November 27, 2011
Web Service To Compare Medical Costs

Too often with medical services you don't find out what costs you are incurring until you get the bill. In fact, you can end up getting multiple bills from different organizations (e.g. testing labs) from a single visit to a medical provider. So it is not always clear when the final bill has arrived. Comparison shopping on price is made even more difficult since each provider offers a wide array of services and you end up paying for some services before moving on to later stages in diagnosis and treatment where more services are proposed. Into this anti-competitive environment a company named Castlight Health has been collecting price information on medical tests and procedures to provide as an information service.

This lack of transparency has contributed to huge disparities in the cost of procedures. According to Castlight Health, a startup based in San Francisco, a colonoscopy costs anywhere from $563 to $3,967 within a single zip code. EKGs can range from $27 to $143, while the price for a set of three spinal x-rays varies from as little as $38 to as high as $162.

When someone else is picking up the tab, mystery pricing is not much of a problem. But these days, even the 59.5 million Americans who get health benefits through large self-insured employers are increasingly expected to pay a percentage of the costs for their medical care.

Castlight sells this service to employers who then let their employees access it to compare costs. If you've got a high co-pay or high deductible and want to get access to comparative medical services cost information in your area then you could let your employer know this service exists.

Where we need to get to: Your medical history should reside on some cloud service that is linked to diagnostics and treatment advisory software. Test results should flow into your cloud repository and then run through diagnostics apps. When real doctors recommend tests you should be able to instantly find out your options for getting the testing done with pricing, schedule openings, and directions. So what Castlight Health is doing is a valuable piece of a much larger puzzle that I expect will come together over the next 10 to 15 years.

Share |      Randall Parker, 2011 November 27 09:17 PM  Medical Information Services

Nick G said at November 28, 2011 2:23 PM:

This is a little misleading. Relatively few people pay the list price - most bills go to 3rd party payors of some sort that discount the bills, sometimes by more than 90%. Co-pays and deductibles are typically paid after the bill has been discounted.

Only a small percentage of patients pay on a cash basis. OTOH, that percentage is badly hurt by this system - they may get a discount for paying cash, but that discount is much smaller than that taken by insurers.

, Joe said at November 28, 2011 7:40 PM:

This is the MOST IMPORTANT ISSUE in the ongoing healthcare debate.

As long as prices are not discoverable by the consumer/patient, free market forces simply can't work. That's the joke underlying the logic of all the people who complain that the market doesn't work in medical care, and more government involvement is needed (egged on by the Medical Industrial Complex).

If you walk into a doctor's office for a SPECIFIED REASON, LIKE A PARTICULAR PROCEDURE, and ask how much it will cost, the office will go into a panic. Nobody knows. Worse, NOBODY KNOWS HOW TO FIND OUT! (I do this every time I go to the doctor just to amuse myself an hopefully make a point.) After about 15 minutes of telephone calls, they will finally give you a phone to talk to someone in some billing department, and they will tell you that they will send you an estimate in 2-4 WEEKS! (I have not ever actually received a promised estimate after many tries.) And they won't provide care if you want a price first. You just have to sign the promise to pay ANY AMOUNT or you are politelly asked to leave.

One hell of a system, that is.

Before ANY discussion of further government involvement in medical care, these things need to placed into law and given a chance to work:

1. Require a good faith estimate of cost for any medical care provided before it is provided (absent emergency obviously), and a rule that any charges above those stated are invalid.

2. Revoke the medical industy's exclusion from the anti-trust rule against price discrimination, so they have to charge every patient the same amount for the same good or service. That's the general rule for every other industry. Now, they charge radically different amounts to different people for the same good or service, radically short-circuiting the price discovery process. As of now, the competition in medical prices is supposed to come from HMOs negotiating for lower prices for their members. But this is a joke, and has failed miserably. It results in uninsured people being charged 5-10 times as much as others (this is the root of all the bankruptcies you hear about from medical bills), and the concentration of patients into large HMOs (which in turn buy Congress and make the situation even more uncompetitive).

Go Ron Paul.

PacRim Jim said at November 28, 2011 11:37 PM:

One day soon, marketers will pay much for genomes snatched from the cloud.
The genome will reveal much about one's behavior and medical problems, existing or prospective. Blackmail is a possibility, as well.
Digital medical records in the cloud would be a disaster.

Hlth Rsrchr said at November 29, 2011 7:32 AM:

Re: Nick G -- you're right that few patients pay the list price (or billed charges), and too many studies focus on these list prices. Castlight, however, is not talking about the list price, but rather the negotiated rate that insured members actually pay. Even if you have insurance, as long as you have a deductible or coinsurance, you're subject to these crazy price variations.

Nick G said at November 29, 2011 2:40 PM:

Hlth Rsrchr,

I would have thought that the amounts paid by insurance companies wouldn't vary much. Surely Blue Cross or Prudential aren't going to pay $162 for a set of three spinal x-rays?

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