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Medical Money Pits
Price Transparency’s Powerful New Ally

One the nation’s largest insurers is getting into the price transparency game. For the first time ever, Blue Cross Blue Shield has made price data available, making public what providers charge the company for different kinds of surgeries. The release confirms that insane price variations plague US health care, via WaPo:

The report, which analyzed three years of BCBSA companies’ claims data in 64 markets, found that the average price for a knee replacement surgery is $31,124. But that price, which doesn’t reflect what the patient actually pays, can vary greatly within the same city. In Dallas, for example, a knee surgery will run anywhere between $16,772 and $61,585 depending on the hospital. That’s a 267 percent price variation, the largest within any of the markets that BCBSA analyzed […]

Wednesday’s report was the first in a series that BCBSA plans to release as it tries to nudge customers into choosing higher-quality, lower-cost providers.

It’s one thing, as USA Today points out, for costs to vary nationwide, with different cost-of-living standards. But it’s quite another for them to vary within the same city. Still these results effectively confirm what we already knew from the Medicare data that was released nearly two years ago. This matters not because we learned anything all that new—though this data more accurately reflects what insurers pay than the Medicare data did—but because it shows that we are making progress nationally on transparency. We now have insurance companies invested in releasing accurate data about prices, and prodding their customers to shop around more when looking for treatment. That’s extremely good news, and a much-needed bright spot in the otherwise gloomy health care landscape.

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  • Andrew Allison

    Given that, as the report notes, the patients are not paying for the procedures, where’s the incentive for them to shop around? Surely the real question is why are the insurance companies paying such disparate prices for the same procedure? In a major metropolitan area like Dallas, it seems feasible, and reasonable, for the company to require patients to choose among lower-cost providers. In response to advocates of patient choice, it seems unjust that all the insured are paying for gold-plated treatment for the few, and the patients who want it are free to pay for it themselves. Of course, another question is whether the gold-plated treatment is really gold-plated. It would be nice to have data on the outcomes of $16,772 knee replacements versus $61,585 ones.

  • FriendlyGoat

    Well, if one insurance company can release data, they all can. If that happened, then every chargemaster list price AND every actual corresponding insurance-negotiated price would be in public view except for those doctors in no networks whatsoever. We also need this in more-or-less real time, by the way. Why should there be any delay exceeding a week, for instance, to the public seeing all transactions as they flow

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