Dramatic procedure price differences in Ohio relate to larger price issues

The price for the same procedure can vary greatly depending on where a patient goes, according to research from the Center for Community Solutions.

The study compared the pricing for six different procedures – inpatient appendectomy, inpatient bypass surgery, angioplasty, total joint replacement, cesarean sections and normal delivery – from Ohio's 206 hospitals.

The most drastic price differences were for angioplasties and inpatient bypass surgeries. Depending on which hospital a patient chose, procedures could cost anywhere from about $9,700 to more than $117,000 for angioplasty and between about $13,000 and more than $288,000 for bypass surgery.

Even the procedures that have a smaller price gap still have significant differences. An inpatient appendectomy ranges in price from about $12,700 to about $47,900; total joint replacements run from about $27,300 to about $111,880; a C-section could cost $5,600 or more than $45,000; and a normal delivery ranges in price from about $3,300 to about $41,100.

These prices are not what consumers directly pay for these procedures, the report notes. The actual price that patients pay is determined by their insurance plans and based on what is negotiated between hospitals and insurers.

WHY THIS MATTERS

Despite price transparency policies that intend to drive prices down by empowering consumers with information, the report's author, Loren Anthes, contends that price transparency in healthcare does not accomplish that goal.

"In fact, research suggests that patients are 'predictably irrational,' meaning the choices patients make about services and where to receive them are often not based on complex evaluations of available information and data, including price," Anthes said in the report.

The reason that price transparency doesn't work for lowering procedures' cost varies.

For one, patients can't use the procedure price tag as a factor for their decision since that isn't the price they will normally end up paying. Another reason is that many procedures happen under emergency situations where consumers don't have an opportunity to shop around. Also, patients oftentimes make choices based on components unrelated to medical outcomes, such as the perception of the hospital, proximity and what their insurance covers.

This problem is not unique to Ohio, Anthes said. He suggested three strategies that lawmakers implement to help fix the vast price differences: Create an independent oversight entity; use reference-based pricing; and establish a basic health plan in the marketplace.

THE LARGER TREND

In 2019, the Centers for Medicare and Medicaid proposed the Transparency in Coverage rule that would require most employer-based group health plans and health insurance issuers offering group and individual coverage to disclose the price and cost-sharing information to participants, beneficiaries and enrollees upfront.

The rule is intended to empower consumers to shop and compare costs between specific providers before receiving care.

However, stakeholders say the rule won't actually accomplish that goal. The American Hospital Association, Association of American Medical Colleges, Children's Hospital Association and the Federation of American Hospitals sued CMS over the rule because they believe it will accelerate anticompetitive behavior among health insurers and lead to confusion about pricing among consumers.

ON THE RECORD

"(T)he state has a role to play to develop sound, cost-effective policies that can better manage these critical resources in ways that actually increase competition and innovation," Anthes said in the report. "Not only will this create a better landscape for employers who want to do business in Ohio, but it will protect consumers who rightfully expect to receive a quality service at a fair price when they need it most."

Twitter: @HackettMallory
Email the writer: mhackett@himss.org