Charting A Clearer Course to Imaging Price Transparency

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A patient is instructed by his physician to undergo a CT examination of the abdomen to help determine what is causing periodic abdominal pain. Instead of simply scheduling an appointment at a local hospital, he first contacts several nearby outpatient imaging centers to find out what they would charge for the procedure based on his insurance plan.

Meanwhile, another patient needs an annual mammography exam. Rather than merely arranging to have the study done at the facility recommended by the referring physician, she consults an online resource offered by a local outpatient imaging center to determine the price she would pay for undergoing a mammogram there.

While such scenarios may previously have been the stuff of fiction, they are becoming a reality as price transparency comes to radiology. Spurred by a multitude of catalysts—from a desire to maintain or increase market share to increased patient sensitivity to healthcare costs—some imaging providers are implementing tools and strategies to provide price transparency to patients.

“There will likely never be 100% price transparency in radiology—or in any other medical specialty, for that matter,” says David Newman, executive director, Health Care Cost Institute (HCCI). “It may not be a game-changer for that reason. However, it’s here, and it’s here to stay.”

Multiple drivers

Several factors are driving the need for price transparency in radiology. Topping the list is a heightened tendency among employers to attempt to control healthcare expenditures by offering healthcare plans with lower premiums and higher deductibles—and a growing tendency among consumers to opt for these plans.

According to the Kaiser Family Foundation/Health Research & Annual Trust (HRET) 2016 Employer Health Benefits Survey, 29% of all workers in the U.S. were enrolled in high-deductible plans that are compatible with health savings accounts (HSAs) or tied to health reimbursement arrangements (HRAs) that reportedly feature lower average premiums than other types of plans.  In 2014, this figure stood at 20%. At the same time, the survey reveals, the share of U.S. workers enrolled in preferred provider organizations (PPOs) with higher-than-average premiums has decreased, from 58% in 2014 to 48% in 2016.

Moreover, the survey results indicate, average deductibles for covered workers continue to be on an upswing. This year, 83% of covered workers face a deductible for single coverage. Such coverage averages $1,478, up $159, or 12%, from 2015 and $486, or 49%, since 2011. Fifty percent of all workers with single coverage must pay a deductible of more than $1,000.

Other figures from the Foundation confirm both the escalation of out-of-pocket expenditures incurred by patients with high-deductible health insurance policies, and the fact that rising insurance deductibles have outpaced the average hike in employee wages during the past five years. Average out-of-pocket expenditures per patient rose almost 230% between 2006 and 2015.  U.S. workers’ wages increased by 1.9% between April 2014 and April 2015, but their out-of-pocket medical expenses jumped by 9% during the identical time period.

“Until high-deductible plans, HSAs, and HRAs were introduced or became so prevalent, patients didn’t think much about or try harder to understand the cost of their care, including imaging, nor did they think that hard about what was going to come out of their pockets,” says Mark D. Stolper, MBA, executive vice president and chief financial officer,

RadNet. Stolper, whose organization maintains more than 310 owner-operated imaging centers across seven states (California, Delaware,  Florida, Maryland, New Jersey, New York, and Rhode Island), notes that as high-deductible plans shift an ever-larger healthcare cost burden onto patients’ shoulders, consumers’ cries for price transparency are growing ever louder. He firmly believes they will be even more so as all manner of employers look to assume less and less of a financial burden for their workers’ healthcare coverage.

Harley Hammerman, MD, CEO of Metro Imaging, which has five freestanding imaging centers in and around St. Louis, Mo., corroborates Stolper’s comments. He adds that an ever-more-educated cadre of patients is also pushing the imaging transparency envelope.

Spiraling healthcare costs for individuals is inciting these patients to demand to know, and to actively research and “comparison-shop” the price of imaging procedures.  In their view, Hammerman says, obtaining price information from imaging providers before consenting to any study should be as normal and as natural an occurrence as doing the same when purchasing consumer goods.

“The feeling is, ‘I wouldn’t buy a car without knowing the price and whether I’m getting the best deal;  why should I do anything different  with an MRI, CT, or any other procedure?’” he explains. “Unless we’re price-transparent, it will be more challenging to [attract patients and keep them in the fold.]”

Wide price variation

Wide variations in the cost of and reimbursement for imaging services are only compelling patients to press harder for pricing information. Both Stolper and Hammerman deem price transparency a significant issue in their market, as does Ed Swager, CEO, Radiologic Associates of Fredericksburg, Fredericksburg, Va.

RadNet’s typical charge for an MRI of the lumbar spine is $500 to $600; at local hospitals, it is approximately $1,500 to $2,500. “There is typically a two- to five-time difference [between its fees and hospitals’ fees]”, Stolper says.  At Metro Imaging facilities, reimbursement for an MRI of the knee averages $393, but one hospital receives $1,181 for the same procedure. For an MRI of the brain without contrast, Radiologic Associates of Fredericksburg receives average reimbursements “in the low $200s” from Medicaid and $675 from commercial payors; for a CT of the abdomen and pelvis with contrast, $285 from Medicaid and $586 from commercial payors.

Claims data from the HCCI and its Guroo.com online price transparency tool (which incorporates price information from major commercial payors) bear out these discrepancies. Specifically, Newman points, with one exception, to marked variations in pregnancy ultrasound rates across 12 metropolitan statistical areas (MSAs): Arizona, California, Connecticut, Florida, Missouri, New York, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, and Virginia. The highest average price for this procedure ranges from $275 in Virginia Beach, Va. to $661 in San Francisco; the lowest average price, from $183 in Canton, Ohio to $271 in Kansas City, Mo., and Richmond, Va. Of the 12 MSAs, California has the most significant price differential for pregnancy ultrasound charges, at $477 ($184 in Oxnard versus $661 in San Francisco); followed by Ohio, at $339 ($522 in Cleveland versus $183 in Canton); and Florida, at $277 ($457 in Jacksonville versus $180 in Orlando).

“It’s very telling that the differentials for pregnancy ultrasound in almost all of the MSAs are so great, save Virginia, with a $4 differential,” Newman states, noting that patient obligations for imaging services also vary considerably between hospitals. For instance, Newman asserts, an outpatient MRI procedure with the same CPT code can carry an out-of-pocket cost of $64 to $476, depending on the state in which it is performed.

Then, there is the establishment of databases and mechanisms that make it easy for employers and consumers to obtain a handle on the price of services and procedures. Several price transparency companies have been launched over the past few years, and payors, among them UnitedHealthcare and Aetna, now offer their own online price-comparison tools.

On the hospital side, 11 states have set up all-payor claims databases from which data on hospital costs and charges can be obtained and with which every payor must share information, according to the All-Payer Claims Database (APCD) Council; the roster of these states encompasses Colorado, Kansas, Maine, Massachusetts, Minnesota, New Hampshire, Oregon, Rhode Island, Tennessee, Vermont, and Utah. All-payor claims database implementation is underway in an additional seven states, including Arkansas, Connecticut, Delaware, Florida, New York, Washington, and West Virginia. Virginia, too, has an all-payor claims database; submission is voluntary. Efforts to create similar databases to which submission will be optional are underway in California, Michigan, Oklahoma, and Wisconsin, the APCD Council’s website indicates.

“If we aren’t being equally transparent about our prices, patients—especially the more educated ones—may think twice about us,” asserts Michael Moreland, chief administrative officer, Premier Radiology, Nashville, Tenn.  A joint venture of the Saint Thomas Health system, Advanced Diagnostic Imaging, and MidState Radiology, Premier Radiology operates 14 diagnostic imaging centers in six counties in the Middle Tennessee region.

Provider catalysts and strategies

Not surprisingly, however, imaging providers’ move toward price transparency isn’t being propelled by such catalysts as patient demand, awareness of price discrepancies, competitive pressure and efforts by payors and other entities to up the price visibility ante. Rather, other factors are at play, most notably a perceived need to harness increased price transparency to achieve and demonstrate value. Additionally, imaging practices are harnessing different means of disclosing prices to patients.

For Radiologic Associates of Fredericksburg, the impetus for boarding the price transparency train was a desire to leverage data to emphasize and prove the value of its services. Its strategy entailed assigning an in-house computer programmer to pull payor data from Excel spreadsheets and to create a tool that existing and prospective patients can use to obtain pricing information on its website by selecting the procedure they require and the name of their insurance carrier from a drop-down menu. Patients also can procure pricing information by telephone. The system is configured so that only patients—no competitors or payors—can view the information; in order to do so, patients must first query it for a code that must be entered before data are released.

Metro Imaging publicizes the availability of a pricing tool and touts the benefit of price transparency using television and radio advertisements, along with messages on its Website. Marketing liaisons visit referring physicians to spread the word. Response to these messages—and to the availability of the tool and the data to which it affords access—has been very positive, Hammerman says, with a “significant impact” on the practice’s market share.

Hammerman claims it was not difficult to get a handle on the pricing information for programming into the tool or to determine the cost of providing service; he and his colleagues “just had to make sure we charge at least as much as the highest reimbursement for a procedure, but our charge is probably 25% of the list price.”

Radiologic Associates of Fredericksburg built its own database that staff query when fielding inquiries about price. Swager describes the process as labor-intensive, especially because the system also incorporates a means of querying payors to determine whether patients have met their deductible and figuring prices accordingly.

“For the first few years, all our payor contract information was transferred from Excel spreadsheets to a large master index,” Swager notes. “Now, that’s part of our revenue cycle management product, which makes things easier.” Information from the Healthcare Bluebook, average utilization cost data and consultant input was used in constructing the database.

Premier Radiology was approached by a third-party company that offered assistance in automating its pre-certification process. As part of the engagement, the company was hired to upload into a database information from tables maintained in spreadsheets. These tables contained breakdowns of reimbursements by CPT code and payor. “It took several months to implement this system, because when there are so many CPT codes and payors involved, proceeding slowly so as not to miss anything is a must,” Moreland asserts.

The information, he says, is now in a readily available and accessible form. “We can say, ‘Here’s the study, here’s your coverage detail, and here’s what the reimbursement will be’,” Moreland asserts. “’Do you want to pay some now?’ Most patients are comfortable enough now to ask.”

Challenges ahead

In all cases and guises, the transparency has helped pave the way for better patient care, sources say. They note that when patients know in advance the charges they themselves will incur for imaging procedures, and that these charges compare favorably with options in their marketplace, they are more inclined to undergo recommended procedures and seek follow-up studies when recommended.

But despite the progress that has been made on the price transparency front, challenges abound. For instance, Hammerman observes, persuading certain patients that the highest-quality imaging studies need not be the most expensive imaging studies remains a difficult task.

“We have seen unscrupulous hospital physicians try to bring patients around to that way of thinking,” Hammerman observes. “Patients will ask them why they should choose the hospital outpatient radiology department, or even a hospital-affiliated imaging center, when they can go to an imaging facility like ours and have the exam for a lower price—and they’ll say the difference is in the caliber of care.”

Fortunately, he adds, most patients do not pay attention to derisive comparisons between the quality of imaging studies conducted at Metro Imaging and the quality of imaging studies executed in facilities that employ these physicians. When patients bring such physicians’ comments to the attention of Metro Imaging’s staff, the latter make it a point to note that clinicians employed at all five of its imaging centers have been trained in the same way as hospital-based radiologists, and that the facilities have a cadre of new equipment, including MRI and breast tomosynthesis

technology. Hammerman and his colleagues also attempt to convey this information to referring physicians, and—when these physicians will take their telephone calls—to dispel the myth that the price of imaging exams equates with their caliber.

At one time, Hammerman would make an offer to any patient who questioned how an imaging exam conducted at one of Metro Imaging’s facilities could, in terms of quality, possibly measure up to an imaging exam conducted in a hospital setting. That offer: to pay for a second study elsewhere if the patient’s referring physician was not satisfied with the one obtained from a Metro Imaging site.

“Almost always, the exam was fine, and there was no re-take’ needed,” he asserts. “It helped with the perception problem from a patient standpoint, but that problem will remain as long as there are physicians who [feed the misconception].”

The quality question

Exacerbating this particular problem, sources say, is the fact that patients —despite such efforts as the increased sharing of provider quality ratings by payors—continue to encounter difficulty in assessing the caliber of care afforded by providers. That patients have limited insight into the relationship between high-quality imaging services and health outcomes only makes matters worse.

“Efforts will have to be made to educate consumers about the value of the data and the trust they should place in its source” in order to jump the hospital-to-outpatient imaging hurdle], Newman says. He adds that if quality does not become part of the transparency equation, commoditization of imaging services may result.

Similarly, Swager cites a lack of understanding among patients about how the charge for any given imaging study differs from the cost of that study. “People often don’t understand that there’s a professional component and a technical component involved, and why their cost is different from our charge,” he explains. “That leads to unfair comparisons—apples to oranges rather than apples to apples. There needs to be much more education on this front [if patients and imaging providers alike are to truly reap the benefits of price transparency].”

Equally vexing, says Moreland, is a trend wherein patients who, aware that an imaging service provider offers some degree of price transparency, request to know the self-pay rate for an imaging study and their particular insurance co-pay for the same procedure. They then try for the lower rate.

“We have to tell them it doesn’t work that way, and that the self-pay rate is our true, uninsured, no healthcare insurance rate,” Moreland states. “We say, ‘Your insurance is Blue Cross, or Aetna, or whatever,’ that we’ll file the claim, or they have to pay right out of pocket, right there. There is no way around it.”

Stolper believes some of the roadblocks that litter the path to price transparency in radiology will be cleared—or at least, become more minor impediments—with cultural change. Under the aegis of this change, he asserts, referring physicians will adopt a new way of thinking about selecting facilities at which their patients undergo imaging studies.

“Instead of telling patients, ‘I’m writing a referral or a prescription for you to have ‘X’ study at ‘X’ hospital,’ physicians will more closely consider (individuals’) best interests by thinking about cost as well as quality,” he says. “Rather than saying, ‘I’m sending you to ‘X’ hospital for your study,’ they will say, ‘Here’s a hospital you can go to for your study, and here’s an outpatient imaging center you can also go to. Both are quality providers. You check them out and decide.”

Clearly, significant work remains to be done when it comes to price transparency in radiology, from persuading other radiology constituents to transition to price transparency, to fostering heightened acceptance among referring physicians, to ensuring that those patients who currently are inclined to select from among imaging providers by equating high prices with high quality see pricing in a different light. It will happen for the most part, but as Hammerman puts it, in small steps rather than in giant ones.