Doctors must discuss the cost of care with their patients

I have been writing a bit lately on the need for health care providers to talk with their patients about health care costs, if for no other reason than to enable patients to determine whether they can afford to pay for the healthcare that their doctors are recommending them to receive.  I have been criticized for this position, on the grounds that I am rationing care from people with less money and connections than I have, a criticism that I have explained as being misguided.

But I have faced another more reasonable criticism too, one I want to write about today.  I have been reminded that doctors and other healthcare providers cannot easily discuss healthcare costs with patients because those costs are often unknown. Lisa Rosenbaum made this point in an excellent New Yorker essay:

The first problem with financial disclosure from doctor to patient is a practical one. Doctors rarely know how much their patients actually pay. Patients are covered by a variety of insurers, all of whom offer several plans, for which any individual patient has a different copayment and deductible, which he may or may not have met.

In this post, I will lay out a fuller version of this criticism and then explain why I still think doctors need to hold these conversations, and also why I think these conversations will become much more common in the near future.

This criticism was nicely phrased by Julian Fisher, a neurologist in Boston who wrote a letter to the New York Times.  Fisher wrote: “It is doubtful that any physician in the United States knows precisely what a given procedure or treatment costs, how much an insurer might pay with negotiated rates, and how much the patient will ultimately be responsible for.”

I completely agree with Fisher on this point.  Physicians cannot know the precise and specific costs.  Indeed in our New England Journal article, Amy Abernathy, Yousuf Zafar and I acknowledge this fact: “The current reality is that it is very difficult, and often impossible, for the clinicians to know the actual out-of-pocket costs for each patient, since costs vary by intervention, insurer, location of care, choice of pharmacy or radiology service, and so on.”  But we also continue to add “nonetheless, some general information is known, and solutions that provide patient level details are in development.”

I want to elaborate on that point right now.

Even when costs are difficult to determine precisely, physicians still often have a good sense of which interventions are relatively expensive and which are probably pretty cheap.  We know that generic drugs are cheaper than trade brands.  We know that PET scans are more expensive than CT’s.  We surely realize that colonoscopies are more expensive than fecal occult blood tests.

Now of course, physicians don’t know how much a specific patient will pay out of pocket for any of these services.  But that is OK because financial staff in our medical clinics will often be able estimate these costs for our patients or direct patients to someone who does (for instance, the patient’s insurance company).  In fact, it is relatively straightforward to imagine a shift in our clinical paradigm, where physicians alter the flow of patients in their clinic so that those who are financially distressed by the cost of medical care, after first meeting with their physicians, walk down the hall and talk to one of the billing experts in the clinic.  The billing expert can help the patient determine the cost of given healthcare services for the patient, and the patient can then return to the physician for a final check-in, to decide whether to receive specific services or, instead, to look for less expensive ones.  A meeting with this kind of a financial expert will help patients gain a fuller sense of the costs and benefits of their health care alternatives.

Perhaps this paradigm shift sounds unrealistic to many busy clinicians.  But I want to remind them that we already practice medicine much this way when patients face serious medical choices.  A woman with breast cancer, for example, might hold an initial meeting with a surgical oncologist, then meet with a radiation oncologist followed by a medical oncologist, before potentially looping back to the surgical oncologist and deciding upon a final treatment. Visits with physicians can even be followed up by visits with allied professionals.  When my wife had breast cancer and met with a plastic surgeon to talk about reconstruction alternatives, that meeting was followed up by a visit with a nurse practitioner who more fully explained the options to us.  We were then able to pose any final questions to the surgeon.

Medical practice is increasingly becoming a team sport.  Good clinicians recognize that to help patients understand their medical care, it is useful to partner with allied health professionals.   To that list of health professionals, we might need to start adding people who can find out how much healthcare is costing specific patients, and whether those costs are becoming a burden.

Sound unrealistic?  Keep in mind that cost conversations are going to get increasingly frequent soon.  A number of companies have formed in recent years to help patients discover the cost of proposed medical interventions.  One such company, Pricing Healthcare, is collecting information on medical bills from patients to develop a database that will help future patients estimate their healthcare costs.

Another company, ClearHealth.com, provides easy to glean information on the costs that self-pay patients will need to fork over to receive common healthcare services.  Women in New York City looking for a mammogram can discover, for example, that All County Radiology will charge them $50 for a mammogram, while Mount Sinai will charge $607.

Yet another company, Castlight Health, offers people information on how much they will pay out of pocket, given their specific health insurance plan and their year-to-date healthcare spending (thereby accounting for whether the person in question has met her annual deductible).  Castlight is selling this service primarily to health plans and employers, not individuals, but as more employers pay for their product, more individuals will have ready access to that information.  I have spoken with people at Aetna who are developing a similar product of their own.

Like it or not, physicians cannot expect to practice medicine without discussing the cost of care with their patients.  This is going to be difficult for a while.  But I expect these cost conversations will get easier over time, as physicians gain experience holding such conversations and as they, and their administrative staff, become more familiar with how much various healthcare services cost.

Rather than resist this inevitable trend, physicians should embrace the opportunity to help their patients better understand the full ramifications of their healthcare alternatives.

Peter Ubel is a physician and behavioral scientist who blogs at his self-titled site, Peter Ubel and can be reached on Twitter @PeterUbel.  He is the author of Critical Decisions: How You and Your Doctor Can Make the Right Medical Choices TogetherThis article originally appeared in Forbes.

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  • Lisa

    An excellent article.

    I hope services like ClearHealth.com will give you more information than just price. You used the example of a mammogram. If I were buying a mammogram, I would like to know what kind of mammogram (digital or not?), who is reading the mammogram and will they accept my insurance.

  • azmd

    I really don’t have a problem discussing healthcare costs with my patients. But I work at a public hospital so those discussions are a natural part of my practice with the population I serve. In terms of the suggestion that a physician in private practice should hire additional staff to research and discuss with the patient the cost of their care, I am not sure I understand why the physician should bear the cost of paying that staff.

    I would suggest that if we have a healthcare system so ridiculously complex that a physician is required to pay a cadre of support staff just to decipher and manage issues related to third-party payment, we have arrived at a point where the system is unsustainable and should be completely overhauled.

    Insurers are the ones who have made our healthcare system so complex. They should be the entities that bear the responsibility, financial and otherwise, to help patients navigate the system in a reasonable fashion.

    • Lisa

      My experience is the billing office of my doctors can easily and quickly tell me what my out of pocket cost will be for a procedure that is done at their office. They also have no hesitation asking for immediate payment to cover my out of pocket costs. They even take credit cards. Things become somewhat more complicated when they have referred me to other providers for tests, biopsies, etc. I would have to contact the other provider to discuss cost. My hospital was easily able to give me my out of pocket costs for all of my surgeries. In any case, all of the preauthorizations I received from my insutrance company gave my co-pays. I don’t think discussing medical costs is all that complicated.

      I think discussing costs would be much easier if people understood their insurance plans. Just as I think any person diagnosed with a serious disease should take a ‘medical statistics ‘ class so they can understand the basis for various treatment decisions, they should also take an insurance 101 class.

      • buzzkillerjsmith

        Same with us. We can tell you how much something will cost if it is done in our office and you’re paying out of pocket. Of course this is the maximum you will pay. But we can’t tell you how much of this insurance will cover. Still, the info is valuable to the pt.

        Outside meds, referrals, procedures, etc. are usually a black box.

        • Lisa

          Why is it that my doctors office knows what my insurance will cover and or not cover and what my co-pays (ie out of pocket cost) will be and your office can’t give that information to a patient? The only thing I can think of is that perhaps the market in my area has fewer insurers so things are simpler.

          I have never had trouble finding out exactly what my out of pocket costs (ie Co-Pays) were for my medical adventures over the last six years (six surgeries, many rounds of PT,treatment for lymphedema, one hospitalization for cellulitis and one ER trip for cellulitis), not to mention all of the office visits.

          • buzzkillerjsmith

            I don’t know why.

          • azmd

            You may have a much easier and more transparent insurer than most.

        • http://onhealthtech.blogspot.com Margalit Gur-Arie

          Buzz, this information is valuable to you too. If you don’t compare payments to contractuals, at least for your largest carriers, chances are you are leaving quite a bit of money on the table. Underpaid claims should be routinely appealed, and the rare overpaid ones should be refunded. There are myriad of reports in practice management systems that can be run (should be run) regularly.

          • buzzkillerjsmith

            We know how much we should get paid, just not how much the pt will have to pay for care on the outside.

    • buzzkillerjsmith

      Complexity->consumer confusion->profits. Hence the finance industry.

      Econ 101 teaches that the free competitive market works only if all players in a transaction have full price and quality information. This works pretty well for the wheat market but is a ridiculous joke in medical care and most other markets as well.

      Curious how free-market idealogues don’t mention this on talk radio.

  • QQQ

    Everyone’s concerned with “costs,” but so few seem to able to see the
    issue clearly. Everybody’s got their own bogeyman for the unsustainably
    rising costs of healthcare – Obamacare, pharmaceutical companies,
    insurance companies, hospitals, doctors, illegal immigrants, etc. But
    the real problem is economic and far more fundamental: The absurd notion
    that the way to finance all health care is through insurance, public or
    private.

    The purpose of insurance is to mitigate catastrophic risk by having a
    large group of people who share that risk, pay a relatively small amount
    into a common pool, which pays out to the few people for whom the risk
    becomes reality. One “insures” against unaffordable loss. The main
    reason we are in trouble is that most healthcare does not fall into this
    category of unaffordable loss that will hit only a relative few (even
    if some of it does). All of us need and “consume” healthcare, incurring
    regular and routine medical costs even if we never suffer catastrophic
    or prolonged illness. Insurance is a spectacularly inefficient way to
    pay for this routine care, and its use in this context introduces
    distortions and perverse incentives into the healthcare “market” that
    reverberate throughout the entire system.

    Insurance drives up costs not only by adding a huge administrative
    burden to every healthcare transaction, but by stifling competition, and
    encouraging over-consumption by divorcing the price of healthcare
    services from the patients who actually use them. There are good reasons
    why we don’t pay for auto maintenance with our car insurance, or most
    home repairs and improvements with homeowners insurance. If you doubt
    this, just look at the costs of those few medical procedures that are
    NOT covered by insurance, like LASIK or cosmetic surgery. They are a
    fraction of the cost of equivalently complex procedures that ARE covered
    – and they are going down as equipment depreciates and doctors compete
    for your business. This is what happens in a transparent, competitive
    market. But healthcare is anything but a transparent, competitive
    market! Try reading a hospital bill, or finding out up front the total
    costs of, say, an appendectomy. It is virtually impossible. Why? Because
    you may be the patient, but you are not the “customer” of healthcare
    providers – your insurance company (or Medicare) is. And until we put
    the customer back in the equation, there is no market discipline, no
    “competition” – and costs can only ratchet in one direction.

    Insurance is popular because it APPEARS as if “someone else” is footing
    the bill, but this is illusion; there is no free lunch here or anywhere
    else! If you, like most people, have employer-provided health insurance,
    all it means is that your employer is deducting the costs from your
    salary. It may not show up in your paystub, but from your employer’s
    perspective, it’s just part of your total compensation. Let’s suppose
    that your health insurance costs your employer $15,000 per year, but if
    there were, say, a $15,000 annual deductable, it would cost only $5000 a
    year. What if your employer were to give you the $10,000 difference in
    cash, and then YOU pay for routine medical costs out of pocket – would
    it be worth it to you? Transition to something like this is the only
    real solution to the cost problem. Most routine healthcare must be paid
    for the way we buy groceries, or gasoline, or housing, or any other
    necessity of life. Leave insurance for what it is meant to be:
    Protection against the cost of catastrophic illness. When the patient is
    also the customer, everything from the price of drugs and medical
    procedures, to the wait at your local hospital ER becomes subject to the
    same market forces as in every other consumer-facing industry. Until
    people recognize this basic economic fact, we have zero hope of
    containing healthcare costs.

    • LeoHolmMD

      Additionally, there are parties trying to move “prevention” into the catastrophic realm of costs. Completely unsustainable.

    • Lisa

      Other countries, such as Switzerland, finance health care through insurance. The difference is that they limit how much insuranc ecompanies can charge for medical insurance (while allowing them to sell other products).

      The problem with costs in this country isn’t insurance per se, but the fact that medicine is a for profit industry.

  • guest

    It seems to me that there’s an even simpler way to ensure that patients are fully informed about the costs of their treatment: the doctor should tell them how much it will cost, and they should pay the doctor directly. Easy-peasy.

    The patient is then free to submit a claim to his or her insurance company for reimbursement, and the amount that gets reimbursed is a matter between the insurance company and the patient. It should be the patient’s responsibility to know how much his insurer will reimburse him, not the doctor’s.

    • Lisa

      So you are advocating that only the rich or well off get medical care?

      • guest

        Not at all; I am advocating for a return to the payment system that was the norm before the late 1980′s when insurance companies began to contract directly with doctors, thus leaving the patient out of the payment loop and creating perverse market incentives which have eroded the quality of our healthcare in many ways.

        • Lisa

          I’ve had employer provided insurance, before 1980. My doctors billed the insurance and I paid the balance, after the insurance company paid. I never had to pay the total cost of my visit and I was relatively poor, I couldn’t have paid for any thing other major. I didn’t have the cash. Today, when so many people in this country are one paycheck away from financial disaster, what you are proposing would would put health care out of reach for many people.

  • http://onhealthtech.blogspot.com Margalit Gur-Arie

    So we’ve been arguing and debating how to “fix” health care for 5 years and the best we can do is to “transform” health care to a system where poor people are taken to the back room, one by one, to be educated on why they cannot receive medical care?

    I was going to type the whole thing here, but it got too long, so here is the rest: http://onhealthtech.blogspot.com/2014/07/health-care-for-poor-sequel.html

  • DeceasedMD

    It’s absurd to be in the middle of this as an MD. Given that there is no transparency in costs and every pt pays a different amount, depending on insurance, the business types should be responsible for giving out the news. MD’s should not be their messenger. Unless we go back to direct pay.

  • LeoHolmMD

    In other words, charging very high prices and then routinely recommending them. As the number of these tests increases with the pile on, it will not be sustainable. It would be interesting to see what prevention entails going from one country to the next. You could bankrupt someone by doing all recommended screenings and preventive interventions. Medical societies are certainly not going to stop coming up with them. Plenty of history to show contributions to overdiagnosis and overtreatment.

  • http://onhealthtech.blogspot.com Margalit Gur-Arie

    Ah, but that’s the whole point. They won’t.
    Since more and more people have high deductibles, the days when you paid a $20 copay and then received a bill from the doctor or hospital, saying that this is not a bill, and finally an EOB from the insurer saying it’s all paid up, are over.

    My guess would be that services will not be provided without upfront payment for people who have not met their deductible, which can be as high as $6,000 or even more.
    In which case, “informing” patients about costs, translates into politely inquiring if they can pay, right here and right now. Otherwise, we chuck it to “cultural preferences” and “patient and family choices” to take a “conservative” approach to treatment.

    I am waiting for the hallmark study showing that poorer people have strong preferences for less aggressive interventions, just like they have strong preferences for restricted and crappy networks with not enough doctors and no top tier hospitals.

  • Lisa

    The only non elective hospitalization I had was for cellulitis; the hospital was able to tell me what my share of the total bill would be when I was admitted. All my other hospitalizations involved surgeries which were planned. Preauthorizations which were easily obtained and they specified my costs.

    My insurance must be easier to work with than many. As long as I am in network (one community hospital and multiple teaching hospitals), my co-pay for hospitalization is $250. For hospital based procedures, my co-pay is zero. If I go out of network, which I have for procedures, I can pay at different levels. However, i have always been able to find out what my costs are. While I am typing, I realize that I haven’t been told what the total bill will be, only what my share is, which has always matched up the EOB.

  • DeceasedMD

    sounds like Communist Russia except without bribing the doctor. Perhaps we need to just make the system more corrupt, so you can get your cut.

    • buzzkillerjsmith

      Very smart for a dead guy.

  • buzzkillerjsmith

    Thanks for the kind words.

    There is a recent exhaustive study by Gilens and Page showing that the rich have about 15 times more effect on public policy than the middle class does.

    Don’t remain stubbornly hopeful. Give up. It is the only route that corresponds to reality.

  • RenegadeRN

    I did exactly that-shopped around- when I needed pre-op tests prior to an elective knee scope.
    The primary, told me to go to the hospital and have them done- they wanted almost $800!! I said “thanks, I will get back to you”….then I literally drove a block away to an imaging center, paid $84 dollars for the chest film, another $30 for an in office EKG at a clinic I used to use for primary care…voila! $114 vs. $800. All because I was outraged and knew there had to be a better way/price.

    Went back to my primary (who doesn’t do EKGs in their office) and told them my success story and asked them to not recommend people go to the hospital for such testing… THEY DIDN’T CARE! I was stunned. It is a small personal office and I have known them for decades… I could tell they were not going to change a thing regarding referring pre op testing. Lesson learned.

    No one will adequately look out for my personal out of pocket costs- but ME.

  • itasara

    I am so glad this article talks about costs. I just read in this series about how we can learn from vetinarians and cost is definitely one of the deciding factors in treating pets. But the costs for humans is not very transparent, especially when it comes to drugs and insurance. In some countries the costs are much more inclusive and less expensive. I read about someone who had cardiac surgery abroad with American trained doctors. He could not have it done in the US; it was just too expensive and he did not have the money or maybe good enough insurance. The stay was in a beautiful hotel like hospital and there was no nitpicking about how many cotton swabs were used, or the cost of the room, etc. . One price covered everything including nurses and food and it was unaffordable had he stayed in the US for the same surgery. My choices depend on how much my ins. company will pay, for example for a drug my doc and I would like to have but the ins. company won’t pay for it because they are waiting for a generic version of the drug I now take which may or may not happen. But no one will be honest as to what these drugs cost and there are all kinds of deals companies make with each other and it doesn’t matter what patient or doctor says is necessary. It is a very sad situation what is happening in this country. We fight over a few dollars for some birth control because we have been made to think insurance should pay for everything and because the costs are so high and because the health industry treats people like they cannot be responsible for their own health at all.

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