Showing prices is not the same as pricing transparency

While hunting for health-care price figures we found, which at first sight appears to be another great health care transparency resource with tons of fantastic data. Equipped with a friendly and consumer-empowering “main street” feel, the site promises to help you “make smart choices about your care” and “learn how to stretch your health care dollar.”

We’re really excited to see the new players entering the marketplace for transparency, and we set out to check out the site’s pricing. We used one of our standard measuring tools, the price of a pelvic ultrasound exam, because we know a lot about that: Here’s our listing for “how much does a pelvic ultrasound cost.” Our prices ranged from $150 to $648 in the New York area.

Mainstreet Medica also listed price ranges for pelvic ultrasound exams. On the high end, Woodwinds Health Campus in Woodbury, Minn., charged between $431 and $797. On the low end, Adefris & Toppin Women’s Specialists (also in Woodbury, Minn.) charged between $127 and $155.

The Medicare price is the closest thing that exists to a regulated price in this field, so we went to check the Medicare physician price for a pelvic ultrasound in Minnesota – $127. This is only for the physician charge and does not account for the facility fee (which is not listed in the physician fee lookup). I couldn’t find facility rates.

Looking a bit more closely, it starts to seem that this site is sourcing the data from a single insurance company,  Medica, a regional insurance company covering 1.5 million patients across Minnesota and parts of Wisconsin, South Dakota and North Dakota.

Once we dug deeper, it started to seem that the information available on the site does not reflect what patients pay for care. As the site explains, the data presented are average costs to the insurance company. Rather than showing prices that reflect what patients will pay, for example in a cash or self-pay situation, the site shows the rate at which Medica reimburses health care providers.

Because the prices reflect only the prices for that plan, the costs given here don’t mean much to the average person not on that plan. Even for someone on the plan, it’s not clear how the site is useful and what it accomplishes. It could drive patients to facilities that charge Medica less for services they provide, but is it safe to assume that will lead to lower bills for patients?

Because our fragmented health-care system puts the provider (doctor or hospital), the payer (in this case, the insurance company) and the patient in separate corners, it tends to obscure actual costs. The providers have every incentive to inflate prices; payers have every incentive to reduce reimbursement. Arrangements for payments are made behind closed doors between payers and providers. The patient is outside of the discussion.

What we’d like to see for transparency: 1) What it costs the provider to deliver the service. 2) what the payer actually pays and 3) what the patient pays – either in cash as a self-pay patient, or in a co-pay, on the plan or off. We know that’s a tall order, but that’s our definition of transparency.