Skip to main content
Sister Publication Links
  • ESG: THE NEW IMPERATIVE
Subscribe
  • My Account
  • Login
  • Subscribe
  • News
    • Current News
    • COVID-19
    • Providers
    • Insurance
    • Government
    • Finance
    • Technology
    • Safety & Quality
    • Transformation
    • People
    • Regional News
    • Digital Edition (Web Version)
    • Patients
    • Operations
    • Care Delivery
    • Payment
    • Midwest
    • Northeast
    • South
    • West
  • Digital Health
  • Insights
    • ACA 10 Years After
    • Best Practices
    • Special Reports
    • Innovations
  • Data/Lists
    • Rankings/Lists
    • Interactive Databases
    • Data Points
  • Opinion
    • Bold Moves
    • Breaking Bias
    • Commentaries
    • Letters
    • Vital Signs Blog
    • From the Editor
  • Events & Awards
    • Awards
    • Conferences
    • Galas
    • Virtual Briefings
    • Custom Media Event: ESG Summit
    • Webinars
    • Nominate/Eligibility
    • 100 Most Influential People
    • 50 Most Influential Clinical Executives
    • Best Places to Work in Healthcare
    • Excellence in Governance
    • Health Care Hall of Fame
    • Healthcare Marketing Impact Awards
    • Top 25 Emerging Leaders
    • Top 25 Innovators
    • Diversity in Healthcare
      • - Luminaries
      • - Top 25 Diversity Leaders
      • - Leaders to Watch
    • Women in Healthcare
      • - Luminaries
      • - Top 25 Women Leaders
      • - Women to Watch
    • Leadership Symposium
    • Social Determinants of Health Symposium
    • Transformation Summit
    • Women Leaders in Healthcare Conference
    • Best Places to Work Awards Gala
    • Health Care Hall of Fame Gala
    • Top 25 Diversity Leaders Gala
    • Top 25 Women Leaders Gala
    • - Hospital of the Future
    • - Value Based Care
    • - Supply Chain Revenue Cycle
    • - Hospital at Home
    • - Workplace of the Future
    • - Virtual Health
    • - Future of Healthcare Staffing
  • Multimedia
    • Podcast - Beyond the Byline
    • Sponsored Podcast - Healthcare Insider
    • Video Series - The Check Up
    • Sponsored Video Series - One on One
  • MORE +
    • Advertise
    • Media Kit
    • Newsletters
    • Jobs
    • People on the Move
    • Reprints & Licensing
MENU
Breadcrumb
  1. Home
  2. Finance
January 22, 2015 12:00 AM

Blues study shows huge price variation for hip, knee surgeries

Bob Herman
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    Few people are able to look under the hood of the healthcare system's price structure, but one of the nation's largest private health insurers has given the public a chance to do so.

    The Blue Cross and Blue Shield Association, the parent organization of 37 independent Blue Cross and Blue Shield insurers, released a study (PDF) this week that detailed the costs of knee and hip replacement surgeries across the U.S. And the results mirror what other studies have shown: There is wild variation in the prices paid for medical procedures.

    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.

    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.

    Richard Raskin, an attorney at Sidley Austin who focuses on healthcare, said the Blue Cross report overall wasn't that surprising. Many differences are due to geographic wage rates and higher regional standards of living. New York City, for instance, is a pricey city for most things, not just elective surgeries.

    Individual hospitals also have to barter for higher prices in some areas depending on their payer mix and teaching status, said Caroline Steinberg, a vice president at the American Hospital Association. A hospital with high rates of Medicare and Medicaid patients is more likely to ask for higher rates from private payers to offset underpayments from government payers. “Each hospital has its own mission, and each hospital must cover its costs,” Steinberg said.

    Raskin said the report raised a big question about the insurers' reimbursement rates. “Why is a Blues plan paying such variable amounts for the same procedure in a geographic area?” said Raskin, who served as an adviser on the Healthcare Financial Management Association's price transparency task force last year.

    Maureen Sullivan, chief strategy officer of the Blue Cross and Blue Shield Association, said in an interview that the study didn't specifically address why payment amounts varied so much in markets. The study was more about “increasing awareness” among its members who have been asking for more information on prices, she said.

    “To really understand variation … you have to go in and look at the hospitals and understand the contracts,” Sullivan said.

    The costs of procedures such as knee and hip surgeries should not be the only part of the growing price transparency movement, cautioned Erica Mobley, director of communications at the Leapfrog Group, an employer-backed organization that promotes healthcare quality and safety. More consumers are enrolling in high-deductible health plans, which require them to pay for more of their healthcare costs out of pocket. Price transparency will help consumers who are shopping for maternity care and these types of scheduled treatments, Mobley said, but quality and safety measures have to be released in conjunction.

    “Displaying cost information is great,” Mobley said. “But it really is important that people and organizations who display this information think more than just cost.” For its part, Blue Cross does rate higher quality providers for a handful of procedures, including knee and hip replacements.

    More of these price reports from payers are expected in the near future. Some of the nation's largest insurers—including Aetna, Assurant Health, Harvard Pilgrim Health Care, Health Net, Humana, Kaiser Permanente and UnitedHealthcare—have partnered with the not-for-profit Health Care Cost Institute to create a database of claims payments, which is expected to be available early this year. Blue Cross and Blue Shield of North Carolina has recently published prices of what it pays providers for several non-emergency services.

    Follow Bob Herman on Twitter: @MHbherman

    Letter
    to the
    Editor

    Send us a letter

    Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

    Recommended for You
    Jason Hollar
    Cardinal Health names new CEO, plans price increases to bolster earnings
    Kaiser Permanente
    Kaiser Permanente has a rough first half as Q2 net loss exceeds $1B
    Sponsored Content
    Daily Finance Newsletter: Sign up to receive daily news and data that has a direct impact on the business and financing of healthcare.
    Get Newsletters

    Sign up for enewsletters and alerts to receive breaking news and in-depth coverage of healthcare events and trends, as they happen, right to your inbox.

    Subscribe Today
    MH Magazine Cover

    MH magazine offers content that sheds light on healthcare leaders’ complex choices and touch points—from strategy, governance, leadership development and finance to operations, clinical care, and marketing.

    Subscribe
    Connect with Us
    • LinkedIn
    • Twitter
    • Facebook
    • RSS

    Our Mission

    Modern Healthcare empowers industry leaders to succeed by providing unbiased reporting of the news, insights, analysis and data.

    Contact Us

    (877) 812-1581

    Email us

     

    Resources
    • Contact Us
    • Advertise with Us
    • Ad Choices Ad Choices
    • Sitemap
    Editorial Dept
    • Submission Guidelines
    • Code of Ethics
    • Awards
    • About Us
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Modern Healthcare
    Copyright © 1996-2022. Crain Communications, Inc. All Rights Reserved.
    • News
      • Current News
      • COVID-19
      • Providers
      • Insurance
      • Government
      • Finance
      • Technology
      • Safety & Quality
      • Transformation
        • Patients
        • Operations
        • Care Delivery
        • Payment
      • People
      • Regional News
        • Midwest
        • Northeast
        • South
        • West
      • Digital Edition (Web Version)
    • Digital Health
    • Insights
      • ACA 10 Years After
      • Best Practices
      • Special Reports
      • Innovations
    • Data/Lists
      • Rankings/Lists
      • Interactive Databases
      • Data Points
    • Opinion
      • Bold Moves
      • Breaking Bias
      • Commentaries
      • Letters
      • Vital Signs Blog
      • From the Editor
    • Events & Awards
      • Awards
        • Nominate/Eligibility
        • 100 Most Influential People
        • 50 Most Influential Clinical Executives
        • Best Places to Work in Healthcare
        • Excellence in Governance
        • Health Care Hall of Fame
        • Healthcare Marketing Impact Awards
        • Top 25 Emerging Leaders
        • Top 25 Innovators
        • Diversity in Healthcare
          • - Luminaries
          • - Top 25 Diversity Leaders
          • - Leaders to Watch
        • Women in Healthcare
          • - Luminaries
          • - Top 25 Women Leaders
          • - Women to Watch
      • Conferences
        • Leadership Symposium
        • Social Determinants of Health Symposium
        • Transformation Summit
        • Women Leaders in Healthcare Conference
      • Galas
        • Best Places to Work Awards Gala
        • Health Care Hall of Fame Gala
        • Top 25 Diversity Leaders Gala
        • Top 25 Women Leaders Gala
      • Virtual Briefings
        • - Hospital of the Future
        • - Value Based Care
        • - Supply Chain Revenue Cycle
        • - Hospital at Home
        • - Workplace of the Future
        • - Virtual Health
        • - Future of Healthcare Staffing
      • Custom Media Event: ESG Summit
      • Webinars
    • Multimedia
      • Podcast - Beyond the Byline
      • Sponsored Podcast - Healthcare Insider
      • Video Series - The Check Up
      • Sponsored Video Series - One on One
    • MORE +
      • Advertise
      • Media Kit
      • Newsletters
      • Jobs
      • People on the Move
      • Reprints & Licensing