On October 8, 2014

New report examines medical service price variations

By Morgan True, www.VTDigger.org

A new report prepared for the Green Mountain Care Board confirms wide variations in the price of medical services throughout the state and examines policy approaches to regulate them.

Prices that Vermont’s 14 hospitals and Dartmouth-Hitchcock Medical Center in New Hampshire receive from commercial insurers vary between 72 percent and 132 percent of the average price received, according to the report.

The study also found wide variance in payments received by non-hospital medical providers as well.

The report doesn’t examine payments from government programs or the uninsured, as the state’s claims database doesn’t capture payments made by the uninsured and rates for government programs are set by the government.

The report found true price negotiation between payers and providers to be “relatively rare” in Vermont. That’s partly because the state’s largest hospital, Fletcher Allen Health Care in Burlington, is a “dominant player” in Vermont. On the other end of the spectrum, independent physician practices are largely relegated to being “price-takers,” when it comes to what they’re paid by commercial insurers.

The report highlights a series of disconnects between the amount health care providers charge, what private insurance companies pay and what portion of those payments are passed on to covered individuals.

One insurance company paid from $63 to $150 for a 25-minute evaluative office visit, according to a fee schedule based on an individual’s plan type and the region where the service took place, the study shows.

The report suggests that the Green Mountain Care Board develop uniform service groupings and payments for those groupings that can be adjusted for demographic differences in a provider’s service area and the services they offer.

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