How consistent is pricing for healthcare services?

Pricing for healthcare services -- including imaging -- isn't as consistent across the U.S. as it should be, according to a study published October 27 in JAMA Health Forum.

The findings underscore how important it is for patients to understand pricing variability in healthcare, wrote a team led by Benjamin Chartock, PhD, of Bentley University in Waltham, MA.

"Informed healthcare consumerism is a potential lever for managing costs and improving patient satisfaction," the group noted.

More than half of Americans carry private healthcare insurance, for which fees are negotiated rather than set by an entity such as Medicare, the study authors explained. This negotiation contributes to private insurance prices that are often higher than Medicare rates and variable, they said. Despite the passage of policies that seek to make healthcare pricing clear, there's more work to be done.

"The private market lacked meaningful price transparency for patients and purchasers until the recent implementation of Hospital Price Transparency and Transparency in Coverage (TiC) rules … [and lack] of transparency limits the ability of regulators to monitor prices and of employers, patients, and purchasers to impose market discipline on prices," they wrote.

Chartock's group sought to investigate variations in healthcare services using 2022 TiC price data from Humana (which mostly provides Medicare Advantage benefits but also covers about one million individuals with commercial insurance). The group focused on seven procedures including what it called "shoppable" services such as CT scans of the head or brain without contrast and lower-extremity MRI exams and less "shoppable" services such as emergency department visits for acute conditions. The investigators analyzed distributional differences in prices (i.e., mean, median, and percentiles) and coefficients of variation.

The researchers found geographic differences in healthcare service prices, with the lowest mean county-level prices in the central U.S. and Florida and the highest in the upper Midwest and the Southeast. They also found the following variations in services:

Variations in pricing across the U.S. by common healthcare services
Service Median price (range) Coefficient of variation (with 1 as reference)
Colonoscopy $417 ($348 to $528)
CT of head or brain without contrast $164 ($132 to $218) 0.51
Established patient office visit $88 ($69 to $114) 0.46
High-severity ED visit $226 ($169 to $320) 0.53
Hip arthroplasty $1,498 ($1,231 to $1,930) 0.47
Lipid panel $15 ($12 to $21) 0.63
Lower-extremity MRI $333 ($251 to $456) 0.55

More research needs to be done to determine the reasons behind variations in healthcare services pricing, according to the authors.

"Future work may examine the underlying causes of price variation in health care, as it is unclear whether prices are meaningfully associated with value as in nearly every market, or whether prices reflect imbalances in market power and negotiation leverage," they concluded. "If price variation reflects clinical or perceived quality variation, purchasers and policymakers need to find balance between receiving higher-quality care and spending financial resources elsewhere. However, if price variation is driven by consolidation or anticompetitive contracting, then regulators should design policies that ensure competitive health care markets."

The complete study can be found here.

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