A new analysis of prices private insurers pay for healthcare services may fuel the already mounting consumer demand for transparency from payers and providers.
Prices for hospital care and outpatient services were hugely different across more than three dozen U.S. markets, even between markets in the same state, according to a report from the Health Care Cost Institute, an independent not-for-profit organization that has a database of medical claims for tens of millions of working-age adults from Aetna, UnitedHealthcare, Kaiser Permanente and Humana.
The institute also found that high-priced hospital markets did not necessarily have high-priced outpatient care.
“There's definitely a lot that consumers and payers, including employers, don't understand about healthcare prices and why they differ within and across markets,” said Steve Wojcik, vice president of public policy at the National Business Group on Health. “This work helps shed some light on it and also points to the need for better information,” he said of the new report.
With healthcare prices drawing increased scrutiny, more states are requiring public reporting, including California, Colorado, New Hampshire and Maine. Even in those states, however, the information is limited and difficult for employers and patients to use. Some employers and health plans that have grown frustrated with price variation have tested so-called reference prices, which limit coverage for certain services to a set price above which patients must pay remaining costs.
The Health Care Cost Institute, which has data for about one-quarter of all privately insured adults, examined the 100 most common inpatient services and the 500 most common outpatient services. The researchers compared prices in each market against what they identified as an “index price.” Markets with prices above the index are higher than average; those with prices below the index are lower than average.
Markets within states on average varied by 38% for inpatient care and 25% for outpatient care, the report said.
The Health Care Cost Institute discovered in previous work that the amount patients spend out of their own pockets can range by hundreds of dollars for five common medical procedures.
The institute's researchers did not attempt to identify the causes of the price variation in the new analysis. Rather, said, Eric Barrette, the organization's director of research, the report might point employers, insurers and healthcare providers to important questions in their own markets regarding the factors at play, which might include the health status of the population and the quality and use patterns of healthcare services.