BCBS: Huge variation in medical costs shows need for price transparency

The costs for knee and hip replacements--the two fastest-growing medical treatments in the country--vary by more than $20,000 from one place to another, demonstrating that insurers should develop price transparency tools so consumers can shop for the best prices, according to a new report from the Blue Cross Blue Shield Association.

Although some price variation is to be expected between large cities and rural areas, the BCBSA report found that "extreme" price differences sometimes existed within the same market.

In Dallas, for example, a total knee replacement costs anywhere between $16,000 and $61,000. And the cost for a total hip replacement in Boston varied from $17,000 to almost $74,000.

"Extreme price variation in healthcare can have obvious financial consequences for individuals and employers as well as serious implications for the sustainability of a U.S. healthcare system that is exceeding its economic capacity," Maureen Sullivan, BCBSA's senior vice president of strategic services and chief strategy officer, said in a statement accompanying the report.

The report itself was released in an effort to boost consumers' awareness of price variation within healthcare. This is the first time BCBS has disclosed costs for services after it has negotiated with providers.

"There's a lot of momentum for this information and this is the first in a series," of reports the insurance lobby group will be publishing, BCBSA's Sullivan told Forbes. "It's going to give us the ability to point to where there are issues."

The Blues plans' efforts follow the decision by Aetna, Humana and UnitedHealth to aggregate their claims data to create a database of reference prices for certain procedures.

To learn more:
- here are the BCBSA statement and report
- read the Forbes article