Medicare is providing consumers with a new way to research health care pricing.
Paul Blow
By Amanda Gengler
June 18, 2014

Medicare has pulled back the veil on what doctors, physician assistants, physical therapists, and other health care providers charge, letting everyone see the rates for a wide variety of procedures in advance for the first time. “This is a big step forward and will be very enlightening,” says Jean Mitchell, a health economist at Georgetown University.

Health care researchers and fraud investigators are salivating over the data—already it’s revealed that some doctors favor the most expensive in-office intravenous drug treatments, likely because Medicare pays them a percentage of the cost, says ­Gerard Anderson, a professor at Johns Hopkins University.

As a patient, you can use the numbers, which are from 2012, to conduct your own research into prices and practices. Even if you’re under 65, you can glean valuable insights. Head to the Medicare Physician and Other Supplier Look-Up Tool to find your doctor. You’ll see how many times he or she did a particular service and the average charges. Then here’s what to make of the information:

If you’re facing surgery
See how often your doctor operates; for complicated procedures, frequency pays. “Research shows doctors who perform more than 50 hip replacements a year have fewer complications,” says Andrew Fitch of Nerdwallet Health. Yet about half of orthopedic surgeons did fewer than 20 a year on traditional Medicare patients, a Nerdwallet analysis of the data found.

The tally excludes operations on patients with private insurance or a Medicare Advantage Plan. Still, a low number compared to other MDs should prompt you to ask how often your doctor does the job, particularly for hip and knee replacements, says Fitch. If the figure is high, keep in mind that at times every physician in a group practice bills under one name.

If you’re on traditional Medicare
For a price preview, calculate the difference between the “average Medicare allowed amount” and the “average Medicare payment.” That’s your share of the bill before supplemental insurance kicks in. One caveat: What you see in the Medicare database are charges per service. So ask if you’ll face other bills or a facility fee if you’re cared for at a hospital or surgical center.

If you have private insurance
Check out the “average submitted charge,” which is the doctor’s full retail price. If you go outside your network, you’ll owe the difference between this amount and what your insurer deems a “customary and reasonable” rate (get that from your insurer), on top of your co-insurance.

You should negotiate with out-of-network docs, and the Medicare allowed amount is a good starting point. If the provider balks at that, go as high as 35% more, which is the national standard for a reasonable charge, says Anderson.

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