There are better prices for health care—know where to look

If Monty Hall was offering to make you a deal on health care, your best option might be to avoid the door marked "hospital."

Two new studies show how patients, employers and the federal government can save big bucks on health costs if people choose to get surgeries and other medical treatment at independent outpatient locations, as opposed to hospitals or hospital-operated centers.

Doctor and patient healthcare
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The savings can be hundreds of dollars in out-of-pocket costs directly paid by the patients, and thousands of dollars per patient in costs incurred by their health insurance plan or the federal government's Medicare program.

At the same time, a third new study is revealing how difficult it can be for patients to get hospitals to reveal their prices for treatment in advance of scheduling a procedure.

One of the studies, conducted by the Blue Cross Blue Shield Association, looked at the costs of four common medical procedures — angioplasties, gallbladder removals, hysterectomies and lumbar/spine surgeries — for patients who were hospitalized for the procedure as compared to those who underwent them at an outpatient facility. BCBS analyzed claims data for about 43 million people insured by Blue Cross and Blue Shield plans from 2010 to 2014.

The biggest savings were seen in the area of angioplasties, which cost the plans, employers and patients an average total of $17,530 less per procedure when they were performed outpatient as compared to when the patient was hospitalized. Patients personally saved $1,062 in average out-of-pocket costs — which is the share not covered by their health plan — when getting outpatient angioplasties.

The average total savings for gallbladder removals was $11,262 for an outpatient procedure, with patients saving $934 in out-of-pocket costs, BCBS found. For lumbar/spinal surgery, the total savings realized from going the outpatient route was $8,475, and $320 in out-of-pocket savings for the patient themselves.

Hysterectomies had total savings of $4,505 if they were performed outpatient, with the patient realizing $483 in out-of-pocket cost savings.

BCBS found that the savings sharply rose for each outpatient procedure from 2010 to 2014.

Maureen Sullivan, chief strategy officer and senior vice president of strategic services as BCBS, said that the cost disparities are "so pronounced because the cost of overhead is very different in an outpatient setting from an inpatient setting." In other words, the bigger bills hospitals have to pay to operate their facilities translate into higher prices for health plans than what outpatient facilities charge for the same procedures.

Sullivan said that because of the price disparities, and because the outcomes for outpatient procedures are as good or better than inpatient procedures, several of the procedures examined "are seeing a dramatic increase" in the number of people choosing to get treatment as an outpatient.

For example, 38 percent of all hysterectomies were performed outpatient in 2010, but that share had grown to 64 percent of all such procedures in 2014. Outpatient lumbar/spine surgery grew by 21 percentage points, to 82 percent of all such procedures over the same time period.

The other recent study compared how much the federal Medicare program paid for three common services — cardiac imaging, colonoscopies, and evaluation and management services — when received from a hospital outpatient department as opposed to from a physician's office. Medicare provides health coverage primarily to people 65 years or older.

The study, prepared by researchers at Avalere Health and released by the Physicians Advocacy Institute, found that even after accounting for certain risk factors, Medicare spent more for all three of those services when they were performed in a hospital outpatient department.

That study found that cardiac imaging done in a hospital outpatient department cost Medicare more than three times what such imaging cost Medicare if it was done in a physician's office. The average Medicare payment for those echocardiograms was $5,148 when done in hospital outpatient departments, compared to $2,862 when done in doctors' offices.

Medicare paid almost 35 percent more for colonoscopies and related services when they received that care from hospital outpatient departments as opposed to doctors' offices, or $1,784 compared to $1,322. And the program paid almost 29 percent more, on average, for evaluation and management services for new patients when a hospital outpatient department did that work, or $525, compared to $406.

In a report summarizing the findings, Avalere noted that the higher payments associated with hospital outpatient departments are due in part to the fact that there is a "higher rate of additional procedures" done by those departments than by physicians' offices.

The third study, conducted by the Pioneer Institute, which researches public policy issues, sought information about pricing for MRIs on a knee from hospitals in six major U.S. metropolitan areas, with researchers telling the hospital they were going to self-pay for the imaging.

"Overall, we found that an average consumer seeking price information for a common procedure faced a difficult and frustrating task," the institute said in its report.

Pioneer said that front-line staff at a majority of the hospitals "did not know what to do with our researchers' requests, and many hospitals were ill-prepared to provided the requested price estimates."

The reported noted that in many cases, researchers waited for long periods of time on hold, had to make multiple calls, experienced dropped calls and several internal transfers of calls as they sought the information.

"Our callers were frequently required to provide medical billing codes about which an ordinary consumer would have no knowledge," the report said.