BURLINGTON, Vt. (WCAX) – Depending on your insurance provider and hospital, the cost of medical procedures can vary immensely. Hospital pricing transparency laws have attempted to lower costs by creating competition. However, advocates say an approach called “reference-based pricing” is the key to lower prices.
Pregnancy and childbirth is a momentous time in any woman’s life. But depending on where she delivers, the costs can vary significantly.
For a soon-to be-mom looking to get a C-section, the maximum negotiated price for the procedure alone costs $3,980 at the UVM Medical Center, $4,409.17 at Rutland Regional Medical Center, and $5,5,950 at Gifford Hospital in Randolph — an almost $2.000 spread.
The price tags are available because of a hospital price transparency law from 2021 to allow consumers to see how much prices can and make an informed decision. But that’s not always possible or practical. Andy Lindquist came down with a fever earlier this year after 10 days with no relief. “I tried to go to urgent care but they told me I needed to go to the hospital,” he said.
The bookseller from Norwich didn’t think — or have the time — to shop around for the least expensive hospital to treat his unknown illness. Rushing to the closest, Dartmouth Hitchcock, he discovered the culprit — an inflamed liver and spleen caused by an advanced viral infection. The diagnosis and treatment came with a price tag of $3,000. “The hospital’s right next town over, so that’s where my primary care has been. So, that’s kind of my first thought,” Lindquist said.
Patients Rights Advocate, a Washington D.C. nonprofit, found that the same procedure in a Vermont hospital can vary by almost 10 times the lowest cost across insurance providers. Among hospitals, the gap is even greater. “A patient could pay $300 for an MRI and another patient at 33 times difference may pay over $9,000 for an MRI in the same hospital or across hospitals,” said the group’s Cynthia Fisher.
The margins of price variation trickle down onto the shoulders of individuals, small businesses, and the entire state. “The variance in the cost by hospital is enormous,” said Vermont State Auditor Doug Hoffer.
One solution being discussed is called reference-based pricing, where an employer provides an insurance plan where medical claims are standardized and negotiated to come out to about 150% of regional Medicare prices. For state employees and educators across the region, price variation in their health care ends up becoming a taxpayer burden. Hoffer says reference-based pricing could save Vermonters millions. “We estimate that if we did that, we could save $16 million a year just for the state. Teachers are twice that big,” he said.
And those teacher costs are only increasing, “Health care expenses are projected to increase to 16% a year,” said Darren Allen with the Vermont-NEA.
Because taxpayers foot the bill for teachers’ health insurance, Hoffer says reference-based pricing is an outside-the-box way of chipping away at the 20% increase in education property taxes projected this year.
But Devon Green with the Vermont Association of Hospital and Health Systems is skeptical. Prices for procedures are negotiated between hospitals and insurance companies. Higher prices for folks with private insurance make up for the costs lost to patients using Medicaid. If reference-based pricing for state employees and teachers ends the negotiations between hospitals and insurance companies, he says the costs for their care would take money out of the hospitals and could shift the burden onto small businesses and individuals. “It would potentially increase the cost for them, or hospitals would have to make hard choices about what services they’re going to provide and how people can access care,” Green said.
For reference-based pricing to become a reality, it would take a combination of legislative action and support from the Green Mountain Care Board and Vermont Education Health Initiative. There are currently no plans to address it in the current legislative session.