As Your Co-Payment and Deductibles Go Up, Here's What You Need to Know

Imagine going into a car showroom to buy a car and finding there are no price stickers on the windows. Or walking into a department store and realizing nothing had price tags. If someone else were picking up the entire bill, maybe you wouldn't care. But when you've got to pay some or all of it, you'd probably like to know something about the cost before you pull out your wallet.

No matter what kind of healthcare coverage you have, your out-of-pocket responsibility is most likely going up. As the cost goes up, you're probably interested in what you can do to cut your expenses while still getting quality care. But it's often very difficult to ascertain the costs you'll be expected to pay when you get health care.

The good news is that the opportunity to save is there. A study released February 28, 2012 by Thomson Reuters shows that by shopping around, you can save a lot of money. In fact, the researchers found that treatment cost variation is responsible for $36 billion in healthcare waste.

"In real world terms, this data tells us that an individual consumer going in for a surgical evaluation of a knee joint with a standard high-deductible insurance plan can expect to save between $200 and $500 by going to a provider who offers the service at or below median price. The cost savings potential for health plans and employers is staggering," said Bobbi Coluni, author of the paper. "To realize this potential, however, consumers and employers need access to price transparency."
  
The study found no correlation between price and quality. In fact, lower-priced hospitals are often associated with the highest quality scores.

You can't shop around for emergency care, of course. But there are lots of opportunities to learn the system and find out more about reducing your bottom line cost. Whether your healthcare provider has ordered blood tests or you need a mammogram, knee replacement or MRI, for example, the tests are typically equivalent in quality and there is time to find out how the costs vary from place to place in your city or region.


As an example, I have a high-deductible Health Savings Account (HSA) plan, so I've become increasingly sensitive to the cost we have to pay before insurance kicks in. After my physician ordered the typical blood work for an annual physical, I called a few diagnostic labs in our area and discovered several hundred dollars of cost difference between them. The doctor said there was no variability in quality between the labs, so I chose the lowest cost facility.  

For more complex procedures, ask for estimates that summarize all costs associated with a service, including the hospital or outpatient center's fee, the anesthesiologist, the physician or surgeon's fee, and ancillary costs.

I should warn you: we're a long way away from price transparency and if you are interested in cutting your costs, you're heading into a new frontier. It isn't always easy. 

Some places will refuse to tell you the cost, saying it depends entirely on a distinct and mystical ratio they've negotiated with each insurance company. In fact, a friend of mine actually found she could get a mammogram for a lower price if she said she had no insurance coverage at all.  

But price comparisons are worth the trouble. First, you'll save some money and learn more about the system. And, importantly, you'll be cutting healthcare cost waste, reforming the system and helping to ensure the money we collectively spend will have maximum benefit.

Currently, 34 states require that hospital charges or reimbursement rates be reported, and seven have established a forum for voluntary price reports. California recently passed legislation prohibiting contractual provisions between provides and health plans that limit price transparency. 

Learn more by reading the full report: Save $36 Billion in US Healthcare Spending Through Price Transparency.