Hospital patients and providers are often unaware of the fees that come with most medical services. “The healthcare system is oftentimes not transparent in actual costs for these services,” says Leonard S. Feldman, MD. Failure to have a sense of costs can increase waste in medicine by ordering expensive and often unnecessary tests and/or medications. This can increase healthcare costs, side effects, and false-positive results, and lead to additional unnecessary testing.
Analyzing Cost Transparency
In JAMA Internal Medicine, Dr. Feldman and colleagues had a study published that sought to determine if allowing physicians who order radiologic and laboratory diagnostic tests to see the costs of these diagnostics would prompt them to only order tests they felt would bring high-quality care to patients. The authors randomly assigned 61 diagnostic laboratory tests to an “active” arm, in which fees were displayed, or to a control arm, in which fees were not displayed. During a 6-month baseline period, no fee data were displayed. At 1 year later, fee data were displayed, based on the Medicare allowable fee, for active tests only during a 6-month intervention period. “This approach helped us identify any secular trends as well as any changes in test ordering rates that were isolated to the active arm,” explains Dr. Feldman.
Displaying fees in the active arm led to a reduction in the rates of test ordering from 3.72 tests per patient per day in the baseline period to 3.40 tests per patient per day in the intervention period. “This was nearly a 9% difference,” Dr. Feldman says. “At the same time, the rate of test ordering actually increased in the control arm, rising from 1.15 to 1.22 tests per patient-day. This meant that there was a significant impact on behavior by showing providers the costs of the tests they planned to order.”
The research team also found that the greatest reduction in test ordering rates was among the most frequently ordered tests at their institution; these tests were also among the least expensive. “Although reducing the number of expensive tests ordered would certainly help improve costs, the inexpensive tests were ordered so frequently that costs began to add up,” says Dr. Feldman. The study team concluded that adopting their intervention may reduce the number of inappropriately ordered diagnostic tests.
Pushing for Change
It is difficult for physicians to bring cost transparency into their daily practice, Dr. Feldman says, but he encourages doctors, directors of hospitalist groups, and those in charge of quality care to advocate for cost transparency. “The bottom line,” he says, “is that we as providers should focus on providing high-quality, cost-conscious care to our patients rather than the most care possible.”
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