Hospital Outpatient Prices Higher Than in Community Settings

Prices for services in a hospital outpatient department (HOPD) can be much higher than prices in a physician’s office or other community-based setting, according to a June 26 study from the National Institute for Health Care Reform (NIHCR).

The study was conducted by researchers at the former Center for Studying Health System Change (HSC), using private insurance claims data from 2011 for about 590,000 active and retired nonelderly autoworkers and their dependents.

Researchers examined prices for forms of four common procedures—knee MRIs, colonoscopies, simple clinical laboratory tests, and physical therapy services—for the study “Location, Location, Location: Hospital Outpatient Prices Much Higher than Community Settings for Identical Services.”

The study suggested that insurers can avoid the higher costs by using narrow networks that exclude higher-price providers, tiered networks with higher cost sharing for patients using higher-cost providers, or reference pricing that requires patients using a provider that charges over the reference price to pay the difference.

Are Higher Prices Justified?

“A key question is whether the higher cost for routine, nonemergency services in hospital outpatient departments is justified when the same services are widely available at much lower prices in community settings,” Dr. James D. Reschovsky, co-author of the study and a former HSC senior fellow, said in a June 24 statement.

The NIHCR study found knee MRIs were over 50 percent more expensive in HOPDs, with an average price of $919, compared to $606 in community settings. Simple clinical laboratory tests were two to three times more expensive on average in HOPDs, the study said. Both the MRIs and the tests had prices that were much more skewed toward the high end in HOPDs than in community settings.

Hospitals say sicker patients and higher overhead costs due to emergency capacity and regulatory requirements account for the higher costs, the release said. However, the study found no difference in health status between the patients receiving knee MRIs and colonoscopies. The study found a health status difference for physical therapy services, likely due to hospital inpatient stays, and for the laboratory tests, but the difference should be irrelevant for the tests because the study looked at standardized services.

Takeaway: A new study explores the difference in pricing for services, including laboratory testing, provided in hospital outpatient settings compared to community-based settings.

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