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As American medical debt balloons, PriceMedic comes to the rescue for Colorado patients

Feb 2, 2022 | Featured six, Health | 0 comments

//The main page of search engine PriceMedic’s website. 

Editor’s note: A source in this story is referred to by their initials to protect their privacy. 

 

Two years ago, Park County resident MP was lying in bed when her partner yelled that he needed help outside. MP jumped up and put on her jeans, trying to be as quick as possible. She slipped and fell on her closed fist, breaking the middle metacarpal in her left hand.

The following day, MP went to the emergency room to get X-rays taken and confirm the metacarpal was broken. She was then referred to an orthopedic surgeon who determined that the break didn’t necessitate surgical intervention. But that didn’t save MP from racking up costly medical bills. 

“I was extremely concerned about costs,” MP wrote over email. “I actually waited until the next morning to go into the hospital hoping it would get better, even though I knew it was broken. I was self-employed at the time, which meant I was also uninsured. If I would have had to have surgery, I don’t think I would have been able to figure out a way to pay for the upfront costs.”

The final cost of the accident—including the emergency room visit, X-rays, a hard cast and two follow-up appointments with the orthopedic surgeon—ran MP almost $3,000. Years later, she’s still in $1,200 of medical debt from the incident. And she’s not alone. In October last year, Forbes reported that 50% of Americans carry medical debt. Of those, 57% owe at least $1,000, driven by diagnostic testing, hospitalizations and emergency room visits like MP’s. 

In January 2021, the Centers for Medicaid and Medicaid Services, or CMS, implemented a rule requiring hospitals to make their standard charges publically available. However, that information isn’t necessarily accessible to those who are not data literate. Two college students from Colorado have set out to solve that problem. El Paso County high school graduates Katelynn Salmon and Josh Nakka spent months combing through and compiling the information to create a search engine called PriceMedic

According to the CMS, Americans spent $4 trillion—yes, trillion—on health care in 2020 alone, accounting for a whopping nearly 20% of the U.S. gross domestic product. And that number is projected to rise to more than $6 trillion in the next seven years. 

Several factors contribute to the increased cost of medical care, specifically from hospitals. Over the past three decades, hospital systems have been consolidating rapidly, diminishing competition. For-profit hospitals, like those in Colorado, rake in the dough by charging increasingly higher prices for services. And a lack of transparency surrounding those charges allows prices to vary wildly even in the same geographical area. 

Salmon noticed this price variation throughout the process of building the PriceMedic database. It’s so stark that, in some cases, the out-of-pocket cost of a procedure at Hospital A could still be lower than that patient’s responsibility for an insurer-negotiated price at Hospital B.

“It’s beyond frustrating,” MP wrote. “I called so many offices before my casting to see what their base prices were for an appointment and a cast and was told they couldn’t provide that upfront because it was ‘variable.’”

Salmon, a junior studying statistics at Rice University, and Nakka, a sophomore studying computer science at Johns Hopkins University, worked on PriceMedic over their summer break. For Salmon, the issue of high-cost medical care is personal. In 2020, her mother was diagnosed with uterine cysts and decided on laser ablation treatment instead of a traditional hysterectomy. Her insurance company refused to cover the procedure, as a hysterectomy is the standard treatment. 

“It was deeply frustrating for my family,” Salmon wrote in an email. “My family is lucky to have really, really good health insurance compared to most Americans, and America has probably the most technologically advanced medical system in the world, but when we needed it, the costs of accessing that technology were prohibitively high.”

The CMS rule requires that hospitals make public five types of standard charges, including the discounted cash price for those who are self-paying. The PriceMedic database has only gathered this specific information from hospitals across Colorado, California and Georgia for the time being. The search engine allows patients to compare self-pay prices at hospitals in their state with just a procedure name and zip code. 

Salmon said the process of putting together the PriceMedic database was a difficult undertaking from a technological standpoint. But they faced several other challenges as well.

“The road to healthcare price transparency is significantly more difficult to traverse than we originally understood,” Salmon wrote. “On top of overcoming issues of actually finding and inputting prices, PriceMedic has to bridge the medical literacy gap, account for inconsistent billing schemas and keep up to date with procedure bundling practices.”

She said the most significant barrier to execution was the incredible variety of non-standard file formats in which hospitals would post their price information. In compliance with the CMS rule, files must be in machine-readable formats like XML and CSV. But the two-person team encountered several health centers that posted their information in non-machine readable, and therefore non-compliant, formats like PDFs, Word documents or tables embedded directly into the hospital website. In addition to processing those individual file extensions, they also dealt with a large variety of ways in which that information was presented within the files. These variables make it harder for the public to understand the information and more difficult for people like Salmon and Nakka to build their programming.

“The [be-all and end-all] and why so many other attempts to build a healthcare price shopping tool have fallen flat is that it is highly difficult to automate the population of the database with new procedures and prices,” Salmon wrote. “Almost all of it has to be done by hand for more than 50,000 individual billing codes and more than 6,000 hospitals in the U.S.”

But those hours of work to make this information public in a user-friendly manner could have a huge payoff. PriceMedic, and any other databases that may come after it, have the potential to significantly alter the healthcare industry by holding hospitals accountable and creating an opportunity for competition. 

“From an economic standpoint, price transparency should create competition between firms, helping to drive consumer costs down across the board,” Salmon wrote. 

The price transparency rule has the potential to help those with disabilities or who are lower-income without insurance. The rule will likely also benefit those who do not have employer-provided insurance, like workers in the growing gig economy or people who own or are employed by small businesses. But it could even help millions more who are covered by private insurance. According to a study from ValuePenguin insurance, 52.9% of American workers covered by private health insurance through their employer were enrolled in a high-deductible health plan in 2020. For many with high-deductible insurance plans or limited-benefit plans, they may find themselves paying out-of-pocket more often than they should. 

MP said that living in the mountains, it’s always a struggle for her to decide which hospital—Breckenridge, Denver or Colorado Springs—to go to in a time of need. She said if she had access to PriceMedic at the time of her accident, it would have made the decision easier for her as she would have been able to see the potential costs upfront. 

“It could be a game-changer!” MP wrote. “While it won’t alleviate all the stressors of going to the doctor, ER or a specialist from those who are uninsured, it will definitely help remove some of that and allow them to make informed decisions.”

Salmon acknowledged that neither PriceMedic nor any databases like it are comprehensive enough or have the power to hold the American healthcare system accountable for pricing at the moment. She also stated that the CMS rule doesn’t go far enough to punish violations or hold hospitals to their prices. 

As of early December 2021, almost a year after the rule went into effect, the federal health regulator had issued roughly 335 warnings to hospitals it deemed to be out of compliance with transparency directives. Despite repeated warnings for some hospitals, CMS has yet to issue any fines. Some health centers have neglected to publicly report their prices altogether. But even more concerning, prices can still vary from the prices listed in the CMS mandated pricing data files. Hospitals are also under no obligation to adhere to the prices they’ve listed publicly nor does the rule require that hospitals live-update the available data files to account for price changes. 

“[The CMS rule is] very ineffective,” Salmon wrote. “There have to be much stricter requirements in place for the way in which prices are released and much higher penalties for hospitals not in compliance for a project like PriceMedic to really and truly take off nationwide.”

Despite the pitfalls, Colorado residents have already benefited from Salmon and Nakka’s work. After posting the PriceMedic link in the r/Denver subreddit, Salmon received overwhelming support for the project. One commenter responded that she used the online tool to compare the cost of giving birth at south Denver hospitals against the one she was planning on going to. She found a cheaper option that she was going to consider instead. Several other Reddit users commented on the absurdity of having to price shop for medical care, a fact not lost on MP. 

“In general, our healthcare system is severely lacking and needs a lot of updating to be accessible to all in our country,” MP wrote. 

 

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