Healthcare Costs Vary Across and Within Metro Areas
HCCI finds a 25-fold variation in median healthcare costs for the same services across metropolitan areas and a 39-fold variation within the same area.
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By - A new issue brief from the Health Care Cost Institute (HCCI) uncovers dramatic variations in the healthcare costs for individuals under the age of 65 years old with employer-sponsored health insurance.
Funded by the Robert Wood Johnson Foundation, the analysis of commercial claims data for select metropolitan areas shows up to a 25-fold variation in median prices for the same services across regions.
For example, the issue brief finds that the median prices for:
- A C-section delivery in San Francisco-Oakland-Hayward, California ($20,721) is almost 4.5 times that in Knoxville, Tennessee ($4,556)
- A common blood test in Beaumont, Texas ($443) is nearly 25 times more than the same test in Toledo, Ohio ($18)
- Established patient office visits in Anchorage, Alaska ($165) is three times greater than in Miami-Fort Lauderdale-West Palm Beach, Florida ($60)
Additionally, the issue brief shows that healthcare costs also varied significantly within metropolitan areas. Researchers found up to a 39-fold price difference for the exact same service performed within a given region even after removing the top and bottom ten percent of prices to exclude outlier effects.
For instance, the issue brief shows that a patient undergoing a common vaginal delivery in the Boston-Cambridge-Newton area in Massachusetts and New Hampshire pays a median price of $8,047. But she could pay as much as $15,973 or as little as $4,701 depending on where the service is performed.
Similarly, the price of a screening mammogram varies by more than four-fold in Allentown-Bethlehem-Easton, Pennsylvania. And some new patient office visits cost over three times more than other new patient office visits Minneapolis-St. Paul-Bloomington, Minnesota, where the median price is $229, HCCI reports.
“It is highly unlikely that these pricing differences are related in any meaningful way to differences in quality or value,” Niall Brennan, president and CEO of HCCI, states in a press release emailed to journalists. “Employers should be outraged that they and their employees may be paying radically different prices based on factors like which provider they go to.”
The issue brief comes on the heels of new healthcare price transparency initiatives.
With national healthcare spending rapidly growing and patient out-of-pocket costs increasing, industry leaders and policymakers are hoping comprehensive pricing information can help patients spend their healthcare dollars wisely.
CMS is leading the healthcare price transparency charge by now requiring hospitals to publish their chargemasters in a machine-readable format on their websites. The federal agency intends for the newly-available pricing information to empower patients to make healthcare decisions based on cost.
But the new hospital price transparency requirement has significant limitations, industry leaders have argued. Patients rarely pay the chargemaster rate for hospital services after providers go through their insurance plans. Therefore, chargemaster rate information does not truly empower patients to make cost conscious healthcare decisions, critics say.
HHS is looking into taking the hospital price transparency requirement a step further by making hospitals reveal the rates they negotiate with payers. But the department is waiting on stakeholder input before releasing a proposal.
For now, research groups like HCCI are stepping in to fill the cost of healthcare information gap.
“By bringing together data from multiple payers, HCCI helps shine a light on these pricing practices,” Brennan states.
