Price variations for common medical procedures boost costs by $36 billion a year for Americans with employer-sponsored health insurance, according to a white paper published by Thomson Reuters.
Researchers examined claims data to analyze variations in prices nationwide for a set of 300 procedures that consumers plan and schedule in advance, such as knee replacement surgery, mammograms and MRIs. They found prices in some markets were two to three times higher than the median price for the same procedures. The care setting -- hospital versus clinic or doctor's office -- was a major driver in price.
If prices for 300 common procedures were reduced to their median price nationwide, total medical expenses for the 108 Americans with employer-sponsored coverage would drop by 3.5 percent, or $36 billion a year, the report said.
A review of published literature tracking the relationship between price and quality found no correlation between the two.
"In real-world terms, this data tells us that an individual consumer going in for a surgical evaluation of a knee joint with a standard high-deductible insurance plan can expect to save between $200 and $500 by going to a provider who offers the service at or below median price. The cost savings potential for health plans and employers are staggering," white paper author Bobbi Coluni, senior director of Thomson Reuters, said in a press release. "To realize this potential, however, consumers and employers need access to price transparency."
Access to price and quality information, including estimates that summarize all the costs associated with a service, are keys to reducing costs for consumers and employers. Thirty-four states require reporting of hospital charges or reimbursement rates, and another seven have established a forum for voluntary price reporting, according to the report. California recently passed a law that prohibits any contractual provisions between providers and health insurance plans that limit price transparency.