STUDY: Doctors Do Fewer Unnecessary Tests And Procedures When They’re Told How Much It Costs

According to a new Johns Hopkins University School of Medicine study, doctors who know the cost of the medical tests and procedures that they perform tend to choose to do fewer of them then those who don’t. That ends up sparing patients from unnecessary testing and preventing Medicare from paying unnecessary reimbursements.

The study involved observing two different groups of doctors and lab technicians at Johns Hopkins Hospital over two separate time periods, while giving them different amounts of information about the Medicare fee associated with the procedures they were ordering:

In the study, physicians and others who ordered lab tests through the computerized order entry system at the Johns Hopkins Hospital were tracked over a six-month period in late 2008 and early 2009 and then again for another six months in late 2009 and early 2010 on how they ordered a selected group of 61 lab tests. Roughly half were chosen from the most frequent tests ordered at the hospital, and the other half, the most expensive. […]

[Researchers] found that, in the test group, when prices weren’t made available, the providers ordered 3.7 tests per patient day, but later, when the prices were linked, the number of tests per patient day fell to 3.4, a drop of nearly 8.6%.

In contrast, the number of tests in the control group, those without pricing in both test periods, rose by 5.1%.

Test costs followed a similar path. For the test group with prices, the cost per patient day fell $3.79, for a drop of 9.6%. Meanwhile, in the control group, charges per patient day rose by $0.52 per patient day, or by 2.9%.

The results are encouraging from both a public health and a financial perspective, since unnecessary testing and procedures do nothing to improve patient care — and in some instances, can even make it worse — and lends to America’s record public and private health care spending.

But even more interesting is the study’s implications for physician medical culture and Medicare fraud. The Justice Department makes much of its settlement money from doctors who cheat Medicare through practices such as “self-referrals” for unnecessary testing and “upcoding” the cost of their Medicare patients’ services in order to return a profit. There have been some early rumblings in health care reform circles that Obamacare’s provision requiring providers to use electronic health records (EHRs) could actually lead to even more fraud by offering physicians an easier way to cheat the system. However, the Johns Hopkins study suggests that most doctors will actually make more prudential decisions when armed with exact information, so if EHRs are linked with exact Medicare fee data, it could actually make care more efficient, safe, and cost less to entitlements like Medicare.