A study published in the journal Radiology confirms what we already know — that there’s no rational explanation for wildly divergent costs for the same test at the same hospital or even between hospitals. And with every negotiation, it appears that hospitals hold the winning hand.
The vast difference between the lowest prices for common imaging services is astonishing. Likewise for the highest price, which on average can be nearly four times as much as the lowest. What’s worse is that these disparities exist not only between hospitals, insurers, and employers, but are found in different health plans offered by the same insurer.
The study shows that more expensive radiology services tend to have wider price variations. The most extreme example is a brain CT scan, whose prices ranged from $134 to $4,065 at the same hospital. How is it possible that the highest negotiated cost is over 30 times more than the lowest?
Even Ge Bai, Ph.D., a professor of accounting and health policy at Johns Hopkins University and one of the coauthors of the study, was surprised by its findings. In an interview with Fierce Healthcare, Bai noted that commercial health plans are “leaving money on the table” when negotiating with hospitals. This often contributes to higher out-of-pocket costs for insured patients and higher premiums for both employees and health plan sponsors.
According to Bai, “If insurance companies’ incentives had been perfectly aligned with employers, we would have observed little variation in negotiated rate for a given hospital across different health plans administered by the same insurance company.”
It’s clear that hospitals and insurance companies have zero allegiance to employers and continue to prioritize their profits over the needs of health plan sponsors and their members. Fair Market Payment™ is an immediate and effective solution for avoiding this price gouging variation and healthcare overspending.
