 285 tests for all of the labs in its network, and then set the maximum amount it would pay for any given test at the 60th percentile.
If a Safeway employee selected a medical laboratory with prices less than the 60th percentile, the normal benefits and co-pays applied. But if a Safeway employee went to clinical laboratories that charged more than the 60th percentile level, they were required to pay both their deductible and the amount above Safeway’s maximum.
Safeway’s strategy revealed wide variation in testing
prices, just as the HCCI report found. This means that employers can be added
to the list of those who are paying much closer attention to medical laboratory
test pricing than they have in the past. These are developments that should
motivate forward-looking pathologists and clinical laboratory executives to act
sooner rather than later to craft an effective strategy for responding to consumer
and patient requests for lab test price transparency.
As consumers increasingly choose physicians and service providers based on other people’s feedback on review websites, Internet-based customer service programs are becoming critical business tools for clinical laboratories and pathology groups
Clinical laboratory managers are becoming increasingly aware that negative reviews on anonymous online review sites, such as Yelp and others, can negatively impact revenues.
Official sources and surveys, such as Medicare’s Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS), already provide information and ratings on healthcare service providers. However, recent coverage in Healthcare Dive highlights how consumers are finding the narrative reviews on websites such as Yelp more accessible and relatable. And, that these reviews focus on the criteria consumers find most important.
“We’re moving to a health system where patient ratings are becoming more important, [one] where top-down ratings are really inaccessible to patients and probably not that useful,” Yevgeniy Feyman, PhD, told Healthcare Dive. Feyman, along with Paul Howard, PhD, co-authored the Manhattan Institute report, “Yelp for Health.”
In the report, they examined the correlation between Yelp reviews of New York hospitals and objective measures of hospital quality. “We find that higher Yelp ratings are correlated with better-quality hospitals and that they provide a useful, clear, and reliable tool for comparing the quality of different facilities as measured by potentially preventable readmission rates (PPR), a widely accepted metric,” they stated.
This is a significant finding for clinical laboratory administrators and pathologists. It demonstrates that how patients review their provider experiences does align with objective measures of provider quality that may be public, but are not as easy for consumers to find as websites like Yelp, Healthgrades, and others.
Online Reviews: A Metric for Determining Healthcare Value and Quality?
Andrea Ducas, Senior Program Manager with the Robert Wood Johnson Foundation (RWJF), told Healthcare Dive the primary considerations patients use to pick providers include:
“Treats patients with respect;
“Accepts insurance;
“Shares in decision-making;
“Responsiveness to phone calls; and,
“Professional skill.”
Research into how patients find/choose their physicians conducted by OnePoll and commissioned by Binary Fountain determined that, of more than 1,000 adults surveyed:
“95% of respondents regard online ratings and reviews as ‘somewhat’ to ‘very’ reliable;
“75% of Americans say online ratings and review sites have influenced their decision when choosing a physician; and,
“30% of consumers share their own healthcare experiences via social media and online ratings and review sites.”
Common research sources listed by respondents included:
“Given that the majority of quality measures out there … aren’t really that accessible for patients, this is a very good proxy,” Feyman told U.S. News in a report on physicians’ concerns about the use and popularity of review sites.
“[T]he emphasis placed on a small number of patient opinions—far fewer patients leave reviews than are treated in a typical health system—makes it harder for doctors to do their job for fear of a career-harming bad review. And a few negative posts from disgruntled patients could unfairly skew public perception—and eventually, a provider’s bottom line,” U.S. News noted.
Despite this, Luther Lowe, Yelp’s Senior Vice President of Public Policy and Government Affairs, assured Healthcare Dive they have processes to “filter spam and quell suspicious activity daily.”
Online reviews recently played an important role in the Wall Street Journal (WSJ) exposé on Theranos, which Dark Daily covered in 2016. Investigative reporter John Carreyrou (above) used Yelp to locate patients who reported negative experiences with specific healthcare services and practices. He described how he used the platform during a presentation to the Association of Health Care Journalists (AHCJ) in April 2018. Click on this link to watch a video of Carreyrou’s presentation. (Photo copyright: Association of Healthcare Journalists.)
Negative Reviews: A Critical Concern for Medical Laboratories
Consumers continue to use Internet platforms to both share ratings and compare information on healthcare professionals and the clinical laboratories supporting them. Thus, to prevent damage from negative reviews, labs must actively monitor feedback, pursue inaccurate information posted online, and encourage consumers to provide positive feedback and opinions.
According to data from Alexa, Yelp is the 32nd most visited website in the United States. Yelp’s own data reports that more than 150-million reviews have been added to the site since its inception 13 years ago.
And, Yelp categorizes 7% of the reviewed businesses as “health-related.”
Between easy-to-access information distributed online and an increased push for transparency, clinical laboratories and other healthcare service providers must work to take charge of the narrative created about their businesses and encourage positive feedback on these developing platforms.
Failing to do so could cost laboratories the physicians’ practices they service.
“There are some providers who are trying to get ahead of the curve and post reviews directly on their website,” Ducas told Healthcare Dive. “Another thing they can do is encourage their patients to read some reviews online and invite them to leave feedback. That’s a radical invitation but it’s certainly something they can do.”
As healthcare customers increasingly turn to review sites for feedback about healthcare facilities and the service providers supporting them, clinical laboratories and anatomic pathology groups must focus on their Internet presence and respond quickly to any negative review feedback with great customer service.
Much hype has been written about the ACA’s Healthcare Marketplace and the user’s experience. Does the reality measure up to the positive press coverage? Dark Daily takes a look
One major element of the Affordable Care Act (ACA) was to radically alter the health insurance industry while increasing the number of Americans with health coverage. As a consequence, both medical laboratories and anatomic pathology groups have experienced significant changes in how payers contract for, and reimburse, lab testing services.
These changes in payer contracting and reimbursement are just one way that the ACA is altering the landscape of healthcare in America. From C-suite executives of the nation’s largest health systems, to working-class families seeking coverage on the so-called “Health Insurance Marketplace,” everyone has been affected.
According to data from the U.S. Department of Health & Human Services, to date, approximately 20 million people have taken advantage of the provisions included in the ACA. However, a recent New York Times article pointed out that the reality of the consumer experience—how people actually use the ACA plans—differs somewhat from early reports. The whole thing’s turning out to be more complex than originally predicted.
Much hype has been written about the ACA. Pathologists and clinical laboratory managers should want to better understand the “real” experience for healthcare consumers after they (and providers) have endured six years of change associated with this federal law. (more…)
