"... become a patient, and you enter a world of paperwork so surreal that it belongs in one of Kafka's tales of the triumph of faceless bureaucracies. And although some insurers and hospitals are attempting to streamline and simplify bills, the efforts so far have been piecemeal."
--"Treated for Illness, Then Lost in Labyrinth of Bills," Katie Hafner, The New York Times, Oct. 13, 2005
The rise in consumer-directed health plans is shifting an increasing amount of the cost of health care from third-party payers to consumers. These plans, which typically pair a high-deductible insurance policy with a savings account designed to pay the first several thousand dollars of expenses, put the focus on patients to make smarter choices about their care.
Yet as described in an increasing number of media reports like the one above and echoed by industry insiders, consumers face a daunting task when it comes to accessing, understanding, and paying their bills. With government and private insurance traditionally covering approximately 90 per cent of medical costs, patients have long been insulated from the true cost of medical procedures, physician fees, and hospital services. Now, this shift in responsibility is beginning to produce not just sticker shock, but outright confusion among patients.
Shifting greater responsibility to patients will create a force we have not previously seen in health care: consumer demand for value in health care, in terms of both quality and price. As a PricewaterhouseCoopers Health Research Institute report noted, "Managed care was designed to put control where there was none. Today's trend toward consumerism attempts to inject something that's been missing from health benefits: a consumer who cares more about cost and quality." (a)
For hospitals, the shift in responsibility for payment from third-party payers to consumers increases risk and collection expense. To minimize this risk, providers must begin providing consumers not only with greater levels of information, but also with patient-friendly bills and other tools that allow consumers to quickly access their bills and understand the cost of their care--and pay their share of costs.
Shopping for Value
As more costs and responsibility are shifted to consumers through higher deductibles, copays, and coinsurance amounts, patients will be driven to shop for health care based on both cost and quality.
Today, the actual costs of common medical procedures are often available for consumers to compare between hospitals and physicians. Meanwhile, health plans such as Aetna, Cigna, Humana, and United are rolling out online pricing tools. Members of these plans living in select cities can see the rates that payers have negotiated with local physicians. Medicare has posted the ranges of what it pays hospitals for 30 common procedures and treatments in what is expected to be just the first of a series of disclosures. States and hospital associations are joining in, too, launching web sites that list hospital charges.
The shifting of healthcare costs to consumers is fueling a demand for greater transparency when it comes to healthcare pricing. Medical centers such as Saint Luke's Health...
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