Firelight for Consumers

I currently have insurance, so why should I be concerned about prices?
• Millions of Americans have high deductible health plans, so for the first few thousand dollars they spend each year -- they are paying the price agreed by their provider and insurer (known as the 'negotiated rate' or 'discounted rate'). And these can vary widely, even within the same city.
• Co-insurance is big. Even after deductibles are met, about half of all U.S. employees pay co-insurance -- a set percentage of the prices negotiated between payer and provider. For example, if your co-insurance is 20%, and your procedure costs $8,000, you pay $1,600. If you could have had the same procedure at the same quality done for $4,000, you would have saved yourself $800.

There are wildly different prices for the same procedure from different providers within most cities. How can this be?
• There are no real constraints on what healthcare providers can set for their 'chargemaster' prices (also known as 'list price' or 'retail price'). They're just numbers on a piece of paper. So if you're uninsured, and facing 'chargemaster prices, the sky's the limit. It's shocking, but true.
• If you have health insurance, your insurer will have a negotiated rate if your provider is 'in network', but not insurance companies are able to negotiate reasonable prices with all providers.

But a higher price means better care, right? No. High prices do not necessarily mean that you will receive higher quality care. Many studies have shown that there is no consistent correlation between price and quality. Always try to get good referrals. Make inquiries about how often a given provider performs the procedure that you need. Research hospital quality at sites like https://www.medicare.gov/care-compare/?providerType=Hospital&redirect=true and https://calhospitalcompare.org

But aren't there laws that protect me from healthcare price gouging? Very few. Our legal and medical system offers good protection from physical harm resulting from negligent or reckless healthcare services, but little protection from financial harm that can so easily result from extremely high prices. Medical debt is the most common form of consumer debt in the U.S., and it features prominently in statistics on consumer bankruptcy.

So what can you do, when no one will tell you the prices in advance? More and more, hospitals are required to provide pricing information on their individual websites. To compare prices among hospitals in the Los Angeles area, try FireLight.

Does FireLight provide actual prices or just estimates? What is the source of the price data?
FireLight provides the actual prices charged by hospitals to each health insurance company that a hospital contracts with. The source of the price data is from annual hospital disclosures required under rules issued by the U.S. Department of Health and Human Services.

How do healthcare providers get away with setting prices that don't seem to have any rational basis? In healthcare, few people pay attention to healthcare prices -- often because they assume that someone else is paying. But prices matter -- because one way or another, we're all paying them.
• Not me; I get insurance from my employer. Employees have seen little wage gains in recent years, but employer health insurance premiums have skyrocketed. The raise you didn't get last year...that's how you're paying healthcare's high prices.
• I'm on Medicare and/or Medicaid, so prices don't matter much for me. Medicare and Medicaid are government programs, paid for by taxes. And practically everyone pays taxes. Also, fewer and fewer doctors are taking Medicare/Medicaid patients. Why? Because they can get away with charging much higher prices to patients with non-government health insurance.
• I buy my insurance directly in the 'Individual' market, and my insurance company negotiates good rates with healthcare providers. First, as an individual buyer, you face some of the highest premiums and deductibles of all. And while insurance companies do negotiate rates, they have not been able to stop unsustainable increases in healthcare prices. They simply pass these costs to you in the form of higher premiums.

How can I avoid inflated hospital prices and help build a market in healthcare services that can bring the kind of falling prices and increasing quality that we've seen in many other industries? Treat healthcare like any other important purchase (e.g. a car or cell phone or college): do your homework, ask questions, and where use FireLight and other services to obtain information about cost, convenience and quality.