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Healthcare pricing still a struggle for consumers

Comparison shopping for medical procedures can involve a web of billing codes and arcane terminology, despite efforts in California to simplify things.

April 15, 2012|By Chad Terhune, Los Angeles Times
  • California state Sen. Ted Lieu (D-Torrance) is the sponsor of a bill requiring hospitals to disclose all potential healthcare charges to patients.
California state Sen. Ted Lieu (D-Torrance) is the sponsor of a bill requiring… (Rich Pedroncelli, Associated…)

Californians are still struggling to get straight answers about the cost of common medical procedures despite state efforts aimed at lifting the veil on medical pricing.

As consumers shoulder a larger share of their healthcare costs, the ability to comparison shop is key to keeping that care affordable. Medical costs borne by U.S. employees have more than doubled since 2002 to more than $8,000 a year, while the median household income has dropped 4%.

Under a state law that took effect in 2006, hospitals must publish their average charges for the most common procedures on a state website. But relatively few take the extra step of listing prices on their own websites, where people are more likely to be looking for pricing information, according to healthcare experts.

David Dranitzke, 40, of San Francisco, recalled his frustration when he tried to get prices on a battery of blood tests for his 15-month-old daughter from three different hospitals and lab companies.

He gave up after spending more than 10 hours calling, waiting on hold and faxing information, all the while having to decipher arcane medical terminology and billing codes.

"It's more difficult to get a price on blood work than remodeling your kitchen," said Dranitzke, a visual-effects producer. "At some point you just throw in the towel."

Dranitzke, who was unaware of the state website, ended up paying more than $700 out of pocket under his insurance plan for his daughter's tests.

To see what consumers were up against, The Times contacted 10 California hospitals and asked for the cost of a routine gallbladder surgery for someone with a high-deductible insurance policy.

Seven of the hospitals offered at least partial estimates, but the quoted prices ranged widelyfrom $1,200 an hour for the operating room to a $8,687 facility fee. None included the cost of the doctors, although California Pacific Medical Center in San Francisco did say that the total cost for hospital services, including a room, drugs and other supplies, could be $37,217.

One hospital, Desert Regional Medical Center, didn't return calls. Contacted later, spokesman Richard Ramhoff apologized and said Desert Regional "strives to make sure everyone with a question about rates gets an answer." Another hospital said it would take 10 business days to get an estimate, and another required detailed insurance information before discussing prices.

"This really highlights how impossible it is for consumers right now with high-deductible plans to effectively shop for care," said Ateev Mehrotra, a policy analyst for Santa Monica-based Rand Corp. and an assistant professor at the University of Pittsburgh School of Medicine.

Mehrotra's Rand study in 2009 produced similar results in California. Only 28% of the state's hospitals responded to a request for an estimate from a fictional uninsured patient and less than 3% offered detailed price quotes including hospital and physician fees.

The California Hospital Assn. says consumers should work with their doctors and insurance companies to figure out estimated costs because each patient's medical situation is unique.

"An auto shop can give an estimate for a brake job, but people are not cars," said Jan Emerson-Shea, vice president of external affairs at the California Hospital Assn. "It's very difficult to get a random call from someone saying, 'I need gallbladder surgery, so tell me what it costs.' "

Yet some hospitals do make it easier. On its website, Huntington Memorial Hospital in Pasadena allows people to select several common procedures and get an instant price quote, including an estimate of the patient's share after plugging in their deductible and coinsurance. But even those numbers exclude the thousands of dollars that physicians, anesthesiologists and other specialists would tack on for most surgeries.

"We are working diligently to make publicly available both cost and quality information," said Stephen A. Ralph, Huntington Memorial's chief executive. "The need for pricing transparency in healthcare services has taken on increasing importance for citizens."

People tend to turn first to medical providers when hunting for prices. In a recent California HealthCare Foundation survey of 1,528 consumers, 26% said they had looked for information on the cost of a medical procedure in advance. Thirty-nine percent of those surveyed said they contacted a healthcare provider, 30% looked online and 8% turned to their insurance company, according to the foundation.

Policymakers and economists have said for years that one way to help slow the rising cost of healthcare was for consumers to have more of their own money at stake.

A report issued earlier this year by the market research division of Thomson Reuters estimated that $36 billion could be saved annually if the 108 million Americans with employer coverage did some comparison shopping on more than 300 common medical procedures.

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