Saturday, September 21

Debate rages over Obamacare, medical costs

Debate rages over Obamacare, medical costs
| By Michelle V. Rafter, MSN Money

Newly public data has shed light on wild disparities in the cost of common medical procedures and treatments, which in itself could put pressure on doctors, hospitals and other providers.

When Dr. Jeffrey Rice needed to schedule outpatient foot surgery for his son three years ago, he called the recommended facility to find out what it would cost. The estimate was so high -- $15,000 to $25,000 -- that Rice asked the surgeon for a second option. The cost for the same one-hour procedure at an outpatient surgery center in a slightly more convenient location: $1,500.

Rice's experience isn't an anomaly. Costs for identical medical procedures can vary by thousands of dollars from clinic to clinic, city to city and state to state, according to federal data and other sources.

With the next phase of the Affordable Care Act kicking in Oct. 1, when individuals can begin enrolling in state-run health exchanges, debate rages over whether health care reform will do anything to rectify such pricing disparities or help lower costs.

The 2010 law, widely known as Obamacare, is meant to address the availability and cost of health insurance, not necessarily the cost of specific services. Still, supporters believe that because it paves the way for universal health care coverage, the resulting larger pool of insured patients should lower costs in the long run. Supporters also believe the high-deductible health plans that health exchanges and a growing number of employers are offering will make consumers more cost-conscious and put downward pressure on health care prices.

Detractors say the number of uninsured who will get coverage under Obamacare is not large enough to affect the cost of health care and that expanded coverage of preventive care and other services will contribute to higher prices.

"Anybody who says they know how it's going to affect costs is smarter than me, or they're guessing," says Dr. Peter Ubel, a medical doctor, author and a professor of business public policy and medicine at Duke University. "This is the kind of stuff that will unfold over the next few years."

The uncertainties over what could happen haven't slowed a movement to make health care costs more transparent, and some argue that holding doctors, hospitals and other providers more accountable for what they charge will on its own help drive down costs.

Today, what hospitals or doctors charge isn't determined by quality of care but by market power, says Rice, who is chief executive at Healthcare Blue Book, a medical care cost-comparison website. "If you're an academic medical center with a good brand name you'll be paid more than an imaging center. If you're a hospital chain you might be paid more than an individual hospital," he says.

Last May, the federal government's Center for Medicare and Medicaid Services helped shine a light on costs by publishing for the first time Medicare charges for the 100 most frequently billed discharges at 3,000 U.S. hospitals. For example, bills for treatment of chest pain at 10 Bay Area hospitals in 2011 ranged from an average $21,044 at Chinese Hospital in San Francisco to $53,408 at Seton Medical Center in Daly City. The average Medicare reimbursement for the treatment ranged from $4,575 to $7,795.

Since May, websites such as NerdWallet and OpsCost have created user-friendly services that make it easy to browse the government data. One Oklahoma mom used OpsCost to contest a bill for her daughter's emergency room visit that included a $260 charge for acetaminophen, the pain reliever better known by the brand name Tylenol, says OpsCost co-founder George Kalogeropoulos. A Tampa man whose family doesn't have insurance used it to find a hospital for his wife to deliver their baby.

"It's also been very surprising how many hospital CFOs and billing experts have been asking us for data about their competitors, other hospitals near them," Kalogeropoulos says. "Generally speaking, there is a lot of unease in those circles as prices have been set in a fairly irrational and arbitrary way for so long, and these folks know that a storm is brewing with the push for transparency."

Other tools have popped up to help people pick low-cost health care providers. Healthcare Blue Book supplies pricing information found in the health care section of Angie's List, a subscription-based consumer review website. Healthcare Blue Book also licenses its database, which is compiled from commercial and private insurance data, to insurance carriers to share with their corporate clients' employees who can use it to choose providers.

But prices can vary widely even within an insurer's network of approved providers, Rice says. "Patients have to shop the network, that's the biggest message that I can get out," he says. "Otherwise, you don't find out until after, and pay several thousand dollars too much."

In another sign of transparency, some hospitals are starting to advertise their fees. In August, the Surgery Center of Oklahoma posted prices for common procedures, including $1,925 for putting a cast on a broken arm and $6,990 to repair a knee ligament. North Carolina Gov. Pat McCrory recently signed a bill requiring hospitals to disclose prices for 140 common medical procedures.

"More states are starting to put requirements out there for hospitals to post prices," says Ubel, the Duke University professor. "That's going to change the culture of medicine almost as much as anything else. That's not from Obamacare, it's more just everyone realizing they have to look at why they're spending so much money on health care."

One way that Obamacare could eventually help drive down health care costs is if hospitals are motivated by it to join accountable care organizations, or ACOs, groups of service providers who band together to offer coordinated care at lower prices. "Obamacare gives (providers) incentives to do this, and if that has a big effect on how medical practice works, it could lower costs," Ubel says.

According to Kaiser Health News, more than 428 hospitals have joined ACOs, serving an estimated 4 million Medicare recipients and about 14% of the U.S. population.

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