June 13, 2015

Not All Health Care is the Same: Variation in Cost

A 40-year old man, in otherwise good health, was injured in a car accident and suffered severe back pain. The ER doctor ordered an MRI of the spine and the patient was whisked off for the test. It’s a sure bet he knew the results of that test long before he saw the bill for the MRI. While the injury to the man’s back was, thankfully, minor, the pain of sticker shock is longer lasting.

Most likely, the doctor ordered what she deemed medically necessary and, again most likely, she didn’t know or consider the cost of that procedure or of the radiologist’s time or even of her own services and that of the ER team.

Depending on where the man was treated in the Wisconsin, all of these costs could vary widely. In 2014, the cost of an MRI of the spine in the state ranged from $2,204 to $7,028. Likewise, last year, the cost of a coronary stent procedure in Wisconsin ranged from $1,510 to $7,130 and the charges for a normal birth of a single baby ranged from $3,045 to $6,347.

These significant price variations had nothing to do with the quality of care and everything to do with the geographical location, how a particular physician was trained, access to care and/or the capacity of the system for services.

Medical systems and individual physicians have varying patterns of practice. Some of this variation is due to the protocols in which the physician was trained. Variation may be due to the type of compensation plan for the physicians—various incentive and disincentive programs reward different behaviors for referrals or procedures. Variation may, also, be due to the availability of particular services and the capacity of system to deliver those services.

So what can we, as health care consumers, do to protect our pocketbooks and avoid sticker shock?

  • First, know which doctors and hospitals are in your insurance network and seek them out whenever possible.
  • Don’t be afraid to ask questions. Some insurance plans and hospitals now make the prices of procedures available.
  • Always ask your physician what are acceptable alternatives to the treatment plan for you.
  • Make sure you can afford your insurance deductible and, when possible, use a cost-estimator tool to know what charges you’re facing in advance.

WHIO’s database of claims data is showing health care providers how their practice patterns and uses of services compare to others in the state and in their geographical area. The more transparent the data, the more able we are to highlight excesses and bring costs down.

Next month we’ll examine variation in the quality of health care in Wisconsin and what consumers can do to get the quality of care they deserve.