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For years, people have been going to the doctor, paying a $10 to $30 copay and going on with their day without thinking about what it truly costs for that doctor's visit. With the advent of consumer-directed health plans, individuals are beginning to pay closer attention to their health-care expenditures.

Until recently, it has been difficult to determine how much to set aside in dedicated accounts because the cost of doctor's fees and other health-care services are typically unavailable to the general public. One national health insurer, Aetna Inc. of Hartford, Conn., is looking to change that scenario.

This is good news, according to Aetna executives.

"The biggest impediment to effective consumerism in health care has been the unavailability of relevant data on health-care quality and cost," says Ronald Williams, president of Aetna. "We are taking the lead on opening what is often perceived as the 'black box' on physician-specific pricing. As more Americans begin managing their health-care dollars, they are increasingly interested in the 'price tag' for the health-care services they receive."

Aetna is aiming to provide consumers with this information to help them make more informed decisions about their health-care services.

"We have been providing tools to help consumers make health-care related decisions for some time," says Robin Downey, head of product development at Aetna. "Our members have had access to estimated physician cost information via Aetna Navigator, our password-protected member Web site, and are able to view in-network versus out-of-network rates for physicians in specific geographic areas, along with gauging the cost of chronic conditions, such as asthma and diabetes. With the growth in consumer-directed health plans, we felt it was time to take it to the next level--to begin offering true transparency of health-care costs."

Aetna held focus groups with network physicians and members, in addition to representatives from local and state physician professional organizations as well as large group practices in Ohio, to guide the creation of the program.

"The physicians we spoke with agreed that patients should understand what their services cost, in addition to the need to make this information easily accessible and understandable," says Downey. "Throughout the pilot program, we will continue to get feedback from members and physicians so that we can continue to enhance and improve these services."

A SHROUD STILL SURROUNDS QUALITY

While many health-care consultants and medical providers applaud Aetna's efforts because it sheds light on the real cost of health care, they agree there are still many challenges ahead, the major one being how to measure quality.

"The consumer is the force that drives cost transparency," says Harvard Business School professor Regina Herzlinger, a long-time advocate of consumer-directed health care. "As soon as this information becomes more widely available, physicians will need to become more competitive in their pricing, in addition to focusing more attention on how they measure the quality of care provided."

"For too long, the medical industry has shielded consumers from transparency on cost and quality," says Stephen Neeleman, CEO of HealthEquity Inc., an administrator of health savings accounts based in American Fort, Utah. "Physicians today need to provide the highest quality for the lowest price. While we're trying to be more transparent about price, it's often difficult due to additional fees from treatment facilities, surgeons, anesthesiologists, hospitals, and other costs involved in treating a patient.

"The goal," says Neeleman, "should be to provide a fair market price for our services and work with patients to determine what makes the most sense for them--such as having a procedure performed on-site at a doctor's office or at a hospital or clinic."

Unfortunately, says Hal Heaton, professor of finance and associate director of the Center for Entrepreneurship at Brigham Young University in Provo, Utah, "Health care does not compete like other industries. When was the last time you saw an advertisement by a health-care provider that says, 'Come to us for the highest quality kidney stone removal at the lowest price?' Today, health care competes by offering more expensive service because no one pays much attention to the cost. The concept of HSAs opens myriad entrepreneurial opportunities, and will ultimately lead to more specialization and competition based on both cost and quality by health-care providers."

The ability to measure quality in the medical provider arena is still in its infancy.

"The overall movement toward asking consumers to take more responsibility for their own health care is an important step in empowering consumers," says Joe Martingale, national health care strategy leader at Watson Wyatt in New York. "While the information Aetna is providing is a step in the right direction, information about the quality of care provided is especially important and necessary for helping consumers make informed decisions about their health-care services. In addition, providers need to respond to the consumer market by competing on both pricing and quality information," he says.

"You don't go into a doctor's office to buy an immunization--you're purchasing a service," says Alexander Domaszewicz, a principal in the consumerism specialty practice at Mercer Health & Benefits Consulting in Newport Beach, Calif. "Information about the quality of services provided by physicians based on best practices is just as important, if not more so, to share with consumers as cost information. Consumers need to take into account the true cost, quality and value of medical services in order to make informed decisions about where to spend their health-care dollars. The next step will be to provide the tools to help consumers make good quality comparisons."

Molly Katz, a gynecologist in Cincinnati and president of the Ohio State Medical Association, who is not affiliated with Aetna's network, agrees that price transparency is important when it comes to health-care costs, but warns that "negotiated fees may be misleading and don't tell consumers anything about the quality of care provided. It's important that consumers understand what the numbers actually mean and know that there may be additional costs involved in providing care."

Katz notes that the Ohio State Medical Association is in the process of helping physicians begin to measure quality criteria and determine how to provide the best care at the lowest cost, along with sharing that information with consumers. "Having high-deductible plans with consumers deciding where to spend their health-care dollars is a good thing," she says. "But it's also important to teach patients about lifestyle changes that could improve their health care and keep them healthier in the long run," she stresses.

"Once consumers understand the relationship between cost and quality of care, they can begin to make a value judgment about the health-care services they choose," says Bill Hannah, a principal in the health-care risk advisory services practice at KPMG in Atlanta. "While Aetna's move is a good first step, until quality can be measured alongside cost, it will be difficult for consumers to get the kind of information they need from the health-care community to make informed decisions."

At the end of the day, says Joseph Paduda, principal of Health Strategy Associates, a Madison, Conn.-based consulting firm specializing in managed care for workers' compensation, group health, disability and health-care cost containment, "I don't believe Aetna's initiative will have much of an impact on health-care costs, but it should begin to make insureds better consumers of health-care services. What it comes down to is price and utilization management. You need to control both in order to effect change, in addition to measuring quality and assessing health-care services against an output."

MINDY TORAN is a writer living in Pennsylvania.

December 1, 2005

Copyright 2005© LRP Publications