Last week Blue Cross Blue Shield released a very informative report (The Health of America Report) showing how the same procedure can cost significantly more at one facility over another – even within the same market. Healthcare price discrepancies are not news, but it is encouraging that a large insurer like Blue Cross is making this information public. But more on that in a second, let’s take a quick look at the data.
Scope of the Report
The report includes an analysis of Knee and Hip Replacement surgery costs across the United States. They used 3 years of data in the analysis, and it includes 64 markets across the Nation. (These costs are the amounts BCBS pays to the provider for the surgery – known as Allowed Amounts, not the “charge master price” or ‘list price”. Allowed amounts are negotiated between the provider and insurer.)
Results
The report highlights that costs for these procedures can vary up to 313% within a single market. This specific case is in Boston, MA for a Hip Replacement where the costs may be as low as $17,910 or as high as $73,987. Nearly all markets had a variance of 10% or more, with nearly half having a 50%+ variance.
So what?
Price variations are not news… Why is this report significant?
- Raises Consumer Awareness – Far too many patients are unaware of these price variances until it’s too late. We need all healthcare industry stakeholders helping patients understand their options before their procedure is scheduled. Having Blue Cross Blue Shield support this effort is positive!
- There is Time to Compare – Hip and Knee procedures (along with hundreds of others) are generally planned well in advance (versus a trauma that must be addressed immediately). This means a patient has time to compare options (when they are aware they have a choice!)
- Validates the Need for Shopping Tools – While reports help highlight the problem, what consumers truly need are solutions. Free and open resources to help them shop for care and compare their options.
But wait, not all Knee and Hip Surgeries are the same, right? Isn’t that why it’s more expensive at some facilities?
It is true that each individual case can vary, and there will be outliers, however, the typical Knee or Hip Surgery cases will vary by a relatively small percentage compared to the variances reported in this study. So as a consumer, it’s important not to be mislead when you are comparing options. The setting in which you have the procedure should not mean you are paying 100-300% more for the same procedure!
Plus, many doctors have “rights” – the ability to perform a surgery – at multiple facilities in the same market. Compare the pricing for the procedure with the same doctor at multiple facilities and you will find the charges still vary dramatically.
Why should I care? All of these prices are higher than my deductible or out-of-pocket max so I’ll pay the same amount no matter where I go.
Ultimately, you are paying the bill. Higher healthcare costs mean higher premiums and deductibles. So as consumers we have an opportunity to save money in the short term on lower cost procedures like imaging, and an opportunity to control overall healthcare costs by shopping and comparing when it comes to higher cost procedures.
As the report states, the American Academy of Orthopedic Surgeons found that in 2011 there were 645,062 typical hip replacements and 306,600 typical knee replacements in the US. How many of these patients knew they had a choice of facility, and the cost savings available at one over another?
As more consumers exercise their right to compare, and hold their healthcare guides accountable for transparency the industry will listen and adjust.
Wait a second. The higher priced facilities are better, right?
Very likely not. Experts from all corners of the industry have stated clearly that cost has very little relation to quality – in this case even Blue Cross’s chief strategy officer Maureen Sullivan. In fact, for many procedures the lower cost facilities are arguably a better setting. For example, Ambulatory Surgery Centers (ASCs) specialize in common procedures offering the patient conveniences and quality levels that may not be achieved at the higher cost facility options.
(Transparency of quality and safety are keys educating consumers… and there is a long way to go here… Stay tuned to our Insights Blog for more articles about quality and safety transparency in healthcare.)
My doctor is recommending one of the higher priced facilities. What should I do?
The patient doctor relationship is a very important one, and we all want to believe our doctors have our best interests at heart. While this is very likely the case when they are diagnosing us, too many times it’s not the case when they are recommending the location of a procedure. Today, more doctors are engaged in relationships with the higher cost facilities that incentivize or require them to drive business to these facilities. As a consumer, it’s important to be educated and investigate your options and then discuss them openly with your doctor. You may find an alternative that better suits your needs.
The Bottom Line
Patients today are responsible for more of their healthcare costs – and that trend is increasing. You can have the same procedure, with the same doctor, and the same instruments and pay significantly more or less based on the location or setting of the procedure. Often these locations are within minutes of each other and the higher priced facilities are less convenient for you, the patient. Consumers must recognize these unique aspects of the healthcare market, become better educated, and engage in their care decision making process.
The following images are from the BCBS website and summarize the report. A complete copy of the report is available on their website.
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Do you need Knee Surgery, Hip Surgery or another procedure? Check out the NewChoiceHealth.com Directory and find estimates for facilities in your area.
Interested in learning more about Healthcare Cost Transparency? Check out our 3 part series in our Insights Blog.
