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Another Smoke Screen! Price Transparency in its present format

Stanley Feld M.D.,FACP,MACE

Last August Aetna triumphantly announced “the first program of its kind to let consumers find out what they can expect to pay at the doctor’s office before going in for a visit. This means for the first time, consumers can better gauge their out of pocket health care expenses by having online access to the actual discounted rates for up to 25 of the most common office-based services offered by their own primary care or specialist physician. Aetna will publish “actual discounted rates specific to their health plan for office visits, diagnostic tests and minor procedures.”

This does not help Denise at all with the fees she had experienced. She did not have Aetna insurance with the specific Aetna insurance plan that Aetna published fees for. Additionally, if she had access to the fees, she would be in no position to negotiate the fee with her vendor. How can the non insured get in a position to negotiate the fee? How did Aetna arrive at the fee to pay the vendor? Aetna announced this innovation in August 2005. Their goal was to try to capture the growing Health Savings Account Market in the Cincinnati area. The procedures and services were limited to the 25 most used by participating physicians. No expansion has occurred since August 2005, as far as I can tell. It does not apply to all their plans and one needs an identifying code and password to get the information published.

Is this price transparency? In my opinion, this is a smoke screen to appease a growing demand for price transparency. Some would say it is a great start. Aetna’s price transparency was announced in August 2005. It is now July 2006. We need price transparency for everyone. Their has to be built in negotiating power. The range of fee agreed on needs to be published. The reason for the range of fees needs to be understood by the consumer.

The AMA nailed it. However, their statement is so subtle that the main message can easily be missed. The AMA had a positive approach , “In support of consumer-directed healthcare and an end to the mystery of medical prices, the AMA today called on the health insurance industry to end efforts to conceal their pricing systems for medical services.”
The AMA goes on to say “ There is no legitimate rational behind health insurers refusal to provide their payment policies and actual costs to patients and physicians” It serves only as a means for the health insurance industry to avoid accountability.”

The key words in the preceding statement are the payment policies and actual costs of the insurance company. In other words, how does the insurance industry price their product to the consumer? How do they price their payments to the providers, the physicians and the hospitals? What are their actual costs in order to service the product they sell to the consumer? How do they calculate these costs? Do they calculate the cost by factoring in multimillion dollar salaries to executives? For patients and potential patients this is information it would be nice to know.

The AMA goes on to say “insurance industry does not provide patients with an entire picture of insurers pricing. Patients are being provided with incomplete and selective information” This is the information that would represent true price transparency.

I received this stunning note from a fellow endocrinologist, Dr David Westbrock from Columbus Ohio. Dr. Westbrock has run for congress twice to defend patients’ and physicians’ rights. He almost won the second time. You will hear more from Dr. Westbrock in the future. However, this was an immediate reply to the price transparency issue.


The ‘system” is indeed broken. The first steps to repair it are to open up the third party market. Example: An x-ray I ordered at a hospital outpatient center was charged-through an HSA account- at 200$ per knee x-ray X2 (RT and LT) and ~300$ for a spine film. The insurance co. paid 75% of the charge, most going to the HSA deductible. If the same 3 procedures were performed in a doctor’s office, the same insurance company would allow 122$. I am not suggesting that the doctors office be allowed more, since it should really be up to the consumer to choose (wonder which they would?). It is that even the HSA system is being subverted by the same companies that gave us HMO medicine. The answer is plain and simple. TRANSPARENCY is the number one priority. The best medicine at the most efficient price. Small and large companies need to be made aware of such practices.

Dave Westbrock

Physicians as well as patients have problems with price transparency.
Next the Simple Solution to Price Transparency

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