Analysis: Wide pricing disparity in common healthcare services

In covering a new Health Care Cost Institute study, the New York Times reports, the price of a metabolic panel ranges from $11 to $952 depending on where you live in the United States. The study analyzed 34 million commercial healthcare claims. Further driving the point home, the analysis found a forty-fold variation in the price of a blood test in Tampa, Florida.

While some health plans provide tools to help their members shop and avoid a bill if the benefit design includes either a deductible or coinsurance, they’re not as widely available and used as one would hope. So many patients don’t know the price of the service, and what they’ll owe, until they get the bill from the provider.   

Takeaway

A couple of thoughts on the findings from this HCCI study.

1. There might be a reasonable explanation for the price variation in commodity lab services called out in the study in some instances. But if there is, it’s not going to fit in a 140- character tweet. And even if it did, a patient/consumer who’s reading about it — or gets hit with the bill — isn’t going to care about the explanation. You must be able to shop to have a market-based system. And to be able to shop around, you have to know the price in advance of the service. The opacity in the current system coupled with the inexplicable variation in prices for services (particularly commodity services) is what’s opening up patients/consumers, who are also voters, to finding alternatives provided by market-based (new business models/products that allow them to shop and avoid overpaying for services) or policy-focused (some version of “Medicare for Some, More or All”) disruptors.
2. On the market side of the equation, there are several companies out there developing AI tools to help health plan members find high-quality, low-cost health services within the contracted network. One example in the news last week was the merger of DocASAP and HealthSparq. As these tools get better, I think we’re going to see more plans deploy them — particularly in PPO products — to steer business away from high-cost providers within their contracted network. Regardless of which path we take to resolution, the current state of things is not a sustainable practice.