May 3, 2016 Kim Krisberg 2Comment

If you’re pregnant and live in Cleveland, Ohio, it’s likely you’ll pay about $522 for an ultrasound. If you live about 60 miles south in Canton, Ohio, it costs about $183 for the same procedure, a recent study found. Why such a significant price difference? Researchers couldn’t single out one overriding factor. But the study does tell us this: place matters when it comes to how much you pay for health care.

The study was published last week in Health Affairs and was based on data from the Health Care Cost Institute, a commercial claims database that includes nearly 3 billion paid claim lines (those are the individual line-item services in your medical bill). Researchers focused on claim data between Jan. 1, 2012, and Dec. 31, 2013, and examined prices for 242 common medical services across 41 states and Washington, D.C. Right off the bat, the study acknowledged that health care costs typically vary across different locations — after all, the cost of doing business (e.g. wages, rent, supplies) is different in each community. Plus, insurers don’t automatically set a price — they negotiate prices with providers and hospitals in each insurance plan, which means those costs vary wildly too.

Certainly from a patient perspective, it’s difficult to tease out why a particular medical service has a particular price tag. And this study shows that even researchers who study these kinds of questions for living are having a hard time pinpointing consistent and justifiable reasons why some of us pay much more than others for the same medical procedure — even if we live a short car ride apart. Here are some examples of what they found.

In examining how states compare to the nation as a whole, researchers found that 95 percent of prices for 241 services in Florida were at or below national averages. In comparison, about 75 percent of prices for 240 services in Ohio were at or below national averages; 30 percent of prices for 232 services in Connecticut were 20 percent higher than national averages; and more than 45 percent of prices for 221 services in Minnesota were 50 percent higher than national averages. California was home to the largest in-state difference in average price, while Virginia was home to the smallest difference.

For example, the price of knee replacement in Sacramento, California, is about $57,504; about 400 miles south in Riverside, California, it costs $30,261. In Dallas, Texas, knee replacement costs about $45,275; about 350 miles west in Lubbock, Texas, it costs $28,456. In Virginia Beach, Virginia, the procedure typically costs $39,298; about 100 miles north in the state capital of Richmond, it costs $39,292 — a difference of just $6.

The study also found some significant price variations for an ultrasound — a service the researchers described as “similar in scope and quality across providers, care settings and geographical areas.” For example, in Jacksonville, Florida, an ultrasound typically costs about $457; less than 200 miles south in Orlando, it costs $180. In Philadelphia, an ultrasound costs about $466; about 100 miles west in Harrisburg, Pennsylvania, it costs $232. And back in Virginia Beach, an ultrasound costs $275; to the north in Richmond, it costs $271 — a difference of $4.

In calling for continued research into what exactly is driving these price variations, the study stated: “The questions that remain for researchers, policymakers, and health care leaders are as follows: Why do prices for the same service differ markedly across distances of only a few miles, and what amount of that difference is justifiable?”

To read the full study, visit Health Affairs.

Kim Krisberg is a freelance public health writer living in Austin, Texas, and has been writing about public health for nearly 15 years.

2 thoughts on “Study: Where you live determines what you pay for medical care

  1. What you see in some of the reference cases is that the insurance company will pay for transport and a hotel for a companion if you travel for lower prices (For example you can do a lot of travel for 30k by going from Sacramento to Riverside Ca, Or from Dallas to Lubbock, Tx (there is a med school in Lubbock, Texas Tech)
    Of course I have expected for a while that some insurers for things like knee replacements would look at say Costa Rica with the travel deal (perhaps even throw in first class flights)

  2. I would be interested to see a cross-reference between the inflated charges and high-prestige hospitals/facilities/physicians. Also an overlay of people without insurance.

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