Consumers who chose less expensive MRs after being informed about price information helped save $220 per procedure in total health system costs, according to a recent study published in Health Affairs. Revealing the prices also increased competition among facilities.

The study was commissioned by AIM Specialty Health — a WellPoint subsidiary — and conducted by HealthCore Inc. — a WellPoint health outcomes subsidiary. The researchers used data from about 100,000 members in WellPoint affiliated health plans in the Northeast, Midwest and Southeast U.S., from 2010 to 2012.

"Right now, consumer transparency is a big issue in the marketplace in general," Andrea DeVries, co-author of the study and senior director of payer and provider research at HealthCore, told DOTmed News. "There's a healthy skepticism as to whether this is an effective strategy."
About 61,000 members were put into an education program and informed about MR imaging cost differences, then were given a choice to go to different providers, and about 44,000 members were not informed. They found that the average price of MR procedures among the group that wasn't informed increased by $125 but the prices for the informed group decrease by $95.

They concluded that price transparency and education saves the health system $220 per procedure. Additionally, the price of MRs conducted in hospitals went down by $175 per procedure, which shows that the program also had an effect on providers.

"We had not anticipated the extent to which we saw provider response," said DeVries. "I think that was a very interesting finding for us as researchers and I think for the marketplace as well."

Additionally, facilities that didn't participate in the program but we're in the same communities as the facilities that did, also decreased their prices. That shows that price transparency leads to greater competition among providers.

Price transparency has historically been difficult to achieve in health care. Most of the provider contracting is confidential and often services aren't provided as one individual service. Instead they're bundled, so separating out individual costs can be complex, said DeVries.

She added that the fact that there is a third party payor also plays a role. "It's conventional wisdom that people are less price-sensitive when somebody else is paying the bill," she said.

However, insurance products with lower premiums and higher deductibles are becoming more common so out-of-pocket prices per procedure are expected to increase, according to the study. So the price of a procedure is starting to become more important to consumers.

"Consumers have more skin in the game than they used to," said DeVries. "That's part of why these transparency initiatives are so important, because if they have more skin in the game then they need to know what their costs are going to be and what their options are."

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