Study finds huge price swings at Minnesota hospitals
- New research released by the Minnesota Department of Health finds wide swings in prices for several common medical procedures.
- While the average cost of a total knee was $23,997, prices paid to Minnesota hospitals ranged from $6,186 to a high of $46,974 — an eightfold difference. The lowest to highest prices for caesarean section deliveries — $4,693 versus $22,831 — represent a five-fold difference.
- The analysis, a collaboration of employers and MDH, was based on commercial claims data only and intended to help employers identify high-value networks that offer both quality care and competitive prices.
The prices in the report — drawn from the Minnesota All-Payer Claims Database — reflect payments made to hospitals and not the total costs patient and employers paid, such as physician services, medications and rehabilitation services, the study notes. Fees for total hip replacement and normal delivery were also included in the study.
The report underscores the need for greater price transparency in selecting healthcare providers.
“Transparency in markets is key to making sure they work effectively,” Stefan Gildemeister, the state health economist and co-convener of the initiative, said in a statement. “By some estimates, pricing failures from the lack of transparent information on health care costs contribute more than 14 percent to waste or inefficiency in today’s health care spending.”
The desire to increase healthcare price transparency and enable consumers to comparative shop for procedures is behind a new Colorado law that took effect Jan. 1. Under Colorado Senate Bill 65, hospitals and other healthcare facilities must post price information for the 50 most used diagnosis-related group codes and 25 most-used procedural technology billing codes. Physician practices and providers must also disclose prices for their 15 most frequent procedures.
In October, Maryland also took steps to improve transparency, launching a state website to search price differences on four common procedures: hip replacement, knee replacement, hysterectomy and vaginal delivery.
The Minnesota and Maryland initiatives and Colorado law are part of a growing movement to increase price transparency and reduce the incidence of surprise medical bills. In a recent Altarum report on healthcare price transparency, only two states — Maine and New Hampshire — earned an “A.” Maryland and Oregon were rated “B” for their efforts to raise transparency, while Colorado, Vermont and Virginia each got a “C.” The other 43 states all received an “F.”
But not all of the onus falls on states and healthcare organizations. According to a national poll by the Bucknell Institute for Public Policy, just over one-quarter of healthcare consumers said they sought cost information from providers. Respondents were most likely to seek information on prices for doctor visits, outpatient services, screening and diagnostic tests, medications and dental care. Least often requested were prices for hospitalizations.
- Minnesota Department of Health Research finds nearly 8-fold price differences at Minnesota hospitals
- Minnesota Department of Health Commercial Case Price Variation among High-Volume Inpatient Treatments in Minnesota Hospitals: July 2014 – June 2015