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Study Finds Huge Disparities In Costs Of Common Surgeries


We all know that costs for surgery vary, but a study released this week documents differences that are stunning. The Blue Cross Blue Shield Association and BHI, the Blue Health Intelligence, looked into the cost of knee and hip replacement surgery around the country. And they found that an operation that will cost, on average, $60,000 in New York City, costs about $16,000 in Montgomery, Alabama, and there are many different prices in between. They also found that within the same city, there are big disparities. In fact, in more than a dozen cities, the price range for one of these operations is over $17,000 - just the range. Maureen Sullivan of the Blue Cross Blue Shield Association joins us from Chicago. Welcome to the program.

MAUREEN SULLIVAN: Thank you, Robert.

SIEGEL: And, first, are people who pay, say, an average of $41,000 for a new knee in San Diego getting a better knee than people who pay, on average, $19,000 in Fresno?

SULLIVAN: You know, that's the first question we looked at - is, is there a relationship between the cost of the procedure and the quality? And there is not a relationship. We have high-quality episodes of care for knee and hip that are low-cost and that there are high-cost.

SIEGEL: And, as for variances within the same market, I gather Boston tops the list. What's the range there for these operations?

SULLIVAN: Yes, for hip procedures in the greater Boston market, its 313 percent. And there, the lowest is about almost 18,000, and the highest closer to 74,000.

SIEGEL: I mentioned the biggest disparity between New York City and Montgomery, Alabama for both knee and hip replacements. It's roughly $60,000 in New York, $16,000 in Montgomery. How much of that $60,000 might be paid out-of-pocket by somebody insured by Blue Cross Blue Shield?

SULLIVAN: It could vary based on the coinsurance and benefit levels, but you could be looking at $6,000, $12,000 depending on how much coinsurance you had on it. And I think a lot of individuals, as they're looking at a procedure, take a look at - what does is it mean for my benefits? And where do I need to go in terms of having the coverage? But, as cost-sharing increases for individuals, we're committed to giving the information so that they can make those decisions on their budget as well.

SIEGEL: What do you say to the observation that the system we have, where the actual price of a procedure depends on who your insurer is and what kind of a plan you have with your insurer, and it's very difficult to get to an absolute price for the system, that that is what permits there to be such variance in the prices? Because it isn't like a shopping mall where you can see - here's what that coat costs here. Here's what that coat costs on the other side of the mall.

SULLIVAN: Well, Robert, that's exactly why, you know, you see the report in front of you. We think, as we increase transparency, we now have the tools to do that, where an individual can then be able to integrate that with the information that they have on their benefits that they can make more informed decisions.

SIEGEL: Is the message here - if you're having a new knee, shop around? There are lots of knees to be had in different places.

SULLIVAN: Yes. I mean, look at the tools that are available. Right now, there are tools that we offer at the local Blue Cross Blue Shield plans. You can actually find out - what does this cost? And what does is it mean for my budget? And you can look at it at different hospitals. And that kind of information helps you become, as an individual, more in control of the decision. And you have more information.

SIEGEL: Well, Maureen Sullivan, thanks a lot for talking with us today.

SULLIVAN: Thank you, Robert.

SIEGEL: Maureen Sullivan is chief strategy officer for the Blue Cross Blue Shield Association. She was talking about a study of variance in prices for hip and knee replacements that the Association did together with BHI - Blue Health Intelligence. Transcript provided by NPR, Copyright NPR.

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