Price Transparency For MRIs Increased Use Of Less Costly Providers And Triggered Provider Competition

Abstract

To encourage patients to select high-value providers, an insurer-initiated price transparency program that focused on elective advanced imaging procedures was implemented. Patients having at least one outpatient magnetic resonance imaging (MRI) scan in 2010 or 2012 were divided according to their membership in commercial health plans participating in the program (the intervention group) or in nonparticipating commercial health plans (the reference group) in similar US geographic regions. Patients in the intervention group were informed of price differences among available MRI facilities and given the option of selecting different providers. For those patients, the program resulted in a $220 cost reduction (18.7 percent) per test and a decrease in use of hospital-based facilities from 53 percent in 2010 to 45 percent in 2012. Price variation between hospital and nonhospital facilities for the intervention group was reduced by 30 percent after implementation. Nonparticipating members residing in intervention areas also observed price reductions, which indicates increased price competition among providers. The program significantly reduced imaging costs. This suggests that patients select lower-price facilities when informed about available alternatives.

Consumer Choice Between Hospital-Based and Freestanding Facilities for Arthroscopy

“…Physicians and patients are being encouraged to engage in shared decision-making with respect to treatment options 5 . Health plans and independent technology vendors are making available information on price and quality at the level of the individual provider and procedure 3,27 . Patients are being asked to pay a substantial portion of the cost of the services that they select.…”

Nationwide Price Variability for an Elective, Outpatient Imaging Procedure

“…In particular, our study indicates that a potential savings of !$200 can be obtained by calling multiple centers to compare prices, a cost reduction that closely matches a recent MRI price transparency study that reported a $220 cost reduction per test [15].…”

“…Such an effect is seen with the costs of hospital elective procedures, including radiology services, which are sometimes based on publically available pricing information from nearby facilities as a means of establishing baseline charges [14,15]. This impact is especially strong in competitive markets that have become "increasingly sensitive to community perceptions of the competitiveness of their charge prices" [14].…”

“…For instance, in a predominantly urban setting, an inpatient radiologic procedure such as a vertebroplasty costs $9,837 on average versus $3,319 at an outpatient center [16]. Moreover, a recent retrospective analysis on administrative claims data [15] has shown that price and quality transparency for MRI facilities led to increased use of less-expensive centers that often were not associated with a hospital system. In turn, the more-costly facilities reacted through price reductions of their own, which amounted to a 30% decrease in the price difference between hospital and nonhospitalassociated centers.…”

The New Politics of US Health Care Prices: Institutional Reconfiguration and the Emergence of All-Payer Claims Databases

“…10 Business allies were particularly likely to be suspicious about arguments focused on prices rather than service volume as contributing to health care costs (see White 2011). 11 But see Wu et al (2014). 12 See also Kyle and Ridley (2007).…”