The Truven Health Blog

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By Truven Staff

Price Transparency for Medicare Services and Procedures Can Help Avoid Wasteful Spending

Mike Taylor imageI welcome the recent announcement from Centers for Medicare & Medicaid Services (CMS) that it is publicly releasing extensive data detailing how much Medicare part B pays physicians for more than 6000 services and procedures. I don’t share the American Medical Association’s position that this data release will be harmful. Medicare part B pays in excess of $77 billion annually for physician services, and the public should be able to see how those dollars are spent.

Truven Health research proves there is tremendous variation in price for hospital services and procedures, and I fully expect these new data will show the same level of price variation. I expect to see considerable variation in price for physician services (office visits, consultations, etc.), but I suspect the real story will be in the prices charged for procedures rather than just the physician services.
  • How much price variation is present for frequently performed services like EKGs and blood tests? I recently received a bill for a “Metabolic Panel Comprehensive.” The test costs pennies to run—and the bill was $145! In total, my lab bill was $1035.
  • Many physicians have invested in office testing equipment and can charge a wide range of prices for these tests. Bone densitometry equipment a good example: it’s marketed with a definite business plan. Doctors are told how many tests they need to do every month to pay for the equipment and guarantee a certain profit level.
Over the past months, several Truven Health articles and studies have highlighted the huge variation in prices for colonoscopies, a recommended screening test, ranging from several hundred dollars to thousands. The public has a right to see these prices before agreeing to the tests. That is the goal of the Truven Health Treatment Cost Calculator. Patients using this tool can see the actual charge for a given test in his or her community, compare costs and then make an informed decision. Our fee-for-service payment system drives wasteful spending on medical procedures, and full transparency is one way to better understand what is driving these high costs.

Michael L. Taylor, MD, FACP
Chief Medical Officer
4151

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