It’s become one of the most vexing questions in health care: How much does it cost? Of course, the answer depends on a constellation of factors, including who’s asking, who’s being asked and even where the service is provided.

Physicians have to live with some ambiguity, but experts in value-based care define the top-level terms physicians can learn to help patients during clinical encounters

The AMA Code of Medical Ethics provides guidance on dealing with costs and transparency, such as Opinion 11.1.2, “Physician Stewardship of Health Care Resources,” which includes steps to take to ensure prudent stewardship of social resources.

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The following insights are summarized from an article published in the AMA Journal of Ethics® (@JournalofEthics) by medical faculty from the University of Chicago, the University of California, San Francisco, and Harvard Medical School. Their advice highlights the complexity of health care transactions and outlines physician responses.

Cost. If you’re a patient, cost is simply the amount you pay out-of-pocket for health care services. For physicians, it’s the total expense you incur to deliver health care services to patients. If you’re an insurer or a government agency, this is the amount you pay physicians or hospitals for services rendered.

Then consider that patients with health insurance might not pay the full charge, but rather a “copayment”—either a fixed amount for a service, often paid at the time the service is received, or a percentage of the charge.

The amount a patient owes is further affected by the health care setting. If a Medicare patient, for example, is seen in an emergency department and is not admitted or is kept under “observation status,” he or she is considered outpatient, for which copayment might be as much as 20 percent of the total charge.

Charge, or price. This is the amount requested by a physician, hospital or other provider for a good or service. This is the “you pay” amount that appears on a patient’s bill and there might be no clear relationship between this number and cost.

Most hospitals have a “chargemaster”—an itemized list of prices, similar to a restaurant menu, with prices that are many times the amount for which the hospital is paid by insurers. This stratagem enables hospitals to set high starting prices for closed-door bargaining with insurers. Unfortunately, it is also establishes very high charges for self-pay, or uninsured, patients.

Reimbursement. This is what’s paid by an insurer to a health professional for services. It might be tied to each service delivered (known as fee for service), day in the hospital (per diem), episode of hospitalization (for example, diagnosis-related groups), or patient under care (referred to as capitation).

These sources of variability make it difficult to predict how much health care costs, how much a given patient will be charged, how much a given patient actually pays, and how much physicians and health care organizations are paid.

It’s not reasonable to expect physicians to master these variables, but there are two basic actions they can take to keep patients from spending more than is necessary.

Order useful services. “First, we physicians should take ownership of our clinical decisions and make sure they are actually going to make our patients better,” wrote the authors, Vineet Arora, MD, Christopher Moriates, MD, and Neel Shah, MD, MPP. “More than one-third of the health care services we deliver do not help patients get better, so there is clearly room for improvement.”

Screen patients for financial harm. Simply asking, “Do you have difficulty paying for your medications?” can help identify patients who are at risk for cost-related nonadherence. Also, having conversations with patients about their finances can help them decide to switch to cheaper, alternative prescription drugs.

The AMA Code of Medical Ethics is AMA policy. The AMA Journal of Ethics, however, is an editorially independent scholarly publication of the AMA.

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