2013
If you looked at the following for a list of restaurants you would know instantly the least expensive and the priciest. By implication you would also know the expected quality and ambiance from a greasy spoon to fast food to white tablecloth with sommelier. In other words, there is some logic in the price indicator.
Not so with health care and if you were a physician dealing with these plans you would be frustrated to say the least, but would you provide better care to one group over another?
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Medicaid💲
Medicare 💲💲
Obamacare exchange plans 💲💲💲
Group insurance plans 💲💲💲💲
Private payers 💲💲💲💲💲
If we want transparency in health care prices, why do different programs pay different fees which are accepted by providers and what effect does all this have on groups unable to dictate what they will pay? Wouldn’t it make more sense to collectively negotiate (Medicaid, Medicare, private insurers, TRICARE/physician and hospital organizations) allowable charges the same for every program? If the fair value for an routine office visit is $80 (geographically adjusted as necessary) then all plans should pay $80, with the portion shared by plan and patient determined by the coverage provisions. Scarp all networks, there is no need for them and their associated cost to manage. Physicians would no longer have to decide about participating in this plan or that plan, a single claim processing system could be used by any program, public or private. The administrative burden would be reduced for everyone.
If you were on Medicare or any private plan you would know an office visit would cost you $16.00 (assuming 20% coinsurance) or whatever your fixed co-pay may be. Doctors who charged more than the allowed fee would soon price themselves out of the market because unlike today, no insurance would pay more than $64 for an office visit while the patient would pay 100% of any difference. There would be no in and out of network benefits, no separate deductibles no higher coinsurance percentage. Similar amounts would be set for an episode of care, a bundled payment if you will. Everyone is treated the same, total transparency.
Needless to say it’s not quite as simple as I make it appear, but it has been done before.
The next challenge is reaching the optimum level of utilization for maximum quality outcomes. As daunting as that task is, getting pricing out of the equation helps.
QUINNSCOMMENTARY 
No problem. Let’s do the same with say lawyers, architects, engineers, fast food restuarants, etc.
Who sets the price? Like “Comparable Worth”, another idea President Obama supported when he was in the senate, he would nominate the federal government to decide.
I think they call that “Medicare for all”. Watch out what you ask for.
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Excellent article. One of our daughters works for a large nation-wide company who provides kidney dialysis services. She works in billing and was initially astonished at the widely different prices paid for by medicare and private insurance for the same service. As your article indicates, the prices charged have no real world relation to the costs of the services provided.
Another example: A friend had an MRI done recently at a local hospital which cost twice as much as one charged by the radiologist my wife works for.
I don’t think things will improve in this area any time soon. Sadly, it looks like they will get worse.
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Sounds good. Where do I sign-up? The supplier of the services are also required to provide the fees in advance with statement showing Insurance part and copay, so we don’t find out afterwards that you picked the most expensive service in town. Had routine surgery one time, surgeon/hospital paid by HMO. Two months later another surgical group sends bill HIGHER THAN SURGEON I CONTRACTED! After investigation was told original surgeon wanted help? But even they didn’t understand how the Help wanted more the the one incharge(contracted with) was charging for their services. HMO eventually paid them about the same as original surgeon. Still don’t know who was there doing what, other than the 3 O.R. nurses, Anest. & 1 contracted surgeon, I was having the best sleep of my life at the time! Moral is even if you think you know what will happen and the cost, you really don’t.
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