Summary: Prices paid by insurers for common procedures vary wildly. Two recent reports from the Blue Cross and Blue Shield Association, which insures one of three Americans, point to the discrepancies.
The reports dealt with angioplasties, a common heart procedure, and with hip and knee surgeries, also common procedures.
“The median amount that a Blue Cross insurer paid for an angioplasty in Los Angeles was between $10,749 and $67,937, a 532% difference and the most extreme variation in the report. In Chicago, Blue Cross reimbursed providers between $15,951 and $49,604 for the same types of angioplasties, a 211% difference. There were 39 metropolitan areas in which angioplasty payments varied by at least 100%,” the angioplasty report said, as quoted in this Modern Healthcare article.
“Angioplasties cost the most in Sacramento, Calif. The median cost for an angioplasty episode of care in California’s capital was $46,506. The cheapest angioplasties were in Birmingham, Ala., costing Blue Cross about $15,495 for every procedure on average.”
Similar wide swings in reimbursement rates were shown in hip and knee replacements.
“For example, Blue Cross paid $11,317 for total knee replacements in Montgomery, Ala., but the same procedure cost the payer $69,654 in New York City, according to the report. Huge differences also existed in the same metropolitan markets. For a total hip replacement in the Boston area, Blue Cross paid providers anywhere from $17,910 to almost $74,000—a 313% difference,” Modern Healthcare said in an article about this type of surgery.
“Even markets with little price variation showed how expensive U.S. healthcare could be. In the Fort Collins-Loveland, Colo., area, the prices for knee replacements only varied 0.3%. But those prices still reached more than $55,600 on average, the second-highest total in the 64 markets studied.
“What’s significant—and unusual—about the data is that the numbers represent prices that Blues plans pay hospitals, not the hospitals’ charges. Hospital charges are generally considered less useful because they don’t reflect what Medicare, Medicaid and private payers actually pay. But charges are not irrelevant either, as they still signal a starting point for rate negotiations. The CMS released inpatient and outpatient hospital charge data for the first time last year.”
Both pointed out that Blue Cross could not identify reasons for the price variations.