What do hospital discounts really mean?

Our local newspaper recently ran an article on the top of its front page, stating that our monopoly health system is now “expanding health care cost discounts.”  The article was actually a press release – free advertising on the front page. As a primary care physician who refers patients to this health system, I wanted to know what these discounts really meant.

So, I asked the newspaper in an editorial, “what are the prices being discounted, how can we obtain these prices, and how can we make sure that these prices include all the services our patients need in order to get the results we are looking for?”

After all, federal regulations now require hospitals to post their prices in a prominent place in a consumer-friendly format. Instead, ours has tucked them away on the website of its psychiatric hospital on an incomprehensible “chargemaster list” of 12,348 medical services.

To its credit, our health system has been discounting charges to patients long before this announcement.  For example, last fall, it quoted a patient of mine $2,000 for an MRI of the knee, which represented a 71 percent discount from its chargemaster. I asked this patient if it included the radiologist’s fee, and he said he didn’t know because he wasn’t aware that he needed to ask.

Most of our patients, including this one, pay out of their own pockets for MRI’s because my insurance-free practice over the last two decades has attracted mainly the uninsured and patients with high deductibles. We had already compiled a list of such prices from facilities throughout the region and scheduled one for him at a hospital 30 miles away through the website MDSave for $422.

When more than one service is involved, pricing confusion is multiplied.  Take a common procedure such as a colonoscopy, for example.  Our health system doesn’t have a quote on its current chargemaster, but last fall it was $3,560.  Did that price include the fees for the gastroenterologist, nurse anesthetist, and pathologist, or was it just for the use of its facility?

We advise our direct paying patients to consider Colonoscopy Assist, whose website lists colonoscopies with all fees included for $1,275 at facilities within a couple hours’ drive of here.

Simply by steering patients to low cost, high-quality alternatives, direct primary care (DPC) practices such as mine are saving patients sometimes thousands of dollars per visit. This is not the only way we save patients money, however. We charge members $20 and non-members about $200 to repair simple lacerations while local ERs charge about $2,000.

In this article, the health system’s CEO stated that expanding discounts “is in no way a long-term solution to the affordability crisis in health care.” He is right, seeing that discounts on inflated prices don’t save anyone money.  What we need are transparent, all-inclusive prices.

It should be apparent that direct payment for non-catastrophic medical care has the potential to save everyone a bundle of money. President Trump coined the term “shoppable” in his Executive Order on Improving Price and Quality Transparency in American Healthcare to Put Patients First to describe this level of care. He defined it as “common services offered by multiple providers through the market, which patients can research and compare before making informed choices based on price and quality” – such as knee MRIs and colonoscopies.

The question is, are Americans willing to “shop” for these services and pay for them directly?  One of the unintended consequences of Obamacare has been that more Americans now have high deductibles and are essentially uninsured until they reach them.  Increasingly they are turning to direct pay practices such as ours to “shop” more intelligently for medical services and not be fooled by promises of “discounts.”

Robert S. Berry is an internal medicine physician.

Image credit: Shutterstock.com

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