How to see through opaque health care costs

If only shopping around for routine medical procedures were as simple as booking a flight online or flipping through supermarket sales fliers.

The reality for millions of Americans couldn’t be more different. Employer-provided health plan deductibles have risen 47% since 2009 as companies try to keep their own health care costs down, leaving families to cope with higher out-of-pocket costs before their insurance kicks in. The average deductible for a family in the U.S. was $4,522 in 2013, according to the Kaiser Family Foundation. Meanwhile, copay-based plans have given way to plans that offer coinsurance — a percentage of costs that the individual must pay, even after they meet their deductible. (Monthly premiums are typically lower in high-deductible health plans.)

For people with high-deductible health plans, it makes sense to shop around to find the most affordable treatments. But it can be next to impossible to comparison shop.

Part of the problem is that doctors themselves often don’t know the sticker price of routine treatments (procedures like basic blood tests, mammograms, MRIs and X-rays). That’s because insurance companies set the rates for procedures and medications and very few of them make those lists public. Doctors, who typically rely on a third-party billing company, submit their patients’ bills with a coded list of services to insurers. Insurers decide how much they’re willing to pay and cut the doctor a check.

“It’s a completely opaque marketplace, full of misinformation and asymmetry,” says Jeanne Pinder, founder of Clearhealthcosts.com, one of a few websites where consumers can find estimates for routine medical treatments in their area.

And because doctors’ offices charge based on the maximum rates set by insurance companies, the price of some treatments can seem outrageous to someone without insurance, says David Belk, a San Francisco-based physician. It doesn’t matter much to the patient who has a great policy — they just get a bill for their standard copay and go about their business. But for people with high deductible plans to deal with, sticker shock is common.

“Why should anybody be told a $300 CT scan is really $4,000?” says Belk, who offers his advice on how to get the best rates on medical care at his website Truecostofhealthcare.org. “If getting a small amount of care can drive people into bankruptcy, it keeps these people away from this business.”

Knowing how to shop for health services is vital as many consumers will either be placed in high-deductible health plans through their employer or select one through the federal marketplace in the upcoming open enrollment period (Nov. 15-Feb. 15). Despite the lack of transparency, there are things consumers can do to make sure they’re getting the best deal possible. We asked Belk and Pinder to share some tips:

Figure out the medical billing code for your procedure. Ask your doctor’s office for the exact billing code (called a “CPT code”) for the treatment you’re getting. Of course, even this simple question can be complicated to answer.  An MRI of the abdomen, for example, will have a different billing code than an MRI of your lower back. But once you know the exact code, it will make it easier for you to call around to different providers to compare rates.

Ask for the cash-pay rate before you are treated. If a certain procedure isn’t covered by your insurance or you’re uninsured, you may be able to finagle a discounted rate if you agree to pay cash upfront. It’s important to ask before the service is rendered, Pinder says, so there aren’t any surprises. Keep a list of estimates you’re given and call other providers in your area to compare. Just keep in mind that some doctors may be more willing to negotiate than others. “Some doctors don’t even like to discuss money and they’ll have an office manager quote you the price off of their fee schedule, which may be grossly inflated,” Belk says. “Some doctors will just charge you a fair price.”

Comparison shop by calling providers or searching prices online. Clearhealthcosts.com uses a combination of crowdsourced and proprietary data to ascertain estimates for about 35 common medical procedures in areas across the U.S.  You can also find estimates at Healthcarebluebook.com.

Don’t go to the hospital for routine care if you can help it. “Hospitals will charge you thousands of dollars for a test that’s hundreds of dollars,” Belk says. A May 2013 study by the Centers for Medicare and Medicaid Services found that hospitals sometimes charge 10 to 20 times what Medicare typically reimburses for a service. If you need a routine outpatient treatment, such as an MRI or an ultrasound, Belk recommends shopping around for the best rate at a stand-alone clinic. “There are a lot of services that provide outpatient tests for a little bit more than what insurance providers pay, but far less [than] what you’d pay if you went to a hospital or if you use a high-deductible health plan.”

Don’t assume insurance will give you the best deal on generic medications. The majority of prescriptions written in the U.S. today are for generic medications — drugs that can cost pharmacies as little as a penny per pill. The problem with the way medications are priced today is that it’s almost entirely concealed from the consumer. If you are using insurance and pay a copay of $10 or $20 every time you fill a prescription, you could be paying more than someone who walks in and pays the cash rate.

“It pays to shop around for generic medications,” Belk says. “Even a number of retail pharmacies will cut you a deal if you’re not insured.”

When you have a prescription in hand, call around to several pharmacies to get quotes for paying in cash. Some pharmacies may require you to sign up for a membership card before letting you pay cash. Others will do whatever it takes to make you pay with your insurance if you have it, especially if they can bill your insurance company for more than the cost of the drug’s actual retail value. But Belk has found some of the best rates for generic medications at Costco’s pharmacy, where anyone can shop even if they don’t have a Costco membership.

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Have a question about your health plan or your finances? We're all ears: yfmoneymailbag@yahoo.com.

Read more in our Obamacare series:

The Obamacare marketplace one year later: How you’re faring

The 'Opt Out' nation: Why uninsured Americans decided to pass on Obamacare

Obamacare navigators are facing a tough road this year

Contact Mandi here: mandiw@yahoo-inc.com.