Attached is the detailed case study with all of the gory details and named companies… BTW, anyone is welcome to use this case study as a basis for other initiatives or further study.
SUMMARY

change:healthcare knew that a wide range in costs for consumer pharmaceuticals existed at major pharmacy chains within the same marketplace. But there was no empirical data to back up this assertion. Verifying this fact would underscore that consumers can and should become smarter purchasers of healthcare goods and services by shopping around. Because doing so would increase the quality and value they will find in their healthcare purchases. This mindset is especially important since healthcare costs continue to impact the bottom line of employers – who pay the greatest share of that burden today — and larger and larger portions of healthcare costs are being transferred to employee shoulders.

RESULTS

If all six drugs were purchased from any of the locations examined, a person buying at the highest priced chain in the survey would have paid about $485 (20%) more than the person buying at the lowest. In fact, the cost of a prescription can vary as much as 20 to 40 percent between major pharmacy chains within walking distance of one another, and as much as 50 percent from one part of a city to another.

This finding has implications for the uninsured, as well as for people enrolled in the increasingly popular Healthcare Savings Accounts (HSAs). Those in an HSA have a high deductible and pay that deductible out of their own pocket first before insurance kicks in. That’s in stark contrast to traditional insurance with a pharmacy plan that allows for a standard co-pay amount, generally $10-$35-$50 per prescription depending upon the plan.

This also has implications for the traditionally insured. Though some individuals only play a co-payment for their prescriptions, the employer by way of the insurance carrier covers the other portion of the cost. Every dollar you save when purchasing a pharmaceutical could have an impact on the following years’ healthcare cost, including the premium increase an employer may ask an employee to shoulder in the coming year(s).

Here is the Case Study for download… rxpricecasestudy.pdf

Interesting article popped up today on how the healthy population may cost more in terms of healthcare than the obese or smokers. The premise is that the healthy person lives longer and therefore has more opportunity to run up costs in part because they have a longer window to work in.

Let me add a little personal perspective to that. I have been fortunate in my life in that I have lost relatively few people in my immediate family (partially the result of parents who were both late children, and many of my relatives were gone before I was 6). However, lately, the odds have been catching up to me. My parents, my in-laws and many other people close to me are getting older and facing increasingly greater health challenges. One in particular comes to mind.

This friend is a former coach, world champion in sports and just flat out all around great athlete. Never smoked or drank. He is in his 80’s – well into his 80’s. Healthy as a horse. His healthcare costs are piling up – slowly and consistently. Some had written him off at one point. He had a leg amputated due to complications and many saw that as the beginning of the end. For someone less healthy, it probably was. That was nearly two years ago. But well into his 80’s, he is going strong. I actually carried his mother’s casket at her funeral when she was well into her 90’s. I suspect that he will live to a similar age. Ironically, I wrote a piece on him in grade school about how I admired him, and here I find myself over 30 years later writing about him again.

Another friend is much the same way. Never smoked, never drank. Kept her figure. She has had a number of near misses lately. Much to our pleasant surprise, she continues to move forward and recover. A less healthy person would not fare so well. I interviewed her for a high school history project where we taped the conversation to capture some of the pieces of history locked inside of the average person and that might otherwise be lost. She continues to this day to be a wonderful source of history.

 I can point to many others I have known – less healthy, far younger and far shorter illnesses took them. It’s all anecdotal, but it’s hard to ignore. I think this underscores the mission of what we are doing at change:healthcare. It’s easy to think that it’s only the less-than-healthy who need to keep up with their healthcare and the associated costs. But it’s not. It’s all of us.

So how do people choose a healthcare provider? We jokingly refer to it as the three C’s – Cost, Conversation and Quality. The truth is there are a lot of factors that go into a healthcare decision, but quality would seem to be what trumps all. But how is quality defined?

There is a lot of talk around quality. It’s another of the industry buzz words like transparency. And like transparency, quality can be entirely subjective. Ask the question, what is quality, and ultimately the answer emerges “I know it when I see it.”

But what are the elements of quality? We speak with people at different levels of income and various walks of life about quality in healthcare all of the time. Our conversations are informal, but interesting. Here is some of what we hear.

Outcomes

Generally the first response we get when we ask some to define quality is “It’s all about outcomes.” – the results. How quickly a doctor’s patient recovers or even how long they survive. There is a significant amount of data out there on outcomes, but if people are honest with themselves and really dive down into how they’ve selected a provider, they realize that outcomes received 3rd, 4th or even less priority in your choice if it ever was given consideration at all. Often times, it is simply assumed based on a provider’s reputation.

Outcomes data is publicly available. Morbidity rate or the number of deaths per hundred or thousand with a certain diagnosis can be a quantifiable metric. So which outcomes data is it? Just be sure to take into account that an oncologist specializing in stage 4 patients is understandably likely to have a higher morbidity rate than an oncologist who sees patients in all stages.

Experience

This is another metric that is available, but open to interpretation. Do you base experience on how many years a doctor has been practicing? Or how many times has a provider performed a certain procedure?

Convenience

In our drive-thru, 24-hour, print on demand society, convenience is a major deciding factor. If you’ve ever been to a retail based clinic, you know just what we mean. It’s a heck of a lot shorter wait than the ER or even your doctor’s office. You might really like your doc, but if you’re sick, who wants to wait until this afternoon or tomorrow?

Where do you get your prescription? Those large chains with a location on virtually every corner are pretty darn convenient. But do they fill the order right the highest percentage of the time? What about the cost tradeoff? Our research shows that those that are most convenient are often the most expensive.

Having sharp chest pains? I bet you didn’t drive anywhere other than the closest emergency room. Do they perform the most open heart surgeries? Are they more likely to try a less invasive solution like a stent before cracking open your chest?

Location

The three most important things in real estate are location, location and location. So how far did you travel for your doc? Did you do a national search to find the best specialists? Did you look internationally? If you live in a small community, you may be fortunate and have a really good set of options for healthcare. But it’s doubtful that you have the top specialists for your specific need. Chances are you’d have to head to a larger city with one or more hospital systems to get the better specialists – though there are exceptions. I know of one instance where a top NY specialist decided he wanted the simpler life and moved to rural

Referral

If real estate is location, location and location, then for providers, it’s referral, referral and referral. Most people go to the provider their physician refers them to. Your physician will direct you to other doctors within their medical system – probably other physicians associated with the hospital(s) where they have privileges.

Many of the large hospital systems have an ongoing practice of purchasing outside clinics. While those are viable businesses and they can justify their purchase through the revenue earned, there is a more important aspect – the referral. Hospitals depend on the front line physicians to make referrals for the higher dollar procedures that their patients will require. There is little better way to ensure that they get those referrals than to tie them into the hospital’s system.

Now don’t get me wrong, federal law prevents doctors from referring patients into businesses from which they profit. But once the doc is in the hospital’s system, the hospital has numerous ways to encourage using their providers. They may offer administrative and billing services, a common appointment setting system, have ongoing internal communications that let their providers know what other providers are available and many other incentives. That may all sound trivial, but doctors are busy people, and just like convenience is a factor for you, so it is for them.

Bedside Manner

How you get along with a physician heavily influences your choice of a provider. It can be the deciding factor in vetoing a doc. Numerous people we talked with have selected a doc because they have a great reputation, have been referred into them and have all the right experience and credentials. And then, they have rejected that provider because of bedside manner. I am guilty of vetoing a provider for my own needs over bedside manner. He scooted in and out and did not give me sufficient time to answer questions and assess my situation. He is head of surgery for a department in a large hospital specializing in that particular field and came recommended by my physician whom I trust.

Cost

Even among the well-to-do and very well insured, we heard, “Cost is not an issue.” But don’t be fooled by that cavalier attitude. Sure in situations of life and death, no one asks about the costs. But when it’s not, it is all about the dollar spent. Even if you don’t think so, your insurer probably does, and your provider is trying to watch that dollar as well. Providers will often try the least invasive and least costly procedures first before moving into the more expensive procedures and/or referring you on to a specialist. It may be in part because that’s what the insurer will allow, and it may be an effort by your provider to watch what they know you are not. So even if cost is not an issue, be aware that it is distinctly a factor in your care and may be part of what determines when and to which provider you ultimately get referred.

Cost can be a major consideration for uninsured, underinsured, treatment outside of coverage or whatever the reason. The rates providers billed, get reimbursed, their insurance paid and their patients paid are all readily available. Just check out the Compare tab in the change:healthcare website.

And if you think that costs are not an issue, consider how providers handle their billing – what they get pre-authorized, what is covered or not could determine what part of the bill you get stuck with at the end of the day. Providers who are on top of their billing may do a good job of making sure they get the insurer to pay most of the bill and minimize the cost to their patients. If they are not, you may wind up with more of the bill than you would have with another provider who did a better job. So it’s important to see how your provider fares in what the patient is left paying versus other providers of the same services and procedures.

Network

Your insurance network plays a strong role. This is a factor that ties closely into the issue of cost since going out of network generally implies a higher cost for a provider. However, if youve ever gone through a list of doctors within different plans to find out if your doctors are listed there, your network is influencing which docs you will see. Any future selections are then constrained to those providers in network since they are often inclined to refer to other providers who are in the same network.

Your insurer will provide you with a directory of providers who are in-network. What about those who are not? You’ll have to go someplace else for that list.

The Water Cooler and Over the Fence

Choosing your healthcare provider is arguably the most important decision you will make in your life. It can literally be a life and death type of decision. And what ultimately decides where you go comes down to that conversation that you have over the back fence with your neighbor or friend or the water cooler conversation with a co-worker (who, by the way, shares the same network you do through your common employer).

If your source is a qualified medical professional, their opinion carries great weight. But if it’s not, it’s really more of an assessment of that person’s personal experience. They are reacting to their personal outcome, the convenience of the doctor, the proximity to them, the referral they got from another physician, the amount their insurer left them to foot, the doctor’s bedside manner, their compatibility with that physician’s personality, or the conversation that they had with someone last week over the fence or at the water cooler.

What’s a Responsible Healthcare Consumer To Do?

Do your research. Seek out the quantifiable data and select a few providers. Call around. Ask about them. Google them. See what other people are saying about them. And when all else fails, go see them. Have an office visit. See what you think. After all, it’s your health we’re talking about here, not that annoying guy in accounting.

What did I miss? Any other suggestions? We would love to hear them.

Figuring out your credit card bill is tough, but you do it because it has implications for your credit score.

Figuring out what you owe the doctor is just as tough if not more so and often time far more expensive than that monthly credit card statement. At least you know what you bought with your credit card. A billing statement from the doctor or hospital leaves you scratching your head at the archaic abbreviations they use to describe whatever it is that they did to you.

And now along comes your MedFICO score from Healthcare Analytics like a consumer’s credit rating!

What’s a responsible healthcare consumer to do?

How can you keep track of your medical bills and avoid winding up with a bad score? That poor score may not keep you from receiving care as some fear, but it may wind up costing you more and sooner. Before you check out, the hospital may ask you to pay or if you can’t right then and there, they may ask you to sign a promissory note. Think they won’t do it? Some already do (see page 2, second paragraph). And guess what? The hospital has no idea what discount you might get by virtue of your insurance company’s negotiated rate – not until they “run it through” your insurance – and I know of no insurance company offering real-time adjudication (the insurance industry technical term for “running it though”) at this point, though many aspire to it. So could you be overpaying? Sure.
Consumers need products like MedBillManager and Intuit Health (though I have a decidedly prejudiced preference for the former). Patients and their caregivers need the services of medical bill review companies and audit services that identify innacuracies in billing. Healthcare long ago threw off its charitable aura and has become a business. It’s time for consumers to realize that and act accordingly. It’s time for consumers to take responsibility for understanding their healthcare and making the decisions and stop allowing the healthcare industry to hide behind the excuse that healthcare is too complex for the average consumer to understand. It’s time for comparing the pricing of a strep throat test to be as simple as comparing the price of an oil change.

The business people behind healthcare are getting serious about becoming a real business. It’s time for Americans to get serious about being real healthcare consumers.

Not convinced? Then check out some of these articles:

http://www.dallasnews.com/sharedcontent/dws/bus/stories/121207dnbushealthcredit.299ccc0.html
http://www.vimo.com/blogs/consumer/?p=142
http://bestamericanhospital.blogspot.com/2008/01/health-industry-develops-medical-credit.html
http://susiemadrak.com/2008/01/18/21/22/medical-credit-reports-in-the-making/
http://forums.vwvortex.com/zerothread?id=3640720
http://www.sltrib.com/business/ci_8015982
http://www.just-a-webpage.com/rantings/?p=372
http://www.thepittsburghchannel.com/news/15131060/detail.html
http://forums.catholic.com/showthread.php?t=214154

Got a chance this week to spend some time with a wonderful person, Susan Wentz, MD MS, at Case Western Reserve University in Cleveland, Ohio. She’s a very insightful person when it comes to many things, especially healthcare. I mention her because she gets credit for this initial analogy. I just took it a bit further and blogged it.

Susan and I had made arrangements to meet at her office. Her colleague, Catherine, gave us directions on how to get there. Two paragraphs of directions she gave us. And not concise paragraphs. Katrina and I found it a bit amusing at first, until we arrived on campus. We needed every word of the two paragraphs which basically ended up depositing us at the door marked Visitors Entrance. From there, we were to call, and Susan would come get us. Thank goodness she did!

If you’ve ever been on a hospital campus, you know the frustration of trying to find your way around. You can literally be on one floor of the building and not be able to get to another area on the same floor without going back down to the lobby, changing elevator banks, asking directions from the desk once more to be sure you have not lost you mind, riding up a different elevator bank, and latching onto a poor sole who takes pity upon you when they see that lost look on your face.

You know the medical campus. It started out as a couple of buildings. Over time, another one got built in between. And then they joined two of the buildings by putting another building in between. They tore down a bit of another, but that was so they could join up the one that hadn’t been assimilated just yet. And then they acquired that old grocery store property that had been on the corner and built another facility. Ooh, wouldn’t a skybridge be cool – like a tentacle stretching across the street! The elevation is a bit different between floors, but it’ll be OK if the bridge goes from the 3rd floor on one side to the 4th floor on the other.  This skybridge thing is IT! Let’s do more – like an octopus! And now you can’t get to the clinic the same way you got there the last time. Sure the facades of the original buildings still peek out in spots, but this is no longer the hospital you knew. I mean, how many helipads do they really need? You have to wonder why they don’t just tear the whole damned thing down and start over clean.

Maybe that’s what they should do.

And that’s what our healthcare insurance system has become – a giant, bloated, overbearing, seething mass of non-matching additions, expansions and non-compatible renovations. Navigating the healthcare system has become as difficult as navigating the hospital hallways. There are dead ends. Delays. Confusion. Frustration. There are exorbitant costs. Huge expenses that no one seems overly concerned about trying to control. There’s no one there to help guide you. You literally wind up looking for someone who seems to have the same ailment as you and see if they’ve figured out how to navigate things so that they can help you. The healthcare system and the healthcare facility have developed in an ironically parallel fashion. You have to wonder why they don’t just tear the whole damned thing down and start over clean.

Maybe that’s what they should do.

A quick Monday morning nod to the wisdom of Bachman-Turner Overdrive. Having applied the wisdom of these lyrics for many years they once again proved their relevance as I read the article from Friday’s Minneapolis – St. Paul Star Tribune. The article is titled UnitedHealth billing flaws persist as company grew by David Shaffer. Below is a quick overview.

The articles first line sets the tone.

“As UnitedHealth has grown this decade into a national insurance colossus, the company has repeatedly failed a basic job: paying patients’ medical bills correctly or on time.”

UnitedHealth Group is a company on the move. They have grown to become an insurer of 70 million Americans and are watching their company profits soar to an estimated $4.7 billion this year.

While profits have soared so have lawsuits and fines against the company from all sides. One orthopedic surgeon quoted sued the giant insurer for unreimbursed claims.

“(After the) US District Judge in Missouri ruled against the insurer in November 2006 he declared its claims processing systems ‘flawed in many ways, denying, reducing and improperly processing claims on a regular basis. And despite innumberable requests, United was unwilling to remedy the underlying errors in its system.’”

“After the verdict this surgeon continued to have payment problems prompting a second lawsuit. When interviewed he stated, ‘These people can never get it right, which says to me that they just plain lie.’”

“Executives (at United) have placed the blame on rapid expansion, the complexity of medical reimbursements and difficulties in weeding out data errors that foul up claims.”

At least we all agree on the fact that medical reimbursements are complicated.

The article also shares the experience of Katie Sailors of Omaha, one of United’s customers.

“who complained to state regulators in 2004 after UnitedHealth’s computers incorrectly rejected her son’s surgery-related bill six times. ‘You automatically assume the health insurance company is doing right by you.’ “

Mandarin Cheung-Yueh of Scottsdale, AZ verified with United’s call center that the doctor and facility she made an appointment with was considered in-network. Ms. Cheung-Yueh checked her EOBs and noticed that the initial claims were processed as in-network but subsequent charges were processed as out of network. After five months of phone calls and 25 pages of documentation and a compliant to the Arizona Insurance Department, United paid the disputed amount but would not concede that its system had failed.

Despite what you are probably thinking, my purpose in sharing this is not to take a cheap shot at UnitedHealthCare or any other of the mighty insurance companies. My purpose in sharing this is to remind all of us that we have to take back complete responsibility for our own healthcare. Nobody else can or will do it for us. Nobody understands your situation as well as you do. Nobody has a larger vested interest in getting it right than you do. And nobody stands to lose more when things go awry than you do. You cannot and must not let anyone else take responsibility for your healthcare it is up to you and me to take ownership for ourselves.

So dust off that old BTO album, crank it up and sing along.

“Yes I found out all the tricks of the trade
And that there’s only one way
That you’re gonna get things done
I found out the only way to the top
Is looking out for number one
And that’s me
I’m looking out for number one”

Link to original article http://www.startribune.com/business/12279546.html

I rest my FREAK’N case! Well, actually, i’m not that smart and certainly this is a loose stretch to use the term “validate” but it is nice to have the New England Journal of Medicine validate my notion of social influence as noted below in today’s post:

An interesting and somewhat shocking study published in The New England Journal of Medicine shows that the chance of becoming obese increased by 57% if a person had a friend who became obese in a given period!

Similar with other vices like smoking and drinking, we are easily influenced by the people around us. Social networking is just a new medium but the psychology behind peer influence is still same.

To make matters worse, obesity spreads up to 3 degrees of separation. According to Nicholas Christakis, a physician and Harvard University professor who headed the study:

We know that people are influenced by their friends. But what was innovative about our study is the fact that people tend to be influenced by friends of friends of friends.

This is on top of the sedentary lifestyle of many active members of social networking sites.

When i posted about the tangible influence of peers and behavior modification, i was merely pulling from my anecdotal experience. But now i feel even more strongly that where change:healthcare is headed will provide a DRAMATIC means for employers to engage and enable their employees to become better healthcare consumers and reducing the need to force nor apply top-down pressure but rather by giving people the objective, portable tools that they have been asking to access. People can make smarter, more informed decisions when given the tools, relationships, and platform to influence each other. Remember that a company’s best communication and influence tool has been and will continue to be the infamous “office grapevine” and “water-cooler conversations.” Which i would propose is the precursor to Facebook and Linkedin.

Heh… I’m just a mess-o-conflicting analogies these days. Of course nothing is ever as black and white as we might want them to be. But the NEJM study certainly does point to some rather compelling data and outcomes…

Christakis said the perception change can be either conscious or unconscious.

Beggs said the “tide of information” a person receives about acceptable behaviors usually has to be backed by a support frame to have a significant impact.

“In order not to exhibit certain behaviors, you have to be able to go against the tide of information,” Beggs said.

By way of explanation, the $4 prescription is a misnomer. Some are $4. But for the most part, what the pharmacy is doing is simply reducing your co-pay to $4. They still charge your insurance for the part above your co-pay, be it Medicare, Medicaid, or private insurance. You’re still paying for the balance of the prescription, just in the form of premium paid in to your insurance that is used to reimburse the pharmacy.

So kudos to Matt who pointed out the following:

“If your copay for generics is $10…what with all the offers at Wal-Mart, etc. it seems it may almost be smarter to just act like you don’t have insurance when you go to get your generics filled and pay the $4.  It saves you a few bucks, and I would imagine reduces your insurance’s view of you as a “high-end” user.”

True. And that might work for a period of time, but eventually you will probably hit a snag. And here’s how.

Whenever you take your prescription in, the pharmacy asks Have you ever filled a prescription here before? That way they don’t have to re-enter the records. So the first time you go, you say, No I have no insurance. So far so good.

The next time, your prescription(s) may not be on the list of $4 drugs. And now it REALLY costs something. Oops, well maybe I do have insurance. Here it is.

Next time you go in, they’ll ask you if you’ve ever filled a prescription there before. Nope, you say. Hmmm. We have that name at this address. Is that you? Oh, yes. Is this still your insurance? Um, no. I mean, well, yes. Um, is that on the $4 generics list?

And even if you tell them that the insurance is no longer valid, there’s a decent chance they won’t even ask and may just run it through on whatever insurance they have on record.

“Oh what a tangled web we weave, when at first we practice to deceive.” – William Shakespeare

That’s the line that stared back at me from the printout on the prescription the bag came in.

Your insurance saved you $84.99.

Did my insurance truly “save me $84.99″ I wondered.

Like most of us with private insurance, I don’t get EOBs for my prescriptions. I simply pay a prescription co-pay of $10 for generics and $35 for brand drugs. So did the pharmacy accept $84.99 less because of my insurance? That was the implication, but was it fact?

Or did my insuror pay $84.99?

Exactly how did the transaction go down?

As someone who actually pays for their insurance and does not have it provicded for me as an employee, I wondered, since when I get underwritten next year, the expense will be considered and may contribute to a rate increase. If my insurance paid $84.99, then they most certainly DID NOT save me $84.99, but they paid out $84.99 on my behalf – semantics, I know, but I don’t like being misled, and I felt I was being misled.

How do you feel about it?

Comments

I certainly think it’s a good idea. The vast majority of medical inflation starts with medical equipment manufacturers and pharmaceutical companies, passed on through docs to patients to diagnose and care for chronic conditions caught too late by overworked, underpaid (and often the least skilled since they are the lowest paid) docs. This is counter-intuitive… the best docs should be in primary care, and the most time should be spent there. …Comment by Ready for change

Comments by “Ready for Change” are proof positive of why we are in this medical/health mess–ignorance and wrong-thinking…Moreover, primary care docs are not the least skilled. By the very nature of their occupation, they need to be a “jack of all trades” when it comes to their knowledge and practice of medicine. Because they are on the “front lines” of medicine they need to know a lot about everything as opposed to a specialist which knows a bit more about a few things…Comment by Rick De La Pena

As an emergency department doc, I can state this with certainty: different PCPs have different capacity to keep their patients out of the ED. The patients of some primaries only come when they are in seriously decompensating. The patients of other primaries are in the ED all the time for trivial issues…Comment by jz-md

JZ has it right — Blanket statements about primary care being “better” are off-base a fair amount of the time. As a specialist, many of my referring primary care docs are excellent — and some are marginal. After you see patients who have been watched with rising PSA for several years, then finally sent to the urologist with late-stage, incurable prostate cancer (as I have quite a few times, unfortunately), you realize that “primary care” and “preventive medicine” are just comfortable phrases which do not guarantee better care. Of course, the late-referring doctors were practicing “cost-effective” care by keeping their patients away from “expensive” specialists, keeping the third-party payors happy, and would have scored well therefore under most current “pay-for-performance” measures…Comment by Dr Bob

the state of primary care is disastrous. with rising costs and malpractice premiums and no increase of fees for service there will not be a primary care physician left who will accept insurance fees and medicare.if you want to see a barefoot practitioner in the future keep the system as is…Comment by rr md

Health Blog : Payers Propose to Boost Primary Care.

Whew! The article announcing the NCQA initiative focused on Primary Care-focused services as a preventive cost measure sure generated some interesting comments.

Tags: wsj, primary+care