The Reading Room

Price transparency can lead to lower costs, even for those patients who do not shop

by Matt Morrill and Ty Aderhold

Are patients actually shopping for imaging? Here at the Imaging Performance Partnership, we have been seeing this question more and more of late. While estimates assert that 30% to 40% of health care, including most medical imaging, is shoppable, studies continue to show that patients are not shopping for imaging care as much as one might expect.

Tool: Access the imaging price shift calculator

However, new research indicates that increases in price transparency can lead to (modest) amounts of shopping and overall reductions in imaging prices. In this particular study, all consumers, even those who did not shop, benefited from lower prices.

The research followed the effect of New Hampshire's state-wide price transparency website, HealthCost, on commercially insured individuals over a five-year period, from 2007 when the website was first launched through 2011. Because only a portion of imaging procedures were listed on the website, the study was able to examine the differences in spending and price for imaging procedures listed on the website versus those that were not.

Price transparency reduces imaging costs for patients willing to shop

Only 8% of New Hampshire's commercially insured imaging patients used the website, but this limited shopping still reduced overall spending on medical imaging. Overall out-of-pocket costs for consumers for the medical imaging procedures listed on the website were reduced by 5% when compared with those procedures that were not listed, which demonstrates that some patients were using the tool to find lower-cost providers.

This reduction was even more pronounced when looking at just patients who had not yet met their deductible, as these individuals saw a 10.3% reduction in cost for listed procedures. These findings suggest that patients who were going to bear the financial burden benefitted the most from the price transparency website. And patients were not the only benefactors of the tool—there was a 4% reduction in cost for medical imaging visits for insurers as well.

Effects of transparency on imaging visit price over time

Even though only a small subset of New Hampshire patients accessed the price transparency information, researchers found that all patients benefitted from the website. By comparing price changes over time while holding procedure, price, and insurer constant, researchers identified a reduction in prices due to provider competition and negotiated rates with payers, as opposed to shopping. Overall, total visit prices fell by 2% over the five-year period, which translates into cost savings for all New Hampshire patients, regardless of their awareness of the price transparency website.

As imaging price transparency continues to gain momentum, these results demonstrate that providers should be aware that these tools will do more than just encourage patients to shop. Price transparency can also impact payer negotiations and price competition between providers, which will lead to a reduction in overall prices even—if patient consumerism fails to materialize.

 

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