If you’re looking for a knee replacement, you might want to steer clear of Minnesota, Wisconsin, North Dakota and New Hampshire.
The cost of knee replacements there range on average from $38,883 to $40,600, with New Hampshire the most expensive.
Better places to shop are Arizona, Florida, Maryland and Tennessee, where the price tags for knee replacements range on average from $27,989 to $30,225.
Related: The Big Medicare Mystery—Why the Same Services Cost Double in Some Areas?
There are other bargains to be had in these four states, including cataract removals ($2,422 to $2,978) and pregnancy ultra sounds ($201 to $275). Those same procedures would cost double or triple in Alaska, Minnesota, New Hampshire, North Dakota and Wisconsin, which rank among the priciest states.
These and scores of other state and regional medical cost comparisons are contained in Health Care Cost Institute's new study which analyzed three billion medical claims from Aetna, Humana and UnitedHealthcare during 2012 and 2013 – or about a quarter of the entire commercially insured market.
A few years back the groundbreaking Dartmouth Institute for Health Policy and Clinical Practice study found significant variations in spending in the Medicare program from state to state and even among cities in the same state. This latest report is important because it focuses instead on the commercial health insurance market and reflects the prices actually paid to hospitals and doctors – and not simply the list prices for those services, which often are reduced.
“With the need to better understand variation in commercial prices and the scale and scope of these available data, HCCI has produced this report on the state-level variation in average prices paid for common health care services,” the report stated.
The comprehensive report found that employers and health care insurance companies in the commercial markets pay strikingly varied costs for the same procedures depending on where the patients reside. David Newman, executive director of the Health Care Cost Institute, who headed the study, told Modern Healthcare, “As we think about policy responses to try and rein in increases to healthcare prices, the responses are going to have to be nuanced.”
The study calculated the national average price for 242 common services—everything from lab tests and x-rays to diabetes evaluation, urinary tract infections and breast biopsies — and then showed how much individual state averages varied from those national figures and from other states.
For instance, the average tonsil removal in West Virginia costs at least 47 percent more than the same procedure in neighboring Maryland, according to the report. The average price for a pregnancy ultrasound in Cleveland was $522, while just 60 miles down the road in Canton, Ohio, the average charge was $183, as Modern Healthcare noted.
Yet there were notable bi-coastal price similarities between two of the nation’s largest states, New York and California. Cataract eye surgery costs roughly $3,200 in both states; pregnancy ultra sounds go for between $247 and $275, while knee replacements run from an average of $36,216 in New York to $39,865 in California.
While the cost of U.S. health care has risen over the past couple of years, the Obama administration has been pressing for changes in Medicare through the Affordable Care Act to “bend the cost curve.” Administration officials hope to achieve this by moving from traditional and costly “fee for service” to a more “value based” system that rewards doctors and hospitals for good outcomes rather that the volume of business they do.
Indeed, the Centers for Medicare and Medicaid Services (CMS) on Wednesday unveiled its first formal proposed rule for how to go about linking Medicare provider payments to the quality of patient care rendered. However, the commercial market has relied on providers and insurers to reform on their own, and there has been less progress made on this front.
Medical fees and charges in the commercial market have tended to span the gamut, largely depending on the local cost of living, the availability of health care services, transparency in pricing and other factors.
The authors of the new report said they did not attempt to identify the underlying causes of price variation from state to state. Nor does the study offer any insights into the “acceptable or unacceptable level of variation in prices.”
However, Newman said that geography – and the related issue of access to medical services – obviously plays an important role in that variation. “Everything in Alaska, other than snow, is more expensive than elsewhere in the country,” Newman told Modern Healthcare. Moreover, variations in housing, rent and salaries might justify differing healthcare prices.
Nevertheless, medical tourists may find a better deal for that hip replacement in another state, or even in their own hometown, if they bother to read the report.