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Many Physicians Don't Routinely Consider Insured Patients' Out-of-Pocket Costs

Only 4 in 10 Physicians Consider Patient Costs When Recommending Diagnostic Tests

News Release
April 9, 2007

Alwyn Cassil (202) 264-3484 or

WASHINGTON, DC—Increased patient cost sharing is likely to miss the mark in safely reducing health care spending because many physicians do not routinely consider insured patients’ out-of-pocket costs when recommending expensive medical care, according to a study by researchers at the Center for Studying Health System Change (HSC) and the University of Chicago Hospitals in the April 9 Archives of Internal Medicine.

While almost 80 percent of physicians consider patient costs when prescribing a generic over a brand-name drug, far fewer consider patient costs when deciding what diagnostic tests to recommend (51.2%) or deciding whether to hospitalize a patient when outpatient treatment is an option (40.2%), the study found.

"Most physicians reported routinely considering insured patients’ out-of-pocket costs in clinically straightforward prescribing decisions, but only half or fewer do so in more complex situations that allow greater clinical discretion," said Hoangmai H. Pham, M.D., M.P.H., the study’s lead author and a senior health researcher at HSC, a nonpartisan policy research organization funded principally by the Robert Wood Johnson Foundation, which solely supported the study.

"Because physicians consider patient costs less frequently in making decisions about more expensive services, it’s likely that increased patient cost sharing will be limited as an effective cost-control tool," said Pham, who coauthored the article with G. Caleb Alexander, M.D., M.S., of the University of Chicago Hospitals; and Ann O’Malley, M.D., M.P.H., an HSC senior researcher.

The study, "Physician Consideration of Patients’ Out-of-Pocket Costs in Making Common Clinical Decisions" is based on HSC’s 2004-05 nationally representative Community Tracking Study Physician Survey, which collected information from 6,628 practicing physicians. The survey response rate was 53 percent.

Noting that previous research has shown physician decisions affect how 90 percent of every health care dollar is spent, the authors point out that "whether increased cost sharing can effectively control health care spending depends on whether patients and physicians can together consider costs during clinical decision making."

During the survey, physicians were asked: How often do you consider an insured patients’ out-of-pocket costs for copayments and deductibles" in (1) "prescribing a generic over a brand-name drug if a generic option is available?" (2) "deciding the types of tests to recommend if there is uncertainty about a diagnosis?" and (3) "choosing between inpatient and outpatient care settings when there is a choice?"

Each of the clinical decisions studied entail different levels of physician discretion. Generic drugs typically are equivalent to brand drugs, while different diagnostic tests or care settings may involve significant trade-offs in safety or convenience. "For example, a physician trying to determine if a patient’s chest pain is cardiac in nature may order a simple treadmill stress test; a stress test with an echocardiogram to visualize pump function; or a higher risk but more definitive cardiac catheterization. Similarly, a patient with community-acquired pneumonia may be appropriately treated as an outpatient or admitted to a hospital, depending on the presence of comorbidities, severity of the infection, and presence of family or other support in the home," the article states.

Other key study findings include:

  • Primary care physicians were more likely than medical specialists to consider patients’ costs in choosing prescription drugs (85.3% vs. 74.5%), care settings (53.9% vs. 43.1%) and diagnostic tests (46.3% vs. 29.9%).
  • Physicians working in large groups or health maintenance organizations (HMOs) were more likely to consider out-of-pocket costs in prescribing generics than physicians in solo/two-person practices, but those in solo/two-person practices were more likely to consider patient costs when choosing tests and care settings.
  • Physicians providing at least 10 hours of charity care a month were more likely than those not providing any charity care to consider out-of-pocket costs in both diagnostic testing (40.7% vs. 35.8%) and care setting decisions (51.4% vs. 47.6%).
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The Center for Studying Health System Change is a nonpartisan policy research organization committed to providing objective and timely research on the nation’s changing health system to help inform policy makers and contribute to better health care policy. HSC, based in Washington, D.C., is funded principally by the Robert Wood Johnson Foundation and is affiliated with Mathematica Policy Research, Inc.


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The Center for Studying Health System Change Ceased operation on Dec. 31, 2013.