As new health policy debates come to life in Washington and state capitals, the Blue Cross and Blue Shield Association is trying to use its member companies’ claims experience data to show how strange the U.S. health care system is.
The association commissioned BHI, a data analysis company, to help it analyze members’ experience data for two types of common surgery — hip replacement surgery and knee replacement surgery — to illustrate how much costs can vary from facility to facility.
The analysts looked at claims incurred in 64 markets during the 36 months ending in July 2013. They tried to make “apples to apples” comparisons by using only data for patients outside Medicare and only for patients ages 18 to 65. When possible, they excluded episodes complicated by conditions such as cancer or HIV.
The analysts also used the facilities’ “real” negotiated rates, not the sky-high retail rates the facilities might try to charge patients who came in off the street, out of network.
Even after trying to make apples-to-apples comparisons, they found that costs varied by more than 40 percent in about half of the markets, and by more than 100 percent in about a dozen of the markets.
Physicians, hospitals and other care providers have been fighting efforts to let traditional Medicare, Medicare Advantage plans and the new Patient Protection and Affordable Care Act (PPACA) public exchange plans use narrower provider networks.
The Blues argue in their cost report that the extreme variation occurring in health care prices in many U.S. communities has obvious financial consequences for patients and employers.
“From a macroeconomic perspective, it can have serious implications for the sustainability of a U.S. healthcare system that is exceeding its economic capacity,” the Blues argue.
To see a list of the 10 markets in which the BHI analysts found the biggest facility-to-facility differentials, or knee gaps, for knee replacement surgery facility costs, read on.
10. Oklahoma: Oklahoma City
Knee gap: 108 percent
Typical costs range from $22,103 to $45,895, with an average of $30,077.
9. Texas: Austin-San Marcos
Knee gap: 111 percent
Typical costs range from $21,528 to $45,640, with an average of $37,309.
8. South Carolina: Charleston
Knee gap: 114 percent
Typical costs range from $27,256 to $58,418, with an average of $40,170.