Patients, Physicians Adopting Medical Cost Estimators

September 23, 2016

In response to dramatically higher copays and deductibles, patients and their physicians are using technology to find the best prices for healthcare.

In an attempt to hold down escalating healthcare expenses, an increasing number of payers are selling high-deductible health plans to consumers - where annual deductibles can exceed $6,000. Unfortunately, these greater upfront costs can effectively price many patients out of healthcare services.

In response to runaway costs, entrepreneurs have stepped in and developed cost-comparison websites and mobile apps to help consumers compare healthcare providers, facilities, and pharmacies to find the best prices., Blink Health, GoodRX, and are all examples of websites that aim to help consumers find lower prices for healthcare and prescription medications. 

While purchasing healthcare is not exactly like buying a car or finding the best theater tickets, says Doug Hirsch, cofounder and co-CEO of GoodRX, the same principles apply. "In this day and age, we compare prices on everything on the internet," he says, "So I [asked] my cofounder 'Is there a way we can organize [drug] information so Americans can know what they are going to pay between the time they leave the doctor's office and show up at the pharmacy?'"

Visitors to the GoodRX website simply type in the name of the drug they wish to purchase and their location and they are presented with a list of pharmacies and prices. Because there are any number of discount programs for prescription medications, for example, manufacturer coupons and $4 drug lists at discount pharmacies, a consumer may come out ahead by paying cash for his medication. Consumers can also find information on Medicare Part D copays on the website. "Either you can just use your copay … or if there is a lower price that we've found we'll say, 'Don't use your Medicare here, you should just go to Walmart and pay $4,'" says Hirsch.

Drug prices tend to vary wildly and often don't have anything to do with manufacturing the actual drug itself, says Hirsch. It could be that a particular drug has been moved to a higher-cost tier by the insurance company or has been removed from the formulary (a list of approved drugs) altogether. The end result means a much higher cost for the patient, which could lead to the patient not filling his prescription at all.

Physicians are affected by escalating drug prices too. If the drug they prescribe is out of reach for the patient, either through stringent payer requirements or cost, then they will be hampered in the care they give. Many insurance companies use step-therapy, a tactic that forces physicians to prescribe a lower-cost drug for their patient, which may be ineffective for that individual, before prescribing a more expensive drug in the same class. But if patients were able to bypass that system and purchase the most effective drug at reduced cost, it is a win-win for both patient and physician, says Hirsch. That's why the company has developed a mobile app for physicians called GoodRX for Doctors that can be used at the site of care.

Geographic location is another factor that dramatically alters the cost of healthcare services. David Vivero is CEO of Amino, a website that enables patients to search for healthcare services based on location, provider, cost, and outcomes. In order to give the patient this level of granularity, Amino has amassed de-identified claims data from roughly 200 million patients and close to 900,000 physicians in the U.S.

"Because [the data is] longitudinal, meaning we follow the same patient over time, this anonymous patient, we can do the important steps, for example, of risk adjustment," says Vivero. "For example, as we calculate C-section rates or other outcomes measures that you see on Amino … we are able to take into account the unique health aspects of the patient's experience and that physician's overall community."

Vivero says patients traditionally find a physician through word of mouth, often asking family or friends for a recommendation. Their intent is to find someone like themselves who, for example, needed a hip replacement. By replacing that method with one that is data driven, Amino gives the patient tools to search for physicians who are experienced in the care that they need and to estimate the costs of that care prior to the first visit.