Imagine going to the grocery store, picking up the items you need for the week, but not knowing how much anything costs until the store sends you a bill two weeks later.
Sadly, that’s how our health care system works every day.
Health care costs now represent one in every five dollars spent in our country. Patients’ deductibles and copays are rising. Prescription drugs are often unaffordable for many Americans.
We must do something about rising costs, and one key is to empower patients with the information they need to drive costs down and quality up by making the health care system compete for their business.
That’s why Medicare recently launched a new online tool that allows consumers to compare Medicare payments and patient copayments for certain surgical procedures that are performed in both hospital outpatient departments and ambulatory surgical centers.
The Procedure Price Lookup tool displays national averages for the amount Medicare pays the hospital or ambulatory surgical center. It also shows the national average copayment amount a beneficiary with no Medicare supplemental insurance would pay the provider.
Working with their doctors, people with Medicare can use the Procedure Price Lookup to consider potential cost differences when choosing among safe and clinically appropriate settings to get the care that best meets their needs. And cost differences can be substantial.
The lookup tool is needed because the law requires Medicare to maintain separate payment systems for different types of health care providers. That means Medicare pays sharply different amounts for the same service, depending on the locale of the care. It also means that people with Medicare pay different co-pays for the same service, depending on where it’s delivered.
Unfortunately, this is a prime example of Medicare’s misaligned financial incentives, under which providers can make more money if they treat patients at one location as opposed to another. Here’s an example: a Medicare beneficiary needs knee surgery, and her surgeon offers her the choice to have the surgery in the local hospital’s outpatient department or at an independent surgery center.
With the Procedure Price Lookup tool, the beneficiary can type in the type of surgery and see an estimate of the difference in out-of-pocket costs between the two settings.
It would take an act of Congress to change Medicare’s payment systems. In the meantime, patients have the right to at least know what they will be charged. The Procedure Price Lookup makes that information easy to access.
Procedure Price Lookup is part of our eMedicare initiative and joins other patient-oriented transparency tools, including an overhauled version of our drug pricing and spending dashboards. These new tools provide patients with Medicare and Medicaid spending information for thousands more drugs than ever before and, for the first time, list the prescription drug manufacturers that were responsible for price increases.
We launched the eMedicare initiative to empower beneficiaries with cost and quality information. The initiative also offers a mobile-optimized out-of-pocket cost calculator to provide beneficiaries with information on overall health plan costs and prescription drug costs.
The case for price transparency throughout the health care system is clear. The need for consumers to comparison-shop is growing as high-deductible plans become the norm. We also need to integrate quality information with price transparency, so consumers are empowered to seek out high-value care among providers competing on both cost and quality.
Greg Dill is Medicare’s regional administrator for Arizona, California, Nevada, Hawaii and the Pacific territories. Those interested can get answers to Medicare questions by calling 800-633-4227.