Hospitals are overpriced for MRIs and we have reached a tipping point

This week Anthem Insurance announced that in select states it would no longer be paying for MRIs to be performed in hospital facilities. Why would they do that? The answer is simple. Hospitals charge (some would say over charge) a lot more than freestanding imaging facilities do for MRIs and CT scans.

In Virginia for instance a typical shoulder MRI performed in a hospital-based machine will cost around $1,500-$2,000, whereas the same scan performed in a freestanding facility would cost hundreds of dollars. On a state-by-state ranking, Virginia has the seventh highest charge difference in the country (see the attached article). http://www.modernhealthcare.com/article/20170826/NEWS/170829906

Hospitals are allowed to charge higher rates than freestanding facilities by using a “site of service differential”. This simply means that the same product is billed a higher rate for the sole reason that it occurred on a hospital campus. This applies to surgeries, doctor’s visits, and imaging.

In the past, hospitals justified their higher charges by claiming that they needed to do so in order to cover their losses for uninsured care, and higher acuity care that takes place in hospitals. However, these claims have become less compelling as local hospitals have morphed into big business conglomerates posting millions in profits.

Another issue at play is the growth of high deductible insurance plans. Now many patients have to actually pay a large portion of the MRI bill themselves, and it is hard to swallow a two thousand dollar price tag when you could have gotten the same thing for two hundred.

I believe we have finally reached a tipping point, and Anthem’s move this week will be the first of many. Common sense is making its way into the health care market. Insurance companies and patients can no longer be asked to pay more for a service simply because its done at a hospital. We need to find lower cost solutions.

Author

Brad Carofino, MD Dr. Brad Carofino is a board-certified (American Board of Orthopaedic Surgery), fellowship-trained orthopaedic surgeon who specializes in shoulder & upper extremity surgery. Dr. Carofino is an expert in shoulder replacement surgery, minimally invasive arthroscopic rotator cuff repair, and complex reconstructive procedures of the upper extremity.