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Health care costs vary widely, study shows

Posted on Thursday, June 30, 2011

WASHINGTON — Patients pay as much as 683% more for the same medical procedures, such as MRIs or CT scans, in the same town, depending on which doctor they choose, according to a study by a national health care group.

That means patients who pay for a percentage of their care, instead of a co-payment, may end up spending hundreds of dollars more for a certain procedure than they would if they chose treatment somewhere else — often within a few minutes' drive.

"There's been a barrage of studies that show differences from region to region," said Christopher Parks, founder of Change:healthcare. "That makes sense — California's more expensive than Alabama. But this is within a 20-mile radius in your own town."

Change:healthcare looked at claims data from May 2010 to May 2011 for 82,000 employees of small businesses to determine price differences for several procedures: MRIs, CT scans, ultrasounds and PET scans.

MORE: Cost differences within regions for key procedures

For a pelvic CT scan, they found that within one town in the Southwest, a person could pay as little as $230 for the procedure, or as a much as $1,800. For a brain MRI in a town in the Northeast, a person could pay $1,540 — or $3,500.

"It was eye-opening," said Howard McClure, CEO of Change:healthcare.

McClure said health plans are moving toward "reference-based pricing," in which they look at the average price of a procedure for a region, then say that's all they'll reimburse. But if a patient does not know how much a procedure costs, he or she gets stuck with the remainder of the bill if it goes above that average price.

"It helps the small business," McClure said, "but the consumer's left out in the cold."

Providers, he said, often don't know real costs, either. When asked by patients for the cost of a procedure, providers often say they need to check with the insurer. The patient only learns the real cost when the bill arrives, McClure said. Legal reasons often prevent providers from discussing cost differences.

McClure and Parks said they released the study in the hope that insurers, who want prior authorization to make sure a procedure is necessary, will refuse treatment to providers who want higher-than-average payments.

Overall, they found a possible $30 billion in cost savings over the one-year study, and that even one health plan could save as much as $500,000.

"It's important to ask questions," McClure said. "Don't assume that the provider you're going to is the best economic deal."

Michael Painter, a senior program officer at the non-profit Robert Wood Johnson Foundation, said Change:healthcare's study "is exactly what others and we have seen. That's good information."


USA Today

By Kelly Kennedy