What you pay for medical procedures can vary drastically from city to city, hospital to hospital, even doctor to doctor - and there's not a whole lot you can do about it, according to a new report in Consumer Reports magazine.
Nancy Metcalf, the magazine's senior program editor and author of the article, says she was stunned by some of the numbers.
"What we found was there's no such thing as a price for a health care service. Prices are all over the map and vary depending on where you have the service, and it's much more likely to be more expensive if you have it in a hospital versus a doctor's office. The most consumer unfriendly thing is that it's often impossible to find out what the service will cost ahead of time."
That makes it difficult, Metcalf says, for consumers to be smart health care shoppers when they don't to know how much services cost, and insurance companies often don't share negotiated prices for lots of things.
"It's like a trade secret. If you are a provider you may not want consumers to know you're more expensive than the provider down the street," Metcalf said. "If you're an insurance company you don't want providers knowing what deals you made with other providers. They have really held this information very close to the vest. The market negotiation has nothing to do with patients; it's a negotiation between providers and insurance companies."
Metcalf checked prices on member websites of some of the largest insurance companies in the country: United Healthcare, AETNA, Cigna and Blue Cross/Blue Shield plans. She says she was shocked by how much prices varied for services--even within one health plan. She found staying within your plan's network is no guarantee you'll save money.
"It's not so much that it guarantees you lower prices, it guarantees you are not going to have to pay anything extra beyond what your plan says you have to pay--like co-pays. If you go out of network, all bets are off. This is an area that blindsides consumers, they don't understand it and they can end up with unbelievable bills."
The most common types of managed care plans are health maintenance organizations (HMOs) and preferred provider organizations (PPOs). If you have a PPO and use the services of providers in your network, you're usually better off, because network providers accept the plan's negotiated price as payment in full.
According to this new report, if a PPO says it will pay 60% to 70% of the allowable amount for out of network providers, that does not mean they will pay 60% to 70% of what that provider charges. It's actually a fixed percentage of whatever the insurer decides is reasonable, and that price is usually much less than what you are charged. That can leave patient on the hook for a large balance due.
"Customer satisfaction is a bit higher for HMOs. On average, HMOs do a better job and have at least as many satisfied customers as PPOs do," Metcalf says. "Because you can't go out of network, very rarely are you blindsided by weird bills."
Just how big the range of costs for the same procedure can be is stunning, according to Consumer Reports. They say Healthcare BlueBook, a company that tracks what large group health plans pay, found that in one Midwestern city, members in health care plans paid anywhere from $840 at a doctor's office to $4,481 at a medical center for a colonoscopy.
In Hartford, CT, the negotiated "network" price for a regular birth at one hospital was $5,249, but cost $8,941 at a hospital a few miles away. And following an emergency room visit to a hospital in her network, a woman from San Jose, California, was charged $9,000 for a computerized tomography (CT) scan. A CT scan produces images of the bones and soft tissue inside your body from different angles. She later found that an imaging center near her home offered the same type of scan for $318.
Other things to watch out for: What Metcalf calls "stealth" out of network charges. She found that while the hospital you go to may be in your network, some of the health care professionals inside that hospital who treat you, like radiologists, orthopedists or anesthesiologists, may not. "The doctor can come after you, and it may be a lot more than the insurance company is willing to reimburse you."
So how can you avoid some of these traps? Make sure you understand your health plan. Know the rules and cost-sharing features. If possible, stay in-network; the negotiated prices are all you pay for, so no surprises. Some plans post price information online, so look up and compare prices, and find doctors that are a little bit less expensive.
"Don't make the mistake of thinking that the more expensive providers are somehow better," Metcalf says, "Because that's been looked at and they are not. They just are better bargainers."
Robert Zirkelbach is Vice President of strategic communications at America's Health Insurance Plans (AHIP), the national trade organization represents the insurance industry. He actually agrees with that sentiment: "Higher prices do not necessarily mean higher quality care for patients."
Zirkelbach said there needs to be a much greater focus on the underlying cost of medical care.
"The health care reform debate discussion focused almost entirely on the premiums, and largely ignored the high prices that are being charged for medical services," Zirkelbach said. "We need to shine a spotlight on these prices so that we can have a discussion on how best to address this issue. There is a lot of data showing that increasing provider consolidation has resulted in significantly higher prices for services."
So if you think an out-of-network bill is outrageous, fight it. You can also try to negotiate the price with an out-of-network doctor in advance. Do your homework--especially if you're facing a complicated procedure with doctor that's not in your network. You can go online to HealthCareBook.com or FairHealthConsumer.org and find out what the billing codes are for specific surgeries.
"None of this is easy, said Metcalf. "And it's kind of infuriating that consumers have to jump through these hoops, but that's the way we've decided that our health care system is."