Prices can vary wildly for medical procedures

If you're confused about how health care pricing is determined, take heart — or despair — in knowing that even experts have trouble getting straight answers.

"It's complete chaos," says Uwe Reinhardt, a health care economist at Princeton University. One constant, he and other experts say, is the delicate dance of health care provider and insurer to control pricing, with hospitals and doctors groups trying to push prices up and insurers trying to knock them down.

Private insurers often take their reimbursement cue from Medicare, the largest of all insurance programs. Medicare uses a formula estimating physician work, staff salaries and malpractice insurance rates, and considers outside factors — such as government budgeting — to establish what it will pay providers.

Related Stories from Angie's List

• Know medical costs before the procedure
• Prices can vary wildly for medical procedures
  
• Find fair prices for health care procedures
• How to use Healthcare Blue Book on Angie’s List
• How to get upfront medical pricing

But one provider says they typically bill at a much higher rate to recoup maximum reimbursement. "In general, the fees we come up with are fantasy numbers," says Dr. Karl Spector, a highly rated internist in Bel Air, Md. "We make it up."

Patients rarely pay these "fantasy" fees, Spector says, because a doctor's office has contracted with an insurance company to accept a reduced amount. But, experts say, providers can bill uninsured patients for the full amount or insured patients for the balance if they use an out-of-network provider.

Cost shifting is also common. The $20 a hospital billed you for a Band-Aid has very little to do with the Band-Aid, says Charlie Whelan, a health care market analyst with business research and consulting firm Frost & Sullivan in San Antonio, Texas. A pricey charge for supplies could help pay for a hospital's bad debt or building maintenance.

Still, a pricing system shrouded in mystery is also ripe for abuse. One insurance industry study found providers charging eight to 10 times what Medicare reimbursed. "It's really the Wild West," Reinhardt says.

Consumers are often asked to pay a wide range of network prices for the same service. Some examples:

ATLANTA — MRI of the abdomen, price ranges from $1,190 to $2,543

BUFFALO, N.Y. — Routine mammogram screening, price ranges from $100 to $750

CHICAGO — MRI of the lumbar spine, price ranges from $500 to $2,661

CHICAGO — Nuclear stress test of the heart, price ranges from $1,370 to $7,450

DALLAS — Cardiac catheterization, price ranges from $7,305 to $10,591

INDIANAPOLIS — Cardiac echo, price ranges from $560 to $1,449

NASHVILLE, TENN. — MRI of the hip, $455 to $1,302

NEW YORK — Sick child office visit, price ranges from $45 to $200

WASHINGTON, D.C. — Routine mammogram screening, price ranges from $123 to $441

WASHINGTON, D.C. — MRI of the right knee, price ranges from $400 to $1,504

Source: Healthcare Blue Book

 

Angie’s List collects consumer reviews on local contractors and doctors in more than 500 service categories. Currently, more than 1 million consumers across the U.S. rely on Angie’s List to help them make the best hiring decisions. Members get unlimited access to local ratings via Internet or phone, exclusive discounts, the Angie’s List magazine and help from the Angie’s List complaint resolution service. Take a quick tour of Angie’s List and view the latest Angie’s List news .