UnitedHealth report: Cut price variation for diagnostic tests, save billions

Consumers could have saved billions in 2017 if price variation for certain services was addressed, according to a new report.

UnitedHealth Group issued an analysis that examined price variation for several common tests: MRIs, ultrasound, CT scans, pathology tests, microscopic examinations, radioisotope scan and mammography. Wide price variation for these services is inflating healthcare costs, the report concludes.

If prices for these services were adjusted to the lower end of the pricing range, in 2017 consumers could have saved $18.5 million, a 49% decrease.

For example, in 2017, prices for echocardiogram varied from $210 to $1,830. A significant number of patients paid toward the lower end, but more than half paid from $480 to the higher limit.

Spending on the seven types of tests included in the study totaled more than $37 billion that year. So, these findings show that adjusting prices toward the lower end and reducing the wide variation could lead to significant cost savings.

Continuing with the example of echocardiograms, if prices for such services were lowered across the board to the lower end of the spectrum at $390, consumers would have save $970 million, according to the study.

Under that model, spending on echocardiograms would decline from $1.7 billion to $760 million, according to the analysis.

“Price variation leads to gross overspending for many consumers, even for common health care services such as diagnostic tests, which play an important role in the diagnosis, monitoring and treatment of disease,” the researchers wrote.

The greatest cost savings could be found for MRI services, according to the study. Lowering prices to the 40th percentile would lead to $4.6 billion in savings, a 47% decline.

These changes could lead to $3.7 billion in savings on ultrasounds (a 50% decline), $3.1 billion in savings on CT scans (a 56% decrease) and $2.7 billion in savings on pathology tests (a 56% decline).

Regional variation in healthcare pricing is not a new phenomenon. A recent study from the Health Care Cost Institute found prices in San Jose, for example, were 65% above the national average, while in other regions that were below the average.

https://www.fiercehealthcare.com/payer/unitedhealth-report-reducing-price-variation-for-diagnostic-tests-could-save-billions