People are usually savvy enough to check whether their hospital or doctor takes their insurance. But it’s often a mystery how much a medical procedure or operation will cost, even with coverage.
A new report from Trilliant Health, a health care analytics company, shows how much prices for the same medical service can vary at different hospitals and surgery centers.
Want a total knee replacement? It can cost as little as $12,870 or as much $101,527. An ankle replacement? An Austin, Texas, hospital charges $22,011 while a New Jersey hospital billed more than $197,000 for the same operation. These wide price swings can leave insured consumers with big bills, loans and medical debt.
Using claims data from two major health insurers, Trilliant Health analyzed inpatient and outpatient rates charged by nearly 2,700 hospitals and 3,500 surgery centers. The report found prices can vary as much as nine-fold for the same operation or procedure. And hospital prices within the same state varied more than three-fold, the report said.
Trilliant also analyzed 10 hospitals listed on multiple best hospital lists and found no link between higher prices and improved health quality.
Allison Oakes, chief research officer for Trilliant Health, said the report aims to inform consumers and employers on health care prices so they can better gauge the value of services they are purchasing. Oakes said health care prices − and the discounted rates negotiated by insurance companies − historically have been a “very well protected industry secret.”
“The fact that we now have information related to price, we can hopefully begin to rein in our spending,” said Oakes.
Hospital prices drive health spending higher
Research shows such price variation is a key contributor to why health care costs so much more in the United States than any other nation. The U.S. spent $4.9 trillion in health care in 2023 − or $14,570 for every person. Despite spending more than any other nation, U.S. life expectancy is the lowest among large, wealthy nations, according to the Peterson-KFF Health System Tracker.
Employers who pay for health insurance for working-age adults historically didn’t have prices when deciding which hospitals and surgery centers to include in their workplace insurance plans’ networks.
Consumers with high-deductible health plans often pay thousands of dollars out of pocket before coverage kicks in. Or they often are charged coinsurance, which requires they pay a percentage of a medical bill.
Over the past 25 years, the cost of employer health insurance premiums has nearly tripled the rate of workers pay raises, according to a 2024 study in peer reviewed Health Affairs. A major contributing factor: hospital prices.
Under federal price transparency rules adopted earlier this decade, health insurance companies must disclose prices negotiated with hospitals and other health providers. Trilliant’s analysis included prices negotiated by two national health insurers: UnitedHealth Group and Aetna.
Will price transparency spur competition, lower prices?
Researchers not involved in the Trilliant report have analyzed price transparency data and reached similar conclusions about widespread price differences.
One study by Johns Hopkins University found prices of X-rays and CT scans varied more than 10-fold nationwide. The study found prices for the same scan in the same hospital nearly tripled based on different plans from the same insurance company, said Ge Bai, a Johns Hopkins University professor of accounting and health policy and management.
Bai said the study underscores the lack of competition in health services.
“We have a long way to go before we can reach a competitive market for health care prices,” Bai said.
Rice University’s Baker Institute compared prices of three Houston hospitals and found large price differences negotiated by three health insurers: Blue Cross Blue Shield of Texas, United Health and Humana. The biggest price gap: an overnight stay covered by a Humana PPO plan ranged from an average of $17,628 to $57,898 at different Houston-area hospitals.
Vivian Ho, a Rice University economist who has studied hospital pricing, said employers can use pricing information to tailor their health insurance offerings to workers.
“There is a great deal of opportunity for employers to take this information and start restructuring their benefits,” Ho said.
A large New York labor union attempted to steer employees away from New York-Presbyterian to other hospitals as part of a cost-savings move. The union, Local 32BJ of the Service Employees International Union, requested the Justice Department investigate New York Presbyterian over claims that anti-competitive behavior kept hospital prices high. The Justice Department has launched an investigation into the high-profile hospital chain and its insurer contracting practices, according to a subpoena reviewed by the New York Times.
A New York-Presbyterian spokesperson declined to comment.
Another study of Massachusetts health plans that examined the use of tiered pricing that charged consumers higher copays if they chose more expensive hospitals. Consumers could choose copays of $250, $500 or $750, with the higher copays linked to more expensive hospitals.
After three years, overall spending dropped by more than 8%, an indication consumers were willing to choose lower-cost copays and hospitals.
Ho said the tiered copay approach is easier for consumers to understand health prices − and what steps they can take to lower their costs.
“The average consumer doesn’t understand the problem,” Ho said.
Consumers are quick to blame their insurer when health prices rise, Ho said. And while insurers have been scrutinized for practices such as prior authorization and service denials, the main driver of health insurance premiums are hospital charges for both inpatient and outpatient services, Ho said.
“The hospitals and the consolidated health care systems are charging very high prices,” Ho said. “And there’s nothing in your health insurance benefit to stop you from going to the highest-priced providers.”
Email consumer health reporter Ken Alltucker at [email protected].
This article originally appeared on USA TODAY: A $101,000 knee replacement? Why hospital charges vary so much.
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