The New York Times Posted an Article Explaining Hospital Prices for Patients on Private Insurance Plans Such as Blue Cross, United Healthcare, Cigna and Aetna.
The Article Rightly Points Out the Huge Variability in Hospital Prices:
1. Same Hospital, Same Procedure, Different Insurance Carriers - A Colonoscopy at the Univ. of Mississippi Medical Center with Cigna Costs $1,463 and with Aetna Costs $2,144.
2. Same Hospital, Same Service, SAME Insurance Carrier, Just Different Plan Type - An MRI at St. Luke's Hospital in Milwaukee with UHC PPO Costs $4,029 and with the UHC HMO Costs $1,092.
3. Same Insurance Carrier, Same Service, Different Hospital - A Rabies Prevention Treatment at Intermountain Health in Utah Costs $5,000 and at the University of Florida Medical Center Costs $10,000,
WHY? Why the Variability?
The NY Times Article Does Not Explain, But Here is Why...
Hospitals and Insurance Carriers Negotiate Total Annual Contract Value.
Each Individual Service (e.g. Colonoscopy, MRI, Rabies Treatment) Goes Through a Process of 'Horse Trading' to Come Up with a Total Contract that Has a Value of $X (e.g. NYU and United Might Come to a Total Annual Contract Value of $500M).
Each Hospital and Each Insurance Carrier Does Their Own Unique Horse Trading of Prices for Each Service, But It's the Total Contract Value That Matters to Both Parties... Not the Wild Swings in Individual Prices.
To Learn More, Watch the Video.
Sources: https://www.nytimes.com/interactive/2021/08/22/upshot/hospital-prices.html
Disclosure: Dr. Bricker is the Chief Medical Officer of Virtual Care Company First Stop Health.
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