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Hlthaff 2014 0168
Hlthaff 2014 0168
doi: 10.1377/hlthaff.2014.0168
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D
uring the past several years, in- bilities and stringent accreditation and regula-
creasing attention has been paid tory requirements.1 According to a 2009 Medi-
to the variation in pricing for care Payment Advisory Commission report to
health care services.1–6 The varia- Congress, hospitals can charge more for imaging
tion is found throughout health than other providers can, because hospitals use
care, but price variation for imaging scans has their market power to negotiate higher pay-
been more widely documented.1–4 For instance, ments from private insurers.8
the same magnetic resonance imaging (MRI) Among hospital-based facilities, prices may
scan can range from $300 to $3,000 within a vary further—by academic status, with teaching
given geographic area, with no demonstrated hospitals usually charging higher prices;9 by mix
difference in quality.7 of services provided; or by mix of population
A number of factors contribute to price varia- served, because of the need to cross-subsidize
tion, including the type of facility that performs across payers and services. Even within a single
the scan. Hospital-based outpatient departments commercial payer, cost sharing will vary by plan
typically charge higher rates than freestanding benefit designs. As a result, patients generally
imaging centers or physician offices because of are unaware of or unable to estimate the extent
costs related to hospitals’ emergency care capa- to which medical costs vary.7,10
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Price Transparency
are reported using summary statistics. We used program. One enhancement currently under
difference-in-differences regression to evaluate consideration would identify the actual out-of-
the impact of the price transparency program on pocket savings and prioritize for outreach those
unit cost. The impact was net of preprogram members with the greatest potential savings.
price differences between the intervention group Future research could evaluate the impact of this
and the reference group, common imaging cost or similar initiatives when patient cost sharing is
trends, and other covariates relevant to imaging. a more explicit component of the outreach effort.
Those covariates included type of imaging test
(such as imaging of the head, chest, abdomen, or
spine) and the Medicare geographic adjustment Study Results
factor, which measures operating expenses for Patient Demographics There were 61,271 pa-
health care facilities across regions. The geo- tients in the intervention cohort and 44,366 pa-
graphic adjustment factor was introduced into tients in the reference cohort, for a total of
the regression to minimize possible variations in 105,637 patients who had at least one MRI scan.
costs among metropolitan areas. Age and sex distributions were comparable in
Limitations This study had several limita- the two groups (see Appendix Exhibit 2).27
tions.We assumed that the pricing trend derived Fifteen percent of the patients were enrolled in
from the reference group was linearly applicable high-deductible health plans. The minimum an-
to the price transparency program. We also as- nual deductible defined by the federal govern-
sumed that the variation in baseline imaging ment for these plans was $1,200 for individual
costs among different cities would be reduced coverage and $2,400 for family coverage. The
through risk adjustment with the geographic remaining patients were enrolled in PPO plans,
adjustment factor. However, we cannot confirm and the majority of them had an annual deduct-
that the risk adjustment eliminated all baseline ible of less than $1,000 for an individual. The
differences. distribution of high-deductible health plans
The study did not include other socioeconomic and PPOs was also comparable in the interven-
or provider-level factors that could have affected tion and reference groups.
imaging costs in each of the cities included in the Impact On Imaging Cost From 2010 to 2012
study. However, these effects, if any, would likely the unadjusted average cost of an MRI decreased
be homogeneously distributed among both the by $99 (9.4 percent) in the intervention cohort
intervention and reference cohorts. Both co- (Exhibit 1). In contrast, the cost increased by $97
horts consisted of a limited number of metropol- (10.5 percent) in the reference cohort—a change
itan areas, and the results might not be general- that is in line with published data from the
izable to other regions. Bureau of Labor Statistics on price inflation
Lastly, about one-third of the patients in the for medical care services.29
study had no cost sharing for the imaging test. The results were consistent after we adjusted
In some cases, this was because they had no the imaging cost with the difference-in-differ-
deductible. In other cases, it was because they ences regression model (Exhibit 1).We observed
had reached their out-of-pocket maximum, an adjusted cost per test decrease of $95 (9.0 per-
which might limit their responsiveness to the cent) for the intervention cohort from 2010 to
2012 and an increase of $124 (14.3 percent) for
the reference cohort.
Exhibit 1 We compared the regression-adjusted change
from 2010 to 2012 in the intervention and refer-
Volume And Cost Of Magnetic Resonance Imaging (MRI) Scans In Intervention And
Reference Groups, 2010 And 2012
ence groups (Exhibit 2). The result of the price
transparency intervention was an adjusted $220
Intervention group Reference group reduction (18.7 percent; p < 0:001) in the cost of
2010 2012 2010 2012 an MRI scan.
Number Patients Shifted Away From Hospital-
Patients 33,349 27,922a 21,861 22,505 Based Facilities One factor driving the cost
MRI scans 44,050 36,213a 28,534 28,988 reduction was that a notable percentage of mem-
Average MRI scans per patient 1.32 1.30 1.31 1.29 bers in the intervention cohort shifted from hos-
Average cost per MRI ($) pital-based outpatient facilities to freestanding
Unadjusted 1,055 956 928 1,025 or office facilities. The proportion of MRI imag-
Adjustedb 1,053 958 868 992
ing that occurred at hospital-based facilities de-
creased from 53 percent in 2010 to 45 percent
in 2012 in the intervention cohort (Exhibit 3).
SOURCE Authors’ analysis. aNot all employer groups in the intervention area signed up for the price
transparency program. bAdjusted for type of imaging test (such as imaging of the head, chest, In contrast, the rate was essentially unchanged
abdomen, or spine) and the Medicare geographic adjustment factor. in the reference cohort (51 percent in 2010 and
Discussion
In this real-world analysis of a health care price This study demonstrated that a price transpar-
transparency program, we found that when ency program can effectively trigger provider
similar-quality but lower-price alternatives were competition that goes beyond the participating
presented to health plan members by outreach, members. Such an effect was also observed re-
members were willing to select lower-price facili- cently in a study on elective joint replacement
ties. As a result, the price transparency program after patients shifted to less expensive facilities
greatly reduced the average price level, shifted and benefited from significant cost reductions.10
patients away from hospital-based facilities, and Sensitivity Analysis Using Computed
reduced the price variation between hospital and Tomography We repeated these analyses on di-
nonhospital facilities in the intervention group. agnostic CT scans in the same geographic areas
These positive findings were attributed to re- as a sensitivity test for the effect of the price
sponsiveness not only among members in the transparency intervention on different imaging
intervention group but also among providers. procedures. A coding change for CT scans in 2011
Evidence Of Price Competition By Pro- that integrated two separate CT procedures into
viders It appears that the benefits of the pro- one common Current Procedural Terminology
gram extended beyond the members targeted for
intervention to health plan members whose em-
ployers had not participated. A subanalysis of Exhibit 3
39,755 MRI patients residing in the same metro-
politan areas who were included in the study but Market Share Of Magnetic Resonance Imaging In Freestanding Or Office Facilities And In
were not part of the price transparency program Hospital Outpatient Facilities In Intervention And Reference Groups, 2010 And 2012
also showed a reduction in average cost per test,
although to a lesser extent than patients partici-
pating in the program. The nonparticipating em-
ployer groups experienced an average decrease
of $57 per test, compared with a $99 decrease in
the employer groups participating in the inter-
vention (and a $97 cost increase in the reference
group residing outside the regions of the inter-
vention program).
The cost reduction in the nonparticipating
employer groups provides evidence of universal
provider competition that was influenced by the
intervention. In fact, after the implementation of
the price transparency program, more than thir-
ty hospital-based imaging providers reportedly
negotiated to lower prices, to stay competitive. SOURCE Authors’ analysis.
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at CARLETON UNIVERSITY LIBRARY
Price Transparency
Funding was provided by WellPoint Inc. Health, a wholly owned subsidiary of areas for the study and Eugene Chi for
Sze-jung Wu, Gosia Sylwestrzak, and WellPoint Inc. The authors gratefully assistance in providing program
Andrea DeVries are employed by acknowledge Phil Cochetti for definitions and member inclusion
HealthCore Inc., a wholly owned programming assistance. They also thank identification. The authors acknowledge
subsidiary of WellPoint Inc. Christiane Matt Beatty for his professional insights Cheryl Jones for assistance in preparing
Shah is employed by AIM Specialty on the selection of the metropolitan the manuscript.
NOTES
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