Variability in Lab Charges Hampers Rational Consumer Behavior
There is wide variability in outpatient hospital charges for 10 common blood tests, according to a study published Aug. 14 in BMJ Open. While hospital-level factors, including ownership and teaching status, explain some of that variation, the authors say the lack of transparency in establishing charges hampers patients paying out of pocket from making informed […]
There is wide variability in outpatient hospital charges for 10 common blood tests, according to a study published Aug. 14 in BMJ Open. While hospital-level factors, including ownership and teaching status, explain some of that variation, the authors say the lack of transparency in establishing charges hampers patients paying out of pocket from making informed consumer choices. “These findings highlight the lack of predictability facing Americans paying full charges for healthcare, limiting their ability to act as rational consumers,” write the authors, led by Renee Hsia, M.D., from University of California, San Francisco. The researchers examined variation in charges between general acute care, medical/surgical hospitals (average of 177 hospitals per test) for 10 common blood tests (basic and comprehensive metabolic panel, lipid panel, complete blood cell count [automated and with differential white cell count], thyroid-stimulating hormone, creatine kinase, troponin assay, prothrombin time, and thromboplastin time [partial]). The researchers found significant variation in charges for blood tests. For example, while the median charge for a lipid panel was $220, there was a thousandfold difference in charges, with a range from $10 to $10,169 per test. The median charge for a basic metabolic panel was $214, but again charges ranged from $35 to $7,303. Even when extreme cases were excluded and charges from the fifth to 95th percentile were analyzed, there was still large variation. The largest was for a comprehensive metabolic panel ($79 to $948), while the smallest variation was for an automated complete blood count ($37 to $278). Given that the line item outpatient charges should have no variability in patient characteristic or clinical presentation and should just represent institutional differences in charges, the researchers sought to understand the influence of hospital-level and market-level factors on charges. Government hospitals and teaching hospitals charged significantly less than their counterparts for many blood tests, but no other hospital characteristics and no market-level predictors significantly predicted charges for blood tests. For seven of the 10 blood tests, teaching hospital status was associated with a significantly lower charge (i.e., charge for a troponin assay is 65 percent lower at a teaching versus non-teaching hospital). Additionally, five of 10 blood tests had lower charges at government hospitals than nonprofits. These models explained, at most, 21 percent of the variation between hospitals in charges for the blood test in question, the authors say. “It is notable how few characteristics were significant predictors of the charges patients faced,” the authors write. “A hospital’s case mix and labor costs (wage index) do not affect charges for these common procedures. Market level characteristics, including competitiveness of the hospital market, percent uninsured in the hospital’s county and county poverty rate, also showed no significant effects on charges for any of the 10 blood tests.” Do these charges really translate into patient bills? The authors believe yes. “You may hear people say that, ‘Charges don’t matter’ or that ‘No one pays full charges,’” said Hsia, in a statement. “However, uninsured patients certainly face the full brunt of raw charges, especially if they don’t qualify for charity care discounts. And as employers are switching to more consumer-directed health plans with higher deductibles and co-pays, the out-of-pocket costs of even insured patients can be affected by these charges.” Hsia tells DTET that this variability is not isolated to laboratory charges but is systemic throughout the health care system. According to a study from the California HealthCare Foundation and the Robert Wood Johnson Foundation, some efforts are being made to legislate price transparency, especially in New Hampshire, a pioneer in the area, where transparency efforts were enacted to support cost-conscious consumer behavior and spur competition increasing efficiency among health care providers. Takeaway: At a time when a growing number of patients are faced with footing an increasing portion of their own health care bills, wide variation in charges for common blood tests is a concern for patients, especially in situations when price transparency is not available.