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WEIGHING THE COSTS

Consumers and their insurance companies in Jackson County may pay far more or less for medical procedures depending on the hospital, a new state report indicates.

Inpatient hip replacement surgery, for example, ran about $26,400 at Providence Medford Medical Center, while at Asante Rogue Regional Medical Center it ran about $13,400, the report says. Providence had the cheapest heart stress test in the area at $567, while the same test ran $764 at RRMC. 

Even within the same hospital, cost for the same procedure could vary by tens of thousands of dollars. At a hospital in Bend, for example, a coronary bypass ranged from roughly $23,000 to over $100,000, the report shows.

The report, issued by the Oregon Health Authority, shows median payments made by commercial insurance companies to hospitals around the state for 47 common inpatient and outpatient procedures in 2014.

RRMC had some of the highest and lowest medians in the state. The median payment for hip replacements was more than $17,000 less than the state median, and heart valve surgery was a whopping $56,500 less. Yet for inpatient chemotherapy, the median payment to RRMC was $16,000 higher than the state's median.

State Senate Bill 900, passed in 2015, mandated annual reporting of payments for the most common inpatient and outpatient procedures. The Oregon Hospital Payment Report for 2014 is the first of these reports.

Charts are broken down by procedure and frequency, comparing the median payments made to each acute care hospital against the state median. Only hospitals receiving 10 or more payments for a certain procedure in the calendar year were included.

The data set reflects amounts paid by commercial insurers; it does not include Medicare, Medicaid, Veterans Affairs or workers' compensation. Nor does it include co-pays, deductibles and co-insurance amounts.

Jesse Ellis O'Brien, policy director of Oregon State Public Interest Research Group, says he's reluctant to recommend the report as a shopping tool for consumers. But it does give a general sense of what hospitals are charging for a given procedure.

"It's a step in the right direction," he says. "At best, it's a very rough guide to what you'd have to pay yourself."

There are myriad factors that determine how much a hospital gets paid by commercial insurers, says Steven Ranzoni, a hospital policy adviser who helped compile the report.

Geography is one of the biggest factors. Pay scales for medical professionals and operating costs differ by area, and shortages or availability of staff can send prices up. Ranzoni says wages account for 40 to 45 percent of operating expenses for hospitals. Access to professionals who can perform the procedure varies as well.

"Depending on your location, it can be difficult to get a service provider to you," Ranzoni says. "(Rural areas are) paying very high hourly rates to get essentially a city doctor to come out a couple days a week here and there to gap-fill needed services."

Demographics are equally important. Across Oregon, Ranzoni says roughly 43 percent of payments to hospitals come from Medicare, another 23 percent from Medicaid, and the bulk of the rest from commercial companies.

The Rogue Valley has a higher percentage of Medicare recipients than statewide, he says. A sampling of inpatient Medicare charges in 2015 showed they accounted for roughly 60 percent of total inpatient charges at the area's four hospitals.

Figures for some procedures cited in the report might be disproportionately affected by the Medicare factor, says Providence Health & Services communications director Gary Walker.

"It is important to keep in mind that, by and large, hip replacements tend to be paid by Medicare, which is not reflected in this commercial payment data," he says.

A spokeswoman for Asante Health System, which runs the other three hospitals in the area, said the only person who could speak to the report was on vacation.

The volume of procedures paid for also affect the price tag. Most hospitals have negotiated prices with insurance companies, a contract which may change year to year. Some of these contracts are based on the number of services performed — akin to buying in bulk, Ranzoni says.

"Economies of scale plays a factor here. If you operate at a higher volume, you can usually get a lower price per service," Ranzoni says.

Mammogram was the most common procedure in the state, with upwards of 86,000 insurer payments made. Median amounts between the four Rogue Valley hospitals varied by only $15.

Consumers may worry that hospitals charge higher prices when they're the only ones providing a certain procedure in the area, but Ranzoni says that hospitals don't have free rein to set prices.

"The hospital has market power but the insurance company in the area also has market power," Ranzoni says. "It doesn't benefit any hospital to have a price so high that no insurance company will negotiate with them and nobody can get service."

OSPIRG's O'Brien argues that commercial insurance companies often don't have enough leverage to counter a hospital monopoly and risk losing clients — and of lot of money.

"Consumers are counting on insurers to drive a hard bargain on cost and quality," he says, but it is harder to negotiate when there are few alternatives for care. "The hospital can pretty easily walk away from the table."

The health status of patients also affects payments. Given the higher percentage of Medicare charges in Southern Oregon, patients admitted to local hospitals are more likely to have simultaneous or chronic conditions.

The city of Ashland is one organization that exited the commercial insurance system because of costs.

"We were wasting a lot of money on premiums, so we decided to go the self-funding route," Human Resources Director Tina Gray says. Instead of shopping around for the cheapest procedure under their insurance plans, employees are provided with a list of in-network and out-of-network providers, and shop around for providers with the most coverage.

Though the state report does not include any outcomes or quality of service, which can help a patient determine where to go for a procedure, Ranzoni says it gives consumers a sense of what their private insurance company might pay, opening the door for conversations with their providers and insurance companies.

"Many times we just follow the path and don't insert ourselves into that decision making," he says. 

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Cost of Medical Procedures in the Rogue Valley by Mail Tribune on Scribd

Dr. Roger Hall, center left, performs open-heart surgery at Asante Rogue Regional Medical Center in 2014. Mail Tribune file photo