Jacqueline LaPointe, Revcycle Intelligence

In Colorado, the costs of an emergency department visit varied significantly by hospital and severity level, with median facility charges ranging from $190 to $4,700 in 2018, according a recent Center for Improving Value in Health Care report examining data from the all-payer claims database (ACPD).

The report also showed that payments for each individual severity level also varied statewide, which was typical of prices for other common healthcare services analyzed with data in the state’s APCD. For example, the most common range of payments for the highest severity code ranged from $1,990 to $4,700, while the highest facility payment for the same severity level in 2018 was almost $48,000, researchers reported.

Emergency department charges are high, but costs are likely much more, researchers warned in the report. The analysis only looked at what hospitals received from commercial insurers and patients for the evaluation and management (E/M) facility portion of the visit.

The analysis did not include amounts for other services which may be performed during the visit, such as lab tests, imaging services, surgical procedures, and other fees that are billed directly by the attending physician or providers.

This isn’t the first time reports have called out Colorado hospitals for high prices and price variation. An October 2018 report published in the Denver Post showed that hospital prices increased by 76 percent in the state over a seven-year period.

A recent RAND Corporation analysis also found that relative hospital prices increased rapidly in Colorado from 2015 to 2017, with facilities in the state charging private payers between 250 and 300 percent of Medicare rates, well above the average mark-up observed across the nation.

But Colorado is not the exception to the rule. Hospital prices are rising across the nation, according to new research, and prices significantly vary within states, regional markets, and even facilities.

An issue brief released by the Health Care Cost Institute (HCCI) earlier this year uncovered up to a 25-fold variation in median prices for the same services across regions. For example, the analysis of commercial claims data showed that a C-section delivery in San Francisco-Oakland-Hayward, California ($20,721) is almost 4.5 times that in Knoxville, Tennessee ($4,556), and a common blood test in Beaumont, Texas ($443) is nearly 25 times more than the same test in Toledo, Ohio ($18).

Healthcare costs also varied within metropolitan areas, with HCCI researchers observing a 39-fold price difference for the same service within a given region.

Price variation spells trouble for employers and patients, as well as the industry at large, HCCI president and CEO Niall Brennan stated.

“It is highly unlikely that these pricing differences are related in any meaningful way to differences in quality or value,” he stated in a press release emailed to journalists. “Employers should be outraged that they and their employees may be paying radically different prices based on factors like which provider they go to.”

Researchers from the Colorado Consumer Health Initiative and the Colorado Business Group on Health came to the same conclusion after researching hospital quality and price performance.

“High prices at specific Colorado hospitals may correlate with higher quality for some services, but price does not appear to predict or even necessarily reflect higher quality for all services – in significant contrast to the experience consumers have with other goods and services in the US economy,” the organizations stated in their report.

The findings also demonstrate the need for greater hospital price transparency, the organizations concluded.

Colorado already requires providers to give patients pricing information for the most common services delivered at the organization. But critics of similar price transparency laws, especially those regulated at the federal level, argue listing chargemaster prices does not help consumers make cost-effective healthcare decisions.

A new proposal from the Trump Administration would take hospital price transparency a step further. The rule would require hospitals to publish their negotiated rates with private payers or face financial penalty.

Hospital groups are opposing the proposed rule, arguing public disclosure of negotiated rates could increase prices by hindering competition. But the Trump Administration maintains that more hospital price transparency will empower patients to select low cost, high quality providers, thereby reducing healthcare spending.

“President Trump has laid out a clear vision for healthcare: a patient-centered system that puts you in control and provides the affordability you need, the options and control you want, and the quality you deserve. Providing patients with clear, accessible information about the price of their care is a vital piece of delivering on that vision, and it’s what the President’s executive order on transparency called for earlier this year,” said HHS Secretary Alex Azar said in a statement.

Whether increased hospital price transparency will help reduce hospital prices and price variation remains to be seen. HHS plans to release a final rule later this year, after which hospitals will have the opportunity to challenge the rule in court.


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