Patients, providers respond after Anthem promotes lower-cost MRI facilities

August 25, 2014
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If you're insured by Anthem Blue Cross and Blue Shield, and you’ve been told to get an MRI, chances are you have received a phone call from Anthem pointing you toward the lowest-cost MRI facilities in the Indianapolis area.

Most people ignore those calls, Anthem has found.

But the one of every six people who do heed Anthem’s advice have saved Anthem a chunk of money and, in the process, forced health care providers—especially hospitals—to sharply cut their prices.

Until recently, that has been almost unheard of in health care.

Anthem patients in five U.S. cities, including Indianapolis, spent $220 less per MRI scan after receiving those phone calls, compared with patients in nine other Anthem markets that received no phone calls.

Hospital-owned MRI facilities cut their prices 12 percent in the five cities where patients were called, compared with a 15-percent price hike by hospital-owned MRI facilities in nine cities where patients weren’t called. That's a 27-percentage-point swing.

That’s what Anthem’s sister organization, HealthCore Inc., found in a study of the program published earlier this month in the journal Health Affairs. The study compares the experiences of nearly 245,000 patients in 2010 and 2012. Its findings were adjusted for differences in the prevalence of the types of type of MRIs in the two groups of cities.

“The fact that we also saw a change in provider behavior, that was unexpected,” said study co-author Andrea DeVries, director for payer and provider research at HealthCore, a subsidiary of Indianapolis-based WellPoint Inc. that is based in Delaware. “Seeing competition in the marketplace is not something we’re used to.”

This is what Anthem did: Whenever patients in one of its health plans were referred by their doctors to get an MRI, Anthem would check if there was an MRI facility charging at least $400 less than the one a doctor had recommended. If so, Anthem called the patients and informed them of the price difference, which averaged $850 per patient.

The biggest differences in price are between hospital-owned MRI facilities and those operated independently or by physician practices. To understand why these prices differ so much, read one of my previous explanations.

HealthCore did not break out its results by city. But there has been evidence here that health care providers have cut prices on their imaging services, sometimes drastically. The starkest of several examples came from Indiana University Health, which reduced its prices on 38 imaging procedures last year by 60 percent to 80 percent, according to employers.

Anthem also saw health care providers slashing prices in California after it instituted a reference-based pricing program for joint replacement surgeries for retirees covered by Calpers. Under reference-based pricing, Anthem sets an amount it will pay for a certain procedure, and then makes patients pay the difference between the pre-set amount and the actual price if patients choose higher-cost providers.

Now, DeVries said, Anthem is going to study the impact on Calpers employees of the Castlight Health price transparency tool, which is been widely deployed by large employers here in Indiana.

I’ve written before that Anthem has historically shied away from forcing health care providers down on price. But now, it seems, the company—and its employer clients—are doing exactly that. And getting results.

  • Not just big company savings
    Don't forget, as more and more plans include significant cost sharing from the covered person, and are funded by their employer so... many consumers saved out of pocket money as well along the companies they work for.
  • Catch 22
    Some of us cover MRIs with our deductibles. So we don't rush to get them when doctors want them. (This is for a pre-existing condition.) Soooo your health insurance company is suggestion for you to go to cheaper provider. Instead of advertising prices (and reviews) like a normal business might operate. I (ME, not them) have to pay for it, so I might shop around. Sadly, this is our trainwreck of healthcare.
  • Good News for the Consumer (Patient)
    Good news! It looks like the market is working slightly more efficiently thanks to one insurance company and a few consumers (patients). I would like to think that the ACA had some impact, at least indirectly, on these cost-saving actions. Hopefully, more of this type of behavior among insurance companies and consumers will happen as more light shines on health care practices and costs. I had an MRI about 5 years ago that cost about $2900 with about $290 being my share. I simply went to where the doctor told me to go with no idea of how much I would pay and whether the cost would be subject to some market forces/constraints. Things are getting better albeit slowly.
    • Castlight rocks!
      On a previous job my employer's plan had access to Castlight. It is amazing--absolutely incredible that nobody thinks to price-shop for health care. I saved so much money with that tool.
      • Study showing non-hospital MRIs much cheaper
        Here's a recent study that compared non-hospital MRI prices to MRIs done in a hospital. It's a good source to identify MRI facilities with lower prices.
      • Saved me over $500
        Just experienced this - I first thought it was some "scam" thing but when I verified that was dealing with Anthem and they weren't kidding when they offered other options other than the hospital's imaging department. I had 3 options and I chose one that saved me over $500 on my scan. I paid cash rather than running it through insurance which saved me an additional $75. Wish they would do this for more of their services / treatment plans.
      • If we could get prices....we would do this on our own.
        If I could actually get the prices...I would do this on my own. We need laws that force provides to publish the costs they will charge. Everyone else gives you the price in advance...except hospitals.
      • Not all the facts presented
        JK, you fail to mention that many physicians (radiologists specifically) feel that the imaging quality of the scans at these non-hospital based facilities are of an inferior quality. Just something is cheaper doesn't mean it's the same quality! Also, you HAVE to be kidding when you say Anthem/insurance companies have been resistant to force health care providers down on price. Every time our physician group renegotiates with Anthem, they want to give us less for more work. Your statement shows a fundamental misunderstanding of how negotiations occur within health care!
        • To Gojeepdog
          You bring up a real issue. Anthem claims that it does not recommend imaging facilities that are of poorer quality than the one to which a patient was originally referred. Still, I'm not sure I believe that. However, since the average cost of an MRI in Anthem's experiment was $1,050 and the average difference in price between hospital-owned and indepedently-owned facilities was $850, that means hospital-owned facilities are, on average, 2.5x more expensive than indepedently owned facilities. Is the quality 2.5x better for all patients at hospital-owned facilities? And if it is, does every patient need that 2.5x better quality? I would honestly be curious as to your answers on those questions.
          • To Gojeepdog
            Also, on your second point, you are correct that Anthem has played hardball for years with physician groups. I should have been more precise and said "hospital systems" instead of "health care providers." Because Anthem has not forced the hospital systems down on price; it has never been willing to go to employers with one hospital system out of its network, so it has always had to, in the end, go along with hospitals' hefty price increases. I was not more specific in my word choice because the lion's share of physicians are now employees of the hospital systems, so the difference in negotiating tactics is less relevant than it used to be. I hope that makes sense.
          • Tough question
            JK, Thanks for your comments. I suppose your question of whether or not a more expensive but potentially better MRI quality is worth it depends upon whom you ask. If a radiologist misses a significant problem because of imaging quality issues, then maybe the extra cost would have been worth it. That is something a patient has to decide for him/herself. That being said, I too want more fair and competitive pricing and transparency from hospitals!
          • Educated consumers make better service
            Gojeepdog, I agree that IBJ could do a little better explaining MRI and the various fees that run with this procedure - but it's best to speak in specifics and not platitudes. So here we go... MRI has somewhat recently evolved. The old tech was called 1.5T "T"=Tesela (as in Nikola, the guy who brought us AC current to our homes). Now, in recent years there is 3T - twice the power. I'm not sure if any non-hospital facilities in Naptown have 3T machines but other (better) healthcare markets sure do! And guess what? 3T is the same price as 1.5T! So do your shopping and know your tech. Also, some facilities have a separate fee/charge for the radiologist - so you need to factor that in to. IMHO the person reading the MRI is probably more important than the number of Teslas but now that's really getting into moogie foogie territory and most folks sadly have no choice in that matter. Last best price I could find for 3T MRI was at Community North (hospital) - even with their added radiologist fee. Anthem does have a tool in their website that allows people to price compare facilities within a certain area for various procedures including imaging certain parts. Why Anthem customers don't use this tool beats me. Happy hunting.
          • Consumerism is Key
            Consumerism is the key to this change in pricing of MRI services - Not the ACA. The Obama administration, like Jim F., would also like to think (hope, pray etc.) that the ACA was responsible for this cost reduction. But, that is not the case. Much to the White House's dismay, this price reduction is a pure example of free and informed markets working more efficiently than regulation-constricted and uninformed markets. Give educated/informed consumers the ability to conduct business in an environment free of unnecessary regulation and this is the result. It works on a relatively small scale in this example; imagine the benefits that would be realized if we adopted this approach on a larger scale and in other areas of our economy…
          • no help
            Castlight was no help to me in searching for a less expensive MRI, nor did I receive a helpful call from Anthem. MRI was in May, all out of pocket due to high deductible policy. Maybe Anthem doesn't step in if the insured is paying.
          • Matt - No Such Thing As A Free and Informed Market
            Matt - Please note that I said the ACA might have indirectly had some effect on better price transparency. My point was that much of the discussion we/other people are having about health care pricing has taken place since the ACA was passed; hence, it has been somewhat of a catalyst. In addition, the ACA has some elements that are directed at providing health care consumers more information, including better pricing information. Your made a reference to "free and informed" markets with respect to health care; these or this market does not exist! Health care, because of its nature and its involvement with Medicare and Medicaid and insurance companies, will never be "free and informed." That utopian market will only be an ideologue's dream.

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