Doctors, post your prices: Get serious

From a recent news report: The White House is looking into requiring physicians to provide "walk-in" pricing for all patients. There is enough support in Congress to force disclosure if need be, a White House economic advisor told the Federation of American Hospitals.

Issue: September 2006

Douglas W. Jackson [photo] --- Douglas W. Jackson, Chief Medical Editor

The other day I drove past a busy intersection with three of the corners occupied by gas stations. Their prices were posted clearly out in front and there was 20-cents-a-gallon difference between the most expensive station and the least expensive. The station selling gas for 20 cents per gallon more had customers. Customers filling up their gas tanks with 20 gallons were paying $4.00 total more than they could pay across the street. The consumers made their choice.

These stations represented different companies, had different credit and cash policies and had varying access advantages depending on the flow of traffic. Some patrons paid cash and some used a personal or business credit card. They based their individual choices on many factors.

Remote decisions

The idea of consumers knowing prices and controlling their own purchasing is appealing in any free market system. Imagine this same scenario with one difference: A third party (an insurance company) collects a fee from each consumer and then pays for their gas as the consumers need it. The third party (insurance company) would make its profits by charging consumers more than most of them could buy the gas for themselves. The intermediary's profit would be determined by how little of the consumer's money these companies would have to spend for the gasoline.

Now comes an idea that carries this concept further: Scott W. Atlas, MD, a physician and senior fellow at the Hoover Institution, has written that we should post our prices so patients know what their health care costs. He is critical of the third-party payment system which does not encourage patients to ask about pricing.

He states, "When prices are openly stated and widely known, competition will ensue and prices will come down." The price mechanism and the marketplace would become important in purchasing decisions.

My thoughts on this suggestion: Get serious. There are many problems with posting our prices. Our usual and customary charges have become meaningless for most physicians. The government is regulating the marketplace rather then encouraging competition and an informed pricing structure. Medicare patients are being treated under price controls.

Pricing and reimbursement limits are already set and there are other major problems with posting prices. Unless the physician is highly specialized and doing just a few different procedures, it would entail enough paperwork to rival our coding volumes.

Certainly, standard surgical procedures are more easily defined and many carry less individual variation and degree of service contributing to various prices than those that are diagnostically based. But even here — do we post our desired fees, our cash fees, our discounted fees, our contracted fees or the fees we are paid? Most private practice physicians would welcome posting prices if there were any chance they would get them and there were no price controls.

What is more, the informed patient would need to know prices for ancillary services, outpatient facilities and hospitalization that contribute to the total cost. Can you imagine shopping fees for the surgeon, assistant surgeon, anesthesia, medications, rehabilitation and operating room charges for a given procedure?

A better system

An ideal consumer-based system would hold patients responsible for posted and agreed-upon prices. Their insurance (if they had it) could reimburse the patient for a given procedure or service. The consumer could decide what price they were willing to pay and the service provider would have some flexibility in what they charge. This is closer to how things worked when I started in private practice. Today's trend toward lower reimbursements has been set by the government, and insurance companies have followed suit.

Medicare simply has cut reimbursements and limited what can be passed on to the patient. The pendulum has swung away from an open and transparent pricing structure. Physicians and patients can always go to a cash-based system, but at this point, few areas of the country have supported such payment programs. Posting our prices and all the variations that exist in the current system is unrealistic.