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Viewpoint: Payment disparity is causing healthcare costs to swell — 5 takeaways

Variation in how procedures are reimbursed creates wasteful spending and drives up costs across the U.S., according to Richard Slusky, who shared his viewpoint on HealthAffairs.

Five takeaways:

1. There is significant variation in prices paid for the same procedure. For instance, in 2011, commercial payments for a colonoscopy in New Jersey ranged from $200 in a physician's office to about $3,750 in a hospital.

2. On average, four large national insurers paid 147 percent of Medicare in Miami, according to a 2010 study. Those same four insurers paid 210 percent of Medicare in San Francisco. In some cases, hospitals received more than seven times the amount Medicare paid for outpatient services.

3. Payment variations may be a result of providers' market power over commercial payers. Another theory is that health systems charge private insurers more to recoup losses from public payers.

4. In any case, "This variability and complexity in how healthcare services are reimbursed suggests that billions of dollars in payments to healthcare providers have little or no relationship to the underlying value or cost of those services, adds significant, unnecessary costs to the healthcare market, and makes price comparisons difficult for consumers," Mr. Slusky said.

5. Mr. Slusky proposed a solution: using current Medicare methodology as a framework to determine uniform payment rates for all healthcare services. He suggested establishing a regulatory body that would analyze payment rates and establish limits on payers' reimbursement for certain services. This proposal wouldn't involve eliminating private insurers or increasing costs for public insurers, Mr. Slusky said.

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