Dive Brief:
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Patients often choose higher-priced locations rather than more affordable options for lower-limb MRI scans and fewer than 1% use price transparency tools before receiving care, according to a new National Bureau of Economic Research report.
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Despite facing higher out-of-pocket costs, patients usually still get care at higher-cost locations. In fact, the report found that patients on average pass six lower-priced providers between their home and where they receive care.
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The researchers also found that hospital-owned referring physicians are more likely to send patients for hospital-based MRI scans, which are usually more costly.
Dive Insight:
Many hospitals have invested more in outpatient services, such as imaging, which helps offset inpatient admission losses. However, payers like Anthem at pushing members to get MRIs and CT scans at lower-cost facilities, such as imaging centers.
The study by Michael Chernew at Harvard Medical School, Zack Cooper and Fiona Scott Morton, both of Yale School of Public Health, and Eugene Larsen-Hallock at Columbia University analyzed how patients with private health insurance decide on where to get lower-limb MRI scans. The researchers chose lower-limb MRIs because they’re a “fairly undifferentiated service and providers’ prices routinely vary by a factor of five or more across providers within hospital referral regions.”
They added that the price difference shows there are significant potential savings if patients receive care at lower-priced locations. If patients visited the lowest cost provider within the distance they traveled for care, they would reduce out-of-pocket costs by 27% and insurer spend by more than 40%.
Despite lower-limb MRIs being among the “most easily shoppable healthcare services,” the study found that most patients don’t weigh costs before getting an MRI.
The researchers found that referring physicians’ suggestions are more critical for patients than out-of-pocket costs. For instance, orthopedic surgeons tend to send patients to a small group of imaging locations. On average, 79% of all orthopedic referrals go to one imaging provider.
They suggested patients must move away from their physicians’ “established referral pathways” to reduce out-of-pocket costs and total MRI spending. The authors added that policymakers need to incentivize referring physicians to make “more efficient referrals.”
“Ultimately, the referral decisions of physicians may be suboptimal both because referring physicians lack information on the prices of the facilities where they are sending their patients, and because physicians may be motivated to refer patients to specific providers for reasons other than quality or patient costs,” they wrote.
Another influence is the growing number of hospital-employed physicians. Doctors who are vertically-integrated with a hospital are more likely to refer patients to a hospital, according to the study. That raises the total cost of an MRI by 36.5%, including another 31.9% more being paid by the patient.
The study authors said that the results showing patients don't shop for MRIs means they likely won’t shop around during more complicated healthcare decisions. In other words, healthcare consumerism has a long way to go to make a dent in healthcare costs.