A new study out of Stanford University looks at the rates at which private insurance companies reimburse doctors nationwide, and finds the results utterly baffling. Doctors are paid dramatically different rates for doing the same procedures (some twice as much as others), and there doesn’t seem to be any reason at all for it. Reuters:
The price differences couldn’t be explained by the patients’ age or sex, the physicians’ specialty, the patients’ insurance plan type – preferred provider organizations (PPO) or point of service (POS) – or whether the physician was in the plan’s network.
Geographic location accounted for some of the price variation, but only about one-third of it.
“The point is that (there is) very little that can explain these price differences, no matter what information you put into the model,” Dr. Renee Hsia, professor of emergency medicine at the University of California at San Francisco, told Reuters Health.
What’s clear is that we still know very little about our health care system, about why it functions in such bizarre ways. But even if a complete picture still eludes us, an important cause of these variations is that our system is totally unresponsive to market forces. No other industry has arbitrary price fluctuations of this wind, because no other industry is insulated from consumer pressure by third party payer systems and complicated systems of subsidy and cost-shifting. Any sustainable health care reform has to target that problem.
[Photo of stethoscope and money courtesy of Shutterstock.]