Monday, September 9, 2013 at 9:00 AM
People who have private health insurance pay vastly different amounts for care depending on what hospital they go to, according to a new study released by the D.C.-based Center for Studying Health System Change. The study reviewed amounts paid by private insurers in 13 different markets and found that Cleveland stood out. ideastream health reporter Sarah Jane Tribble has the story…
The report looks at claims data for about 590,000 current and retired autoworkers under the age of 65. They were enrolled in plans sponsored by one of the Big Three: Chrysler, Ford and General Motors.
Senior researcher Chapin White explains that the auto companies funded the study and provided the data in an effort to figure out why their health care costs had skyrocketed in the past decade. What they found, White says, is that insurers lacked negotiating power in markets like Cleveland.
“Hospitals have increasingly been consolidating and joining into systems and building their negotiating leverage and hospitals have very clearly been aiming to put themselves in the position where health plans are incapable of excluding them from a network,” Chapin says.
White and his colleagues found that the highest-priced hospitals in 13 cities are typically paid 60 percent more for inpatient services than the lowest-priced hospital.
That price gap widens for outpatient care, which is when you go to the emergency room with a broken bone or have a surgery and then go home the same day. Across the 13 mostly Midwestern markets the best paid hospitals received almost double for outpatient care than the worst-paid hospitals.
But in Cleveland, the difference was even more drastic.
“On the outpatient side, Cleveland has the single highest priced hospital in the entire study,” Chapin says.
Now, the study’s authors agreed not to reveal the names of hospitals in the study. But they note Cleveland exhibits the most extreme variation in pricing for outpatient services. The most expensive Cleveland hospital was paid outpatient prices three times as high as the least expensive.
Bill Ryan, the president and chief executive of Northeast Ohio’s hospital trade group, criticized the study because it uses prices paid by Medicare, which is the government program for the elderly, as a benchmark for what prices should be. Medicare, he says, simply doesn’t pay enough in most cases.
But the study’s author Chapin White says what Medicare pay isn’t the issue.
“What’s increasingly clear is that health plans are paying unsustainable high prices for the services that people get and it’s eating away at worker’s wages,” Chapin says.
Chapin says, he hopes employers and insurance companies will begin asking hospitals to justify the prices they charge.
Want to read the research?
“High and Varying Prices for Privately Insured Patients Underscore Hospital Market Power,” released September 2013.
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