Price Comparing and Health Spending

A new study examines another of the tactics that supposedly will revolutionize health care–providing consumers with comparative price and quality information on providers.  Published in the Journal of the American Medical Association, it is based on the use of the Castlight Health platform by workers at 18 large employers.   (JAMA Article)  (Castlight Health investors might have wanted to do a little price and quality comparing.) The pricing information is fairly tailored, showing the searching individual their actual out-of-pocket costs.  Some information on the provider, such as where a doctor went to medical school or satisfaction ratings, was also available, but comprehensive quality data does not appear to have been included.  The study period was from 2010 to 2013 and covered searches for prices on laboratory tests, advanced imaging services and clinician office visits.  Total health spending was compared for periods before availability of the price transparency system and between users and non-users.  Unadjusted and adjusted analyses were performed.  After the system became available, 304,000 people from 195,000 households covered by the employers got lab services, 37,000 from 32,00 households received imaging services and 446,000 from 237,000 households visited a clinician.  7485 households searched for price on lab tests, 2184 for imaging and 51,500 for office visits.

In the period before price platform availability, payments for lab and imaging services were slightly higher for those who searched after the platform became available, and office visit payments were slightly lower.  For those who used the price comparison platform, payments were lower than for those who did not for all three services.  For lab tests, payments were 16% lower, for imaging 15% and for office visits less than 1%.  These results were for patients who had actual cost-sharing amounts applicable to the claim.  Even for patients who did not have cost-sharing, those who used the platform before receiving the service had lower payments.  In dollar terms, the savings for lab tests were small, averaging $3 or $4 and they were for office visits as well, only about a dollar.  But for imaging the dollar savings were larger, around $125.  The results suggest that price searching can result in lower spending.

There is uncertainty associated with the results, for example were those patients who looked at prices just more likely to be price-sensitive and therefore self-selected.  Also unclear if people who have higher overall spending, and therefore likely higher cost-sharing initially, but maybe less later if they exhaust their out-of-pocket maximum, are more or less likely to be interested in price comparisons.  While price searching logically seems like it should help control spending, it is discouraging that such a small percent of people who received services used the comparison platform.  This could be due to inertia in using current providers.  Some thought needs to be devoted to how to incent people to take advantage of the functionality.  Perhaps cost-sharing will have to be varied on the basis of whether people spend the time to gather appropriate information about services they receive.