iLoveBenefits: Industry News Blog

BCBS Association published report showing wide price variation even in same geographies

The BlueCross BlueShield Association released a report showing that some hospitals across the U.S. charge tens of thousands of dollars more than others for the same medical procedures, even within the same metropolitan market. “Extreme price variation in health care can have obvious financial consequences for individuals and employers as well as serious implications for the sustainability of a U.S. health care system that is exceeding its economic capacity,” Maureen Sullivan, senior vice president of strategic services and chief strategy officer for BCBSA, said.

Price Variation among Cities for Common Medical Services

Imaging if the price of milk or eggs varied as do medical services. . .

According to Castlight Health, analysis of in-network price differences in a U.S. commercially insured population shows within the 30 most populous U.S. cities, prices vary greatly for the same service:

Up to 23x for a lipid panel in Dallas (from $15 to $343)

Up to 12x for a CT scan (of head/brain) in Philadelphia (from $264 to $3,271)

Up to 11x for an MRI (of lower back) in New York City (from $416 to $4,527)

Up to 4x for an adult preventive primary care visit in Phoenix (from $40 to $195)

Castlight Health also ranked the most expensive and least expensive cities in the 30 most populous U.S. cities for four common outpatient services:

-For a lipid panel, Indianapolis came in most expensive (average price $89) and Pittsburgh the least (average price $19)

-For a CT scan (of head/brain), Sacramento came in most expensive (average price $1,404) and Orlando the least (average price $611)

-For an MRI (of lower back), Sacramento came in most expensive (average price $2,635) and Seattle the least (average price $907)

-For an adult preventive primary care visit, San Francisco came in most expensive (average price $251) and Miami the least (average price $95)

Source: Castlight Health

We do we continue to do tests and procedures of little or no value

Researchers evaluated the prevalence in Medicare of 26 tests and procedures that have been found to offer little or no clinical benefit, and calculated:

  • There were 21.9 million instances of the 26 low-value treatments during 2009
  • 42% of beneficiaries received at least one such service
  • This cost Medicare $8.5 billion, or 2.7% of overall spending

Using more specific definitions of inappropriate treatments, the researchers calculated:

  • 9.1 million low-value services were provided in 2009
  • 25% of beneficiaries received at least one such service
  • This cost Medicare $1.9 billion, or 0.6%of overall spending

Source: “Harvard: Overused Medical Services Cost Medicare Billions,” Kaiser Health News/Capsules, May 12, 2014,

Variation in health care spending – it exists – trying to understand what to do about it

Variation in Health Care Spending: Target Decision Making, Not Geography

For over three decades, researchers have documented large, systematic variation in Medicare fee-for-service spending and service use across geographic regions, seemingly unrelated to health outcomes. This variation has been interpreted by many to imply that high spending areas are overusing or misusing medical care. Policymakers, seeking strategies to reduce Medicare costs, naturally wonder if cutting payment rates to high cost areas would save money without adversely affecting Medicare beneficiary health care quality and outcomes. Yet, many have cautioned that geographically-based payment policies may have adverse effects if higher costs are caused by other variables like beneficiary burden of illness, or area policies that affect health outcomes.

In 2009, a group of U.S. House of Representatives members asked the HHS to sponsor two IOM studies focused on geographic payments under Medicare, independent of final health reform legislation. The first study evaluated the accuracy of geographic adjustment factors used for Medicare payment. This second study investigates geographic variation in health care spending and quality and to analyze Medicare payment polices that might encourage high-value care that would modify provider payments based on composite measures of cost and quality of geographic-area performance.

Read the Report >>

Is this a case of unwarranted variation

Study finds higher mammogram recall rate at hospitals than clinics

A study reported in the journal Radiology found 8.6% of women who
received mammography screening at a hospital between 2008 and 2011 were called
back for additional tests, compared with 6.9% who were screened using the same
protocols at a community practice. Researchers noted there were higher rates of
previous surgeries and biopsies among hospital-screened patients, suggesting
the cases may have been more complicated. However, they said bringing patients
back in for additional tests raises costs and contributes to patient anxiety. U.S. News & World Report/HealthDay News

Health Status and Hospital Prices Key to Regional Variation in Private Health Care Spending


Differences in health status explain much of the regional variation in spending for privately insured people, but differences in provider prices—especially for hospital care—also play a key role, according to a study by the Center for Studying Health System Change (HSC) based on claims data for active and retired nonelderly autoworkers and dependents.

Read more here:

February 21, 2012 | Categories: Cost,healthcare,hospitals | Tags: , , , | Comments (0)

Why are outcomes at some hospitals so much better that at others?

Editor’s note: This comes from Maggie Mahar’s blog. It points out in a big way the caution about interpretting data. Understanding the implications of whether there is causation or correlation or something else happening that isn’t related. It is about headlines and whether they are misleading…


Going Beyond the “Dartmouth Debate” to the Most Important Question: Why Are Outcomes at Some Hospitals So Much Better Than At Others?

We all have heard that “spending more” on health care does not necessarily lead to better care. In fact, in regions of the country where care is more intensive and more expensive, sometimes outcomes are worse. This is the basic thrust of what has become known as the “Dartmouth research,” and most medical researchers agree. 

But a paper just published in the Annals of Internal Medicine suggests that specific types of higher hospital spending may lead to better outcomes. After examining the records of some 2.5 million patients admitted to 208 California hospitals from 1999 to 2008 a group of researchers from the University of Southern California and Harvard Medical School report that patients who received more costly and aggressive care were less likely to die while in the hospital

Let me be clear: this study is not trying to prove that the Dartmouth research is “wrong.” The investigators, led by John Romley of the Leonard D. Schaeffer Center for Health Policy and Economics at the University of Southern California, begin by acknowledging that “a convincing set of studies demonstrates that U.S. regions that spend more on medical care–using more specialists, diagnostic tests, imaging, and inpatient hospital care–have similar or poorer patient outcomes than areas that spend less. (Here they footnote the Dartmouth Atlas and this article by Dartmouth’s Elliott Fisher,  

Continue reading “Going Beyond the “Dartmouth Debate” to the Most Important Question: Why Are Outcomes at Some Hospitals So Much Better Than At Others? ” »

Why are rates for urban vs rural dwellers so different

Medicare beneficiaries living in rural areas were between 15% and 35% more likely to undergo a broad array of surgical procedures compared with those living in urban areas, according to a recent study.

Source: “Rural-Urban Differences in Surgical Procedures for Medicare Beneficiaries,” Archives of Surgery, abstract only, January 17, 2011,

February 7, 2011 | Categories: healthcare,Medicare | Tags: , , | Comments (0)

Are C-Sections Value Added or Unwarranted Variation

Rising C-Section Rate in NJ Raises Concerns
Originally intended for mothers only as a last option and only under the most direct of doctor recommendations, cesarean sections have steadily become more and more common – accounting for 38.3 percent of all births nationwide – despite clinical objections and concerns to the often-regarded ”unnecessary” surgical procedure. Why? [ Cherry Hill Courier Post | May 23,

Unwarranted Variation in Cardiology

While nearly all cardiologists in a recent survey denied ordering a potentially unnecessary cardiac catheterization for financial reasons, more than 27% reported doing so if a colleague in the same situation would do so frequently or sometimes, and nearly 24% reported doing so out of fear of malpractice.

Source: “Variation in Cardiologists’ Propensity to Test and Treat,” Circulation: Cardiovascular Quality and Outcomes, abstract only, April 13, 2010,

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