Transparency doesn’t lower healthcare spending

US dollars

Photo by Petr Kratochvil

Providing patients with a tool that enabled them to search for healthcare prices did not decrease their spending, according to a study published in JAMA.

Researchers studied the Truven Health Analytics Treatment Cost Calculator, an online price transparency tool that tells users how much they would pay out of pocket for services such as X-rays, lab tests, outpatient surgeries, or physician office visits at different sites.

The out-of-pocket cost estimates are based on the users’ health plan benefits and on how much they have already spent on healthcare during the year.

Two large national companies offered this tool to their employees in 2011 and 2012.

The researchers compared the healthcare spending patterns of employees (n=148,655) at these companies in the year before and after the tool was introduced with patterns among employees (n=295,983) of other companies that did not offer the tool.

Overall, having access to the tool was not associated with a reduction in outpatient spending, and subjects did not switch from more expensive outpatient hospital-based care to lower-cost settings.

The average outpatient spending among employees offered the tool was $2021 in the year before the tool was introduced and $2233 in the year after. Among control subjects, average outpatient spending increased from $1985 to $2138.

The average outpatient out-of-pocket spending among employees offered the tool was $507 in the year before it was introduced and $555 in the year after. In the control group, the average outpatient out-of-pocket spending increased from $490 to $520.

After the researchers adjusted for demographic and health characteristics, being offered the tool was associated with an average $59 increase in outpatient spending and an average $18 increase in out-of-pocket spending.

When the researchers looked only at patients with higher deductibles—who would be expected to have greater price-shopping incentives—they also found no evidence of reduction in spending.

“Despite large variation in healthcare prices, prevalence of high-deductible health plans, and widespread interest in price transparency, we did not find evidence that offering price transparency to employees generated savings,” said study author Sunita Desai, PhD, of Harvard Medical School in Boston, Massachusetts.

A possible explanation for this finding is that most patients did not actually use the tool. Only 10% of the employees who were offered the tool used it at least once in the first 12 months.

When patients did use the tool, more than half the searches were for relatively expensive services of over $1000.

“For expensive care that exceeds their deductible, patients may not see any reason to switch,” said study author Ateev Mehrotra, MD, also of Harvard Medical School. “They do not save by choosing a lower-cost provider, even if the health plan does.”

Still, the researchers said the tool does provide patients with valuable information, including their expected out-of-pocket costs, their deductible, and their health plan’s provider network.

“People might use the tools more—and focus more on choosing lower-priced care options—if they are combined with additional health plan benefit features that give greater incentive to price shop,” Dr Desai said.

US dollars

Photo by Petr Kratochvil

Providing patients with a tool that enabled them to search for healthcare prices did not decrease their spending, according to a study published in JAMA.

Researchers studied the Truven Health Analytics Treatment Cost Calculator, an online price transparency tool that tells users how much they would pay out of pocket for services such as X-rays, lab tests, outpatient surgeries, or physician office visits at different sites.

The out-of-pocket cost estimates are based on the users’ health plan benefits and on how much they have already spent on healthcare during the year.

Two large national companies offered this tool to their employees in 2011 and 2012.

The researchers compared the healthcare spending patterns of employees (n=148,655) at these companies in the year before and after the tool was introduced with patterns among employees (n=295,983) of other companies that did not offer the tool.

Overall, having access to the tool was not associated with a reduction in outpatient spending, and subjects did not switch from more expensive outpatient hospital-based care to lower-cost settings.

The average outpatient spending among employees offered the tool was $2021 in the year before the tool was introduced and $2233 in the year after. Among control subjects, average outpatient spending increased from $1985 to $2138.

The average outpatient out-of-pocket spending among employees offered the tool was $507 in the year before it was introduced and $555 in the year after. In the control group, the average outpatient out-of-pocket spending increased from $490 to $520.

After the researchers adjusted for demographic and health characteristics, being offered the tool was associated with an average $59 increase in outpatient spending and an average $18 increase in out-of-pocket spending.

When the researchers looked only at patients with higher deductibles—who would be expected to have greater price-shopping incentives—they also found no evidence of reduction in spending.

“Despite large variation in healthcare prices, prevalence of high-deductible health plans, and widespread interest in price transparency, we did not find evidence that offering price transparency to employees generated savings,” said study author Sunita Desai, PhD, of Harvard Medical School in Boston, Massachusetts.

A possible explanation for this finding is that most patients did not actually use the tool. Only 10% of the employees who were offered the tool used it at least once in the first 12 months.

When patients did use the tool, more than half the searches were for relatively expensive services of over $1000.

“For expensive care that exceeds their deductible, patients may not see any reason to switch,” said study author Ateev Mehrotra, MD, also of Harvard Medical School. “They do not save by choosing a lower-cost provider, even if the health plan does.”

Still, the researchers said the tool does provide patients with valuable information, including their expected out-of-pocket costs, their deductible, and their health plan’s provider network.

“People might use the tools more—and focus more on choosing lower-priced care options—if they are combined with additional health plan benefit features that give greater incentive to price shop,” Dr Desai said.

US dollars

Photo by Petr Kratochvil

Providing patients with a tool that enabled them to search for healthcare prices did not decrease their spending, according to a study published in JAMA.

Researchers studied the Truven Health Analytics Treatment Cost Calculator, an online price transparency tool that tells users how much they would pay out of pocket for services such as X-rays, lab tests, outpatient surgeries, or physician office visits at different sites.

The out-of-pocket cost estimates are based on the users’ health plan benefits and on how much they have already spent on healthcare during the year.

Two large national companies offered this tool to their employees in 2011 and 2012.

The researchers compared the healthcare spending patterns of employees (n=148,655) at these companies in the year before and after the tool was introduced with patterns among employees (n=295,983) of other companies that did not offer the tool.

Overall, having access to the tool was not associated with a reduction in outpatient spending, and subjects did not switch from more expensive outpatient hospital-based care to lower-cost settings.

The average outpatient spending among employees offered the tool was $2021 in the year before the tool was introduced and $2233 in the year after. Among control subjects, average outpatient spending increased from $1985 to $2138.

The average outpatient out-of-pocket spending among employees offered the tool was $507 in the year before it was introduced and $555 in the year after. In the control group, the average outpatient out-of-pocket spending increased from $490 to $520.

After the researchers adjusted for demographic and health characteristics, being offered the tool was associated with an average $59 increase in outpatient spending and an average $18 increase in out-of-pocket spending.

When the researchers looked only at patients with higher deductibles—who would be expected to have greater price-shopping incentives—they also found no evidence of reduction in spending.

“Despite large variation in healthcare prices, prevalence of high-deductible health plans, and widespread interest in price transparency, we did not find evidence that offering price transparency to employees generated savings,” said study author Sunita Desai, PhD, of Harvard Medical School in Boston, Massachusetts.

A possible explanation for this finding is that most patients did not actually use the tool. Only 10% of the employees who were offered the tool used it at least once in the first 12 months.

When patients did use the tool, more than half the searches were for relatively expensive services of over $1000.

“For expensive care that exceeds their deductible, patients may not see any reason to switch,” said study author Ateev Mehrotra, MD, also of Harvard Medical School. “They do not save by choosing a lower-cost provider, even if the health plan does.”

Still, the researchers said the tool does provide patients with valuable information, including their expected out-of-pocket costs, their deductible, and their health plan’s provider network.

“People might use the tools more—and focus more on choosing lower-priced care options—if they are combined with additional health plan benefit features that give greater incentive to price shop,” Dr Desai said.