Steering patients to low-cost providers triggers MRI price cuts

Steering patients away from hospitals to lower-cost MRI facilities decreased costs by 18.7 percent and triggered provider price cuts, according to a recent study of price transparency efforts.

Authors Sze-jung Wu, PhD, a senior research analyst at HealthCore, and colleagues wrote that costs were reduced by $220 per MRI by encouraging patients through phone calls to use low-cost non-hospital facilities instead of hospitals. The tactic triggered price cuts by hospitals, though non-hospitals raised prices, reducing the variation in pricing among facilities by 30 percent, they wrote.

The study also showed a decrease in the average unit MRI price of $175, from $1,488 to $1,313, in hospitals. The use of hospitals fell by eight percent from 53 percent to 45 percent, Wu and colleagues wrote.

The study, which was published in the August issue of Health Affairs, is the first evaluation of a large-scale private-sector effort in price transparency and of its impact on consumer response, according to the authors.

Patients in the study were contacted by phone and redirected to comparable MRI facilities close to the original referred MRI provider or close to the patients’ homes. Information on both quality and cost was provided.

“Providing customized information empowered members to respond more effectively to the recommendation during the outreach,” wrote Wu and colleagues.

“The program significantly reduced imaging costs. This suggests that patients select lower-price facilities when informed about available alternatives.”

Prices of MRIs in a given geographic area can range from $300 to $3,000 with no demonstrated difference in quality, according to the authors.

Hospitals, especially teaching hospitals, tend to have higher MRI prices because of the costs related to hospitals’ emergency care capabilities and stringent accreditation and regulatory requirements. Furthermore, other research has found that hospitals could negotiate higher reimbursement from private insurers.

The retrospective study used administrative claims of 105,637 patients from commercial Blue Cross and Blue Shield health plans to compare the provider choices of plan members in similar geographic regions who had at least one outpatient MRI scan in 2010 or 2012. The 2010 group of patients were not included in the outreach effort.

Plan members in the 2012 group were contacted by phone and informed of price differences among available providers of comparable quality. This outreach method was more effective than previous attempts to influence consumer choice simply by posting price information on a Web site, the authors noted.

The authors said the same techniques to steer plan members to lower-cost providers could be used for other imaging technology, such as PET scans, nuclear cardiology, sleep studies, colonoscopy, arthroscopy, and elective joint replacement surgeries, according to the authors.

“The price transparency initiative has the potential to be effective for nonurgent procedures, when there are at least several days between a patient’s decision to select the provider and the time when the procedure takes place,” the authors wrote.