How much is that hip surgery? A one-in-a-million chance you can find the price.

Photo woman in wheel chair with husband making medical decisions.

How much is that hip surgery? A one-in-a-million chance you can find the price.

By Greg Dattilo, CEBS and Dave Racer, MLitt

This article first appeared in the St. Paul Pioneer Press, 9/12/2021, on the Editorial Page.

“How,” we asked in our 2020 manual about health care, “does a Minnesota provider explain why it requires $43,359 for the same hip replacement performed for $6,666 by a different Minnesota provider?”

Suppose instead of a hip replacement you wanted to buy a car. In the auto marketplace you can get the price of cars ahead of time. Online you could find that a 2022 GMC Acadia SLE is likely to cost you $43,680 (the price of the hip surgery at one of Minnesota’s hospitals). If you’re looking for a 2022 car for about $6,700, you may as well plan to walk a lot, or buy a bicycle (you can get a Bianchi Aria E-Road Ultegra Bike for about $6,500 – the price of the same hip surgery at a different Minnesota hospital).

It is tougher than buying a car to find the price for a hip surgery ahead of time, and no consumer will never know why there is such a huge price difference. What you can know, if you are extremely persistent and patient, is how much each Minnesota hospital charges for the procedure. That is because hospitals must disclose their standard prices.

Effective Jan. 1, 2021, federal regulations required all hospitals accepting Medicare payments to fully disclose their standard charge for everything they do. The disclosure must be in a machine-readable format.

We fully support medical and hospital price transparency. We want individuals to be able to get price information before their surgery. Knowing the price of a procedure before having it is a central premise of a patient-friendly medical care system – just like buying a new car, bicycle, or a dozen eggs.

There is, however, a serious flaw in this hospital price disclosure process and result: The data are incredibly complex and indecipherable to anyone without a post-doctoral degree in health care finance.

We searched online for these hospital price disclosures in Minnesota and learned two lessons.

  1. Though the hospitals are required to post this information on their websites, they make it terribly hard to find.
  2. Once you find the price lists, your eyes quickly glaze over as you attempt to make sense of the overwhelming data.

Lakeview hospital in Stillwater is small. Its published “machine-readable” list of hospital prices takes up 13,468 lines on an Excel spreadsheet. If you knew the procedural terms you would discover, for example, that an “Inflammatory Bowel Disease With McD” carried a price of $21,782.55. But an “Inflammatory Bowel Disease with Cc” is only $8,712.05. About the only conclusion you can draw from this data is you’d better hope your problem is a “Cc” not an “McD,” whatever that is.

Wrestling with 13,468 lines of prices to decide whether to buy your next hip surgery at Lakeview Hospital is a huge challenge. It pales in comparison to St. Mary’s Hospital in Rochester, affiliated with the Mayo Clinics.

There are 1,048,575 lines of data on the St. Mary’s Hospital standard charges disclosure sheet. Don’t try to compare the Inflammatory Bowel Disease procedure cost at Lakeview with St. Mary’s – they call it something else at St. Mary’s.

We discovered, however, that St. Mary’s most expensive charge is $1,500,000 for the “YPROGESTERONE CAPROATE FACILITY.” At Lakeview, the most expensive standard charge is for a “CERTOLIZUMAB PEGOL 2 X 200 MG SC KIT” at $2,333,773.40 – which you can get for a measly $977,851.10 if you pay cash.

At Cleveland Clinics and its affiliated hospital, we found their price data spreadsheet, like St. Mayr’s, has 1.05 million lines, but it has more than 12,000 columns. Excel says the file is too large to display. Good luck comparing their prices to Mayo Clinic.

Spreadsheets with price disclosures is a fine idea and a step forward, but it takes computer skills and software unknown to most of us to find, open, and read it. It takes a medical vocabulary to understand it.

Federal policymakers, in drawing up the regulations for disclosure, felt certain a smart entrepreneur would create an algorithm and app to help make sense of it. Perhaps.

Patients need something simpler.

The Medicare-Percent is a single number that tells a consumer what percent of Medicare a provider will accept as full payment – no matter the service or procedure. The Medicare-Percent is a number that compares the Medicare reimbursement rate paid to a provider to the rate a provider will accept as full payment. Lakeview and St. Mary’s have the same Medicare reimbursement rate, but the rate of Medicare St. Mary’s will accept as payment in full is far greater than Lakeview’s.

For example: If St. Mary’s accepts 300% of Medicare as payment in full, its Medicare-Percent is 300%. If Lakeview accepts 200% as payment in full, its Medicare-Percent is 200%. The patient has to compare only two numbers – 200% and 300%. By this the consumer knows that St. Mary’s is far more expensive than Lakeview.

Once the patient knows the provider’s Medicare-Percent, she or he can judge whether the difference in quality and access between the two is worth it. The Medicare-Percent is all the patient needs to know to price shop. It’s a single number, not an Excel spreadsheet with 1.05 million lines.

(For more information about the Medicare-Percent concept, see The Manual – Health Care 2020: Connecting the Dots, by Dattilo and Racer.

Dave Racer