Decoding the price of heart tests and procedures

Before you shell out money for a service — a home repair or a plane ticket, for example — chances are you shop around first to find the best price. You can't do that for medical services, however, because of the way our health care system works. Often, you don't even know how much your health insurer will pay and how much will be your responsibility until the bill arrives.

The new federal Transparency in Coverage rule, which took effect in January 2021, aims to address this problem. Issued by the Centers for Medicare and Medicaid Services, the rule requires hospitals to (1) make the prices for every item and service they provide available to the public and (2) create a consumer-friendly tool to enable patients to look up their projected costs for common tests and procedures.

Transparent, divergent prices

Because cardiovascular disease is the most expensive chronic disease for America's health care system, clarifying the actual costs associated with diagnosis and treatment makes sense. To that end, researchers at the Richard A. and Susan F. Smith Center for Outcomes Research at Harvard-affiliated Beth Israel Deaconess Medical Center took advantage of data made available under the new transparency rule. By searching the websites of 20 top-rated hospitals in the United States, they were able to compare the prices for six common heart tests and procedures. These prices are the result of negotiations between an insurance company and a hospital or health system. Their findings, published in the September 2022 JAMA Internal Medicine, revealed wide price variations.

"The variation in prices for identical cardiovascular tests and procedures across different hospitals was, quite frankly, stunning," says senior author Dr. Rishi Wadhera. Across the hospitals, there was a 10-fold difference in the median price of an echocardiogram (heart ultrasound). Price differences were even greater for procedures such as implanting a pacemaker or percutaneous coronary interventions (a category that includes minimally invasive procedures to open clogged heart arteries, such as placing a stent).

Just as striking were the large price differences within a given hospital, depending on which commercial insurance company a patient had. "In one hospital, the price of a stress test varied fivefold," says Dr. Wadhera.

Stakeholder power, not quality of care

It's hard to argue that these price variations reflect differences in the quality of care, given that the team looked at top-rated hospitals from the annual ranking in U.S. News & World Report, Dr. Wadhera points out.

Instead, the prices likely reflect which stakeholder — the hospital or insurance company — has stronger negotiating power in the board room. For both entities, factors such as location, size, and popularity influence that power dynamic — which, in turn, affects the market dynamics that dictate costs.

One argument for the transparency rule was to give insurance companies more negotiating power to lower the prices demanded by hospitals, says Dr. Andrew Oseran, the study's lead author. Another was to empower consumers and catalyze competition. But for now, accessing the cost data isn't easy, and about 20% of the hospitals they studied didn't provide any price information. Of those that did, the information was extremely challenging to navigate and interpret.

Patients never see the payer-negotiated prices that hospitals and insurance companies agree upon. What you actually end up paying is of course heavily influenced by the specifics of your insurance, including co-pays and deductibles. "However, when insurance companies have to pay hospitals high prices, those costs likely trickle down to patients in some shape or form," says Dr. Wadhera.

Looking to the future

"The ultimate goal of our work is to better understand the extent to which high prices are driving the more than $350 billion spent on cardiovascular disease every year and find ways to reduce it," says Dr. Oseran. For now, the quality of the data limits the types of questions we can answer, but researchers and policy makers are paying more attention to this topic, he says. "We're optimistic that over time, high-quality price data will be easily accessible, allowing us to tackle some of these important policy issues."

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