In need of an MRI scan on an arm joint? Choose your facility with caution. According to information from the Colorado All Payer Claims Database, average costs for this procedure, as well as many others, vary dramatically throughout the state, from $690 at St. Joseph's Hospital in Denver to $2,530 at Children's Hospital in Aurora to $4,200 at Colorado Plains Medical Center in Fort Morgan.
What explains the variance? "That's the million-dollar question," says Cari Frank, a spokeswoman for Center for Improving Value in Health Care. But a new, free online tool from the Denver nonprofit will allow patients to at least compare the average price and quality of procedures.
CIVHC was founded in 2009 on the recommendation of the Blue Ribbon Commission for Health Care Reform, which Frank calls a "governor-appointed, multi-stakeholder group that was looking at ways to improve healthcare at lower cost in the state." The group is non-partisan and independent from the state, sourcing its funding from various grants and private organizations. In 2010, state legislators created the Colorado All Payer Claims Database, and CIVHC was appointed its administrator, Frank says.
That same piece of legislation requires insurance companies and Medicaid to submit claims to the database on a monthly basis. According to Frank, those claims provide "a comprehensive picture of what's getting paid for and how much is getting paid for it." Among other things, that information includes diagnosis, the patient's treatment, the location of the facility where a procedure was conducted and the cost of service.
Available on CIVHC's website, the new tool allows users to select a service and a zip code from their page's drop-down menu, which takes them to average prices, price ranges and patient experience ratings from a variety of facilities.
Franks says most consumers are unaware of the variation in costs for services and how their choice in facilities may effect them. Even those with high-deductible plans who are not paying out-of-pocket for services may see their premium go up if they opt for a service at a more expensive facility, she notes.
"This gives [patients] an opportunity to start understanding that they should be shopping," she says. "I don't think a lot of consumers know that. We haven't been taught, as consumers of health care, that shopping around for care is important and we've never had resources to do that. I know people think healthcare is very expensive and it is, but our mission at CIVHC is just to educate people that there is a huge difference between where you go. You could save up to $8,000 if you're shopping around for care."
A CIVHC study on health care costs in Colorado and five other states showed that Colorado's costs are 17 percent higher than the group's average.
"I think it's one of the most important things that we can do to start controlling our costs — starting to understand the variation and starting to get the information out," Frank says. "I think the more we educate consumers; educate providers on where they stand; educate health insurance companies who don't know how much other companies are paying; educate employers who are purchasing health care, [giving them] variables that they can share with their employees, like, 'Hey, please don't go to the most expensive imaging center,' especially if they're paying for the bill themselves — I think from all of those angles, we're going to start to go, 'You know, this isn't okay anymore. We need to get this under control.'"
Adam Fox, director of strategic engagement at the Colorado Consumer Health Initiative, a nonprofit focused on health-care policy, says increased transparency can be a double-edged sword, with low-cost facilities citing competitors' higher prices as a reason to raise their own. "We've seen some cases where bringing price transparency encourages some facilities to actually increase what they're asking for," he explains.
But he says CIVHC's new tool will do more good than anything.
"I think this will at least open up more conversation and questions about why costs are so high in some areas," he explains. "I think those questions need to be asked pretty pointedly by now, because we've known that these affordability issues have been plaguing Coloradans for a few years now."
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