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Issue Brief Finds Wide Price Variations for Same Services, Even Within Same Metropolitan Area

Jaime Rosenberg
Among 6 services commonly used by consumers with employer-sponsored insurance, there was wide variation in median prices across metropolitan areas, and some services had wide variation even within the same metropolitan area.
A new issue brief from the Health Care Cost Institute (HCCI) is highlighting vast differences in what patients pay for specific services depending on where they live.

The report, which analyzed a subset of negotiated rates between hospitals and insurance companies for 6 commonly used services among consumers with employer-sponsored insurance, found up to 25-fold variations in median prices across metropolitan areas. The report also highlighted that prices sometimes vary even within the same metropolitan area.

While the median price for cesarean sections in Knoxville, Tennessee, landed at $4556, the price was nearly 4.5 times that in San Francisco, Oakland, and Hayward, California, with a cost of $20,721.

The report also looked at a common blood test (comprehensive metabolic panel) and a screening mammogram, as well as new patient and established patient office visits. The common blood test was $443 in Beaumont, Texas, nearly 25 times more than the same test in Toledo, Ohio ($18). In Anchorage, Arkansas, established patient office visits had median prices that were 3 times that of those office visits in Miami, Fort Lauderdale, and West Palm Beach, Florida ($165 vs $60).

“It is highly unlikely that these pricing differences are related in any meaningful way to differences in quality or value,” said Niall Brennan, president and chief executive officer of HCCI, in a statement. “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 report examined these prices among 112 metropolitan areas across the country and constructed a price index for 3 service categories: inpatient admissions, outpatient visits, and professional services.

Even after excluding the top and bottom 10% of prices, wide variation remained within metropolitan areas, with up to a 39-fold price difference for the same service. The median price of vaginal delivery in Boston and Cambridge, Massachusetts and Newton, New Hampshire was $8704, but the price ranged from $4701 at the 10th percentile to $15,973 at the 90th percentile.

Meanwhile, the cost of a mammogram varied by more than 4-fold between Allentown, Bethlehem, and Easton, Pennsylvania, with a median price of $177. The median price of new patient office visits was $229 in Minneapolis, St. Paul, and Bloomington, Minnesota, with some visits costing 3 times more than others.

“We’re talking about everyday services, not the latest technology or drug therapy, and not the cases with expensive complications,” said Brennan. “Most Americans would likely find that negotiated rates can be 4 to 5 times more for the exact same service in the same area. Economists agree that while employers bill for commercial insurance, ultimately the burden falls on consumers themselves.”

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