How Lasik and Botox could point the way to health care price transparency

James Lewis, an Elkins Park eye surgeon, sets the price for laser vision correction surgery in a way that may seem logical to business people, yet odd to many health-care providers: He charges what makes sense in the market.

"I know what people are charging," Lewis said. "I thought: What's the most reasonable amount I can charge and still make it worthwhile."

What's odd about that?

Health care is one of the few commodities that defies the normal rules of supply and demand, largely because few people know what they actually are paying.

Prices for common health procedures vary widely from one provider to another because Medicare, Medicaid, and private insurers each negotiate their own rates. Coverage varies by plan, and insurers are not required to make prices public.

"In an opaque pricing world, you get to charge whatever you want," said François de Brantes, a vice president at Altarum Institute, a health systems research nonprofit. "Who's to stop you?"

Laser vision correction surgery, known as Lasik, is an exception. The surgery is not covered by insurance, which means everyone who wants it must pay out of pocket.

The result: It's easy to find out how much the procedure will cost — Lewis advertises his rate on the homepage of his website — and prices in a given geographic area are relatively competitive.

A survey of Lasik providers in the Philadelphia area found prices for both eyes with one year of follow-up care that range from Lewis' $3,000 up to $6,000.

Similarly not covered by insurance, Botox injections for cosmetic purposes range from $11 to $17 a unit.

Those may seem like significant differences – at 100 percent and 55 percent, respectively – but they're minor compared with the range of cash charges for some services covered by insurance.

The cash price of a sleep study to diagnose disorders such as apnea (not including doctors' and reading fees) can be $577 or $4,196, according to data from the Philadelphia Inquirer/6ABC Action News health transparency tool at philly.com/healthcosts.

That is a 627 percent difference.

A common blood test, according to our data, can cost $11 or $118 when paid for in cash, depending on where you go, a 973 percent difference.

Dave Lange, of West Philadelphia, was shocked by the bill he received for an echocardiogram last fall.

Penn Medicine had billed his insurer, Aetna, $11,201 for the ultrasound imaging procedure, which Lange's doctor had ordered to detect heart abnormalities that could be contributing to his low blood pressure. Aetna's negotiated rate, however, was $1,176, and so that's what Lange, who hadn't met his high deductible, was billed, under the terms of Aetna's contract with Penn, according to records reviewed by the Inquirer. Penn did not respond to questions from the Inquirer about the charges.

Lange, 62, wasn't concerned about whether he could afford the bill, but wanted an explanation of numbers that, to him, seemed arbitrary.

"It just feels like a matter of principle," Lange said, explaining why he brought his bill to the Philly Health Costs project. "Why are they charging so much? Maybe it's my little stand in trying to raise some questions about the cost of procedures."

After getting the bill in mid-November, Lange said, he tried to find out why the procedure was so expensive, especially if his insurer's rate was one-tenth of the original charge. He's still waiting for  answers, he said.

"The scary thing is, what do I know?" Lange said. "It almost feels like you need to be employed in the health-care industry to know what the tactic is, what the right questions are."

Health economists point to the relative uniformity and easy availability of Lasik prices as an argument for greater price transparency in all health-care services.

"When you have transparency, everyone gets to see what the price is," de Brantes said. "It creates some compression more toward the average."

Large health systems often have some of the most expensive prices, in part because they charge a higher facility fee – a relatively new line item in the world of health billing – than smaller health clinics. Their reputation and demand for their services also can command a higher price than lesser-known providers.

But when it comes to Lasik, prices at Wills Eye Hospital, the premier eye-care center in Philadelphia, are in line with those of other providers.

Among 18 Lasik providers surveyed for the Philly Health Costs project, 14 charge $4,000 to $5,000 for surgery on both eyes, plus a year of follow-up care.

Wills Eye charges $4,500 for both eyes, plus a $250 consultation fee. And now, it's even running a highly competitive special: $2,000 for both eyes.

Kierstin Zetterberg decided to have Lasik at Lewis' practice after being turned off by the $6,000 quote she'd received at a large, national provider.

Zetterberg, a 40-year-old physician's assistant, had heard radio commercials advertising Lasik at $245 an eye, "but you read the fine print, there's always a catch," she said.

"I felt that spending $6,000 was too much, but I didn't want to go with a gimmicky place," said Zetterberg, who lives in Ardmore. A friend recommended Lewis, and she decided to go with him after an initial consultation.

When choosing a provider, patients consider lots of factors, such as personal recommendations, reputation, and the gut feeling they get from a doctor and their staff, said Jeff Kullgren, an assistant professor of internal medicine at the University of Michigan.

Often, they're not considering price at all.

"Even when people have a strong incentive to do so, they're not using price and quality information," Kullgren said.

Competitive pricing of Lasik surgery isn't necessarily because consumers are shopping around, but because providers think they might, he said.

Lewis once put the theory to the test by raising his Lasik rate from $3,000 to $5,500 for both eyes.

"Nothing changed," he said. "Patients came anyway. It didn't make any difference."

Lewis, who is affiliated with Wills Eye, said he ultimately reverted to his old price. He worried that patients would run into each other and feel cheated if they found out they'd been charged markedly different rates.

"I thought it was just totally weird," Lewis said. "I was very comfortable where I was — I thought it was fair and honest, and I liked that differentiation."

It's been about a week since we launched our Philly Health Costs project, and the response has been terrific. Thousands of you have been searching our database of cash prices for at least 30 common, shoppable procedures.

And many of you also have been sharing your own billing experiences in the "crowdsourcing" part of the database, and we cannot thank you enough. Your shares – and we want to hear about every kind of procedure and test, and every kind of payment including employer-based insurance, Medicare, Medicaid, cash, you name it – will help us build the Philly Price Check database into the robust trove of information that will help consumers all over the Philadelphia area.

One extra request: Though we certainly allow anonymous submissions and we will never reveal who you are without your permission, we have noticed that some of what has been sent in requires a little extra clarification. As we all know, medical bills are ridiculously complicated. Without seeing the actual Explanation of Benefits (EOB) document (which you can upload), it can be hard for us to tell, for instance, what your insurance paid and what your obligation is. So we would be grateful if you could include an email address or phone number where we can contact you.

Here are a few more tips to help you get the most out of this resource: