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Giving patients a tool to search for health care prices did not result in lower spending

May 03, 2016

If patients knew the price of different health care options, they could make better decisions about their medical care and help cut health care costs by shopping for lower-priced care--at least that's the hope.

With that in mind, more than half of U.S. states have passed laws establishing price transparency websites, and many employers have offered price transparency tools to their employees.

But does it work?

Limited research has been conducted on whether price transparency tools actually help control spending. In one of the first studies of its kind, appearing today in JAMA, a team of researchers from Harvard Medical School found that access to a price transparency tool was not associated with lower health care spending.

The researchers studied the Truven Health Analytics Treatment Cost Calculator, an online price transparency tool, which tells users how much they would pay out of pocket for services such as X-rays, lab tests, outpatient surgeries or physician office visits. The out-of-pocket cost estimates are based on the user's health plan benefits and on how much they have already spent on health care during the year.

Two large national companies offered this tool to their employees in 2011 and 2012. The researchers compared the care of the almost 149,000 employees who were offered the price transparency tool to 296,000 employees from other companies who were not offered the tool.

Overall, having access to the tool was not associated with reduction in outpatient spending, and patients did not switch from more expensive outpatient hospital-based care to lower-cost settings. When the researchers looked at only those with higher deductibles--who would be expected to have greater price shopping incentives--they also found no evidence of reduction in spending.

"Despite large variation in health care prices, prevalence of high-deductible health plans and widespread interest in price transparency, we did not find evidence that offering price transparency to employees generated savings," said Sunita Desai, a research fellow in health care policy at Harvard Medical School and lead author on the study.

There were several potential reasons. Despite aggressive promotion, only 10 percent of the employees who were offered the tool used it. Further, when they did they use the tool, more than half the searches were for relatively expensive services of over $1,000.

"For expensive care that exceeds their deductible, patients may not see any reason to switch. They do not save by choosing a lower-cost provider, even if the health plan does," said Ateev Mehrotra, associate professor of health care policy at Harvard Medical School and senior author on the study.

The tools can still provide patients with valuable information, including their expected out-of-pocket costs, their deductible, and their health plan's provider network, the researchers noted.

"People might use the tools more--and focus more on choosing lower-priced care options-- if they are combined with additional health plan benefit features that give greater incentive to price shop," said Desai.
-end-
This work was supported by a grant from the Laura and John Arnold Foundation and the Marshall J. Seidman Program for Studies in Health Economics and Health Care Policy at Harvard Medical School.

Harvard Medical School has more than 7,500 full-time faculty working in 10 academic departments located at the School's Boston campus or in hospital-based clinical departments at 15 Harvard-affiliated teaching hospitals and research institutes: Beth Israel Deaconess Medical Center, Boston Children's Hospital, Brigham and Women's Hospital, Cambridge Health Alliance, Dana-Farber Cancer Institute, Harvard Pilgrim Health Care Institute, Hebrew SeniorLife, Joslin Diabetes Center, Judge Baker Children's Center, Massachusetts Eye and Ear/Schepens Eye Research Institute, Massachusetts General Hospital, McLean Hospital, Mount Auburn Hospital, Spaulding Rehabilitation Hospital and VA Boston Healthcare System.

Harvard Medical School

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