Costs for the Same Surgery Can Differ 300%

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It is no secret that surgery can be cheaper in a different country or even a different part of the U.S. But, surprising data just published by the Blue Cross Blue Shield Association shows that the cost for the same surgery in the same city can differ by more than 300 percent.

One expects great variations in health care costs from small rural areas versus large urban ones, or private hospitals versus large inner-city facilities. However, the difference in costs for some medical procedures varies greatly regardless of part of city, type of hospital or availability of competition.

For those with insurance who have a copayment of $100 or even $500 to pay, the real cost is hidden. However, for those whose insurance requires them to pay a percentage of the total bill (typically 20 to 40 percent up to a maximum amount) it can be the difference in out-of-pocket costs can be $2000-3000. For those paying for the full cost of the surgery (the insurance company or someone opting or forced to pay directly), the difference for a hip replacement can be up $50,000 in Boston or up to $45,000 for a knee replacement in Dallas.

Insurance companies bear the huge brunt of the difference, but the costs eventually affect insurance premiums. Given the growth of premiums and higher deductibles insureds are bearing, many recommend that patients discuss the actual costs with their providers and insurers before they have a procedure. Very few consumers actually do this. They figure they are in a plan that charges a $30 copay to see an orthopedist, so that is the cost. But for many others, the costs they bear can be three times higher just because they chose the wrong hospital.

The Blue Cross Blue Shield organization looked at the cost for hip and knee replacement surgeries in 64 U.S. areas. The pricing differences seemed unpredictable and almost arbitrary, according to their research release. They looked as those two surgical procedures because of their increase frequency. The number of knee replacements tripled and hip replacements doubled from 1993 and 2009, according to data published in the June 2014 Journal of Bone and Joint Surgery. According to the American Academy of Orthopaedic Surgeons almost a million of the two procedures were done in 2011.

One would reasonably expect replacement surgeries to cost more in New York City than in Alabama given real estate, doctor salaries and other differences. But, why are there tremendous price differences in the same markets (a 267 percent difference between high to low costs for knee replacements and a 151 percent difference for hip replacements in Dallas, Texas)?

The Los Angeles and Long Beach market also had surprisingly large price variations in what the costs can be for the same surgery (thought they did not differ the 300 percent as in Boston). The hospital charges ranged from $17,260 to $46,448 for a hip replacement in the L.A. area, according to Blue Cross Blue Shield claims data. However, less than one hour away by car, the average price dropped to $$21,382 in the San Bernardino/Riverside area of California. Yes, some of that is rural, but it also includes Palm Springs and other areas known for quality care.

By Dyanne Weiss

Blue Cross Blue Shield Association
Business Insider
Los Angeles Times