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Out of the Shadows

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Price transparency remains elusive, but that doesn't stop providers and payers from trying.

Everyone, it seems, is getting into the pricing transparency game these days. From hospitals to outpatient clinics to health plans, leaders see a strategic benefit to moving away from antiquated and largely useless chargemaster prices as patients increasingly price shop for their healthcare. But it's still not as easy as being able to quote all comers an out-the-door price for a cardiac catheterization or hip replacement, because prices vary wildly—not only by facility, but based on the contract the provider has with the patient's payer. For self-pay patients, quoting the hospital's price works fine, but self-pay may be less than 10% of a provider's customer base. The holy grail of real-time eligibility and pricing estimation often seems far away.

But that doesn't mean there aren't currently stopgap solutions for both payers and providers—and even better tools in development. Cigna Healthcare, for example, launched an internally developed tool in April to help its members shop prices. The Hartford, CT-based insurer can provide its members plan-specific negotiated cost-per-episode estimates for medical care as well as real-time pharmacy price comparisons that break out formulary, plan, and member costs for brand name and generic medications at 57,000 pharmacies.

"This allows them to get facility-specific pricing for MRIs and colonoscopies, for example—about 50 procedures for which we provide specific pricing information," says Jim Nastri, Cigna's vice president of new product development. "We show them the cost that a Cigna-covered individual would be charged, with comparisons across multiple facilities."

But still, there is plenty of price variation even in small local areas, he says—making the tool valuable, but not perfect.

"We want to make it easy for covered individuals to understand what they need to pay so we can reduce the confusion with medical bills," he says. "It will reduce delays and bad debts that should be collectible if the information was easily understandable. Tools like this help keep the healthcare cost death spiral from spooling."

Payers working to get providers paid more quickly might seem surprising to many hospital or physician practice executives, but something equally unexpected is on the way, Nastri says. Hospitals and other providers would like to be able to provide prospective patients this information, as well, and building a two-way street so that providers and payers agree on these cost estimates is critical, he says.

Greg Meyers couldn't agree more. The Integris Health System vice president for contracting and revenue cycle management says the hospital system has developed its own method for offering patients prices for care, but it has shortcomings.

"The only thing we were missing is contact with payers to get real-time info on whether the patient had met the deductible," he says. "In Oklahoma, this has to be pretty much a manual process."

Integris, a 13-hospital system based in Oklahoma City, hired people to perform this function at a central location and now gets more than 900 calls a month. "We get as close as we can to pegging what it will cost patients out of pocket," he says. But Myers would much prefer being able to use something like Cigna is planning on rolling out in the first quarter of 2009.

Now in market trials with several provider groups, hospitals and other healthcare facilities, Cigna's treatment cost estimator, developed in partnership with Thomson Reuters, provides procedure-specific pricing to Cigna members who inquire with the provider about pricing. Pre- or post-service, the patient schedules his appointments, and the Web-based tool calculates an out-of-pocket price based on the patient's benefit plan and contracted rate. The service is free-of-charge to providers, and is intended to be an all-payer tool, says Nastri, meaning Cigna is essentially a beta-site development partner for Thomson in the project. "Thomson would license the tool to other payers," he says, "and they might also license it to third-party portals and transaction management systems."

So unless they're paying cash, patients are still a long way from negotiating prices for their healthcare themselves. But with such sophisticated tools, many see a future where that may be possible.

Philip Betbeze

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