Wednesday, February 6, 2013

Price Variation Is Not Just an Out-of-Network Issue

A recent New York Times article described high fee variation for some out-of-network providers, highlighting a cost issue that is definitely an unsolved problem and particularly costly for patients. But the problem is not limited to out-of-network providers. Another area of variation should also be examined; namely, price variation within networks. For example, in looking at specialty drug pricing within network, research at Truven Health has found as high as a ten-fold variation in pricing for some specialty oncology drugs.

Variation in price - and in quality - result from the fragmented, US approach to health care; we don’t see these kinds of issues in other developed countries. Price transparency will become more important as Accountable Care Organizations (ACOs) develop their risk contracting models. Further, I expect that tools to help consumers understand price variation in health care will play an increasing role in advancing payment reform.

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