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Payment Disparities Puzzle, Intrigue Charlotte Health Execs

Why does North Carolina’s largest insurer pay an average of $53,000 more for kidney transplants at Duke Hospital than at Carolinas Medical Center? Or twice as much for knee replacements at CMC-University as at Lake Norman Regional Medical Center?

Executives at Carolinas Healthcare System and Novant Health say they’re pondering those questions in the wake of last week’s surprise data dump by Blue Cross and Blue Shield of North Carolina.

They joined national experts in calling the public disclosure of payments to doctors and hospitals across North Carolina unusual, confusing and potentially misleading. Leaders of both Charlotte systems said they, too, have been exploring the new online search tool – – and trying to make sense of what they see.

Blue Cross officials described the decision to disclose payments that have long been a closely guarded trade secret as a move to help consumers hold down costs. “We are getting consumers literally begging us for this information,” Susan Weaver, Blue Cross’ chief medical officer, told journalists last week.

It’s part of a broader push to rein in spending by cutting through the mystery of medical billing, sometimes by government mandate and sometimes at the initiative of people in the insurance or health care fields. Blue Cross unveiled its tool just days after the N.C. Department of Health and Human Services began posting cost data submitted by hospitals, under a 2013 state law called the HealthCare Cost Reduction & Transparency act.

Each insurance company negotiates payments with hospitals, doctors and other medical providers. It’s not unusual for insurance companies to help their own customers compare costs, but it’s rare to see them voluntarily disclose numbers to the public. Novant and Carolinas Healthcare executives said Friday this is the first time they’ve gotten a peek at what their competitors get from Blue Cross.

The database is also unusual in combining bills from providers to tally the full cost of a procedure. For instance, a patient having surgery can expect separate bills from the surgeon, the anesthesiologist and the hospital; the Blue Cross list combines them.

“It’s one of the more comprehensive efforts that we’ve seen and that we’re aware of,” said Bob Seehausen, Novant’s senior vice president of business development and sales.

Perplexing gaps

The gaps between payments for the same procedure are huge.

For instance, the average reimbursement for a kidney transplant at CMC-Main is $106,764, compared with $159,847 at Duke University Hospital in Durham.

The payments listed for a coronary bypass without cardiac catheterization in the Charlotte and Raleigh regions range from about $49,000 at UNC Hospitals in Chapel Hill to more than $79,000 at CMC-Northeast in Concord.

But why? National experts and local health executives say that’s not clear – and that makes the numbers confusing and potentially misleading.

“It’s absolutely appalling that they do not have a clear disclaimer on what the information is,” said Lynn Quincey, associate director for health reform policy at Consumers Union, the policy and advocacy arm of Consumer Reports magazine.

Some differences are easy to deduce. For instance, screening colonoscopies done in doctor’s offices can come in under $1,000, while those done in hospitals can be $5,000 or more.

Healthy patients generally have the procedure done in an office, while those who are medically fragile or have a history of problems with anesthesia may go to a hospital, where they’re paying to have experts on hand in case of complications.

Officials at Carolinas Healthcare say their rates also reflect a high volume of uncompensated care, costs for staying open around the clock and a high level of clinical expertise.

Who benefits, and how?

Carolinas Chief Financial Officer Greg Gombar and Chief Physician Executive Dr. Roger Ray said Friday they’re still trying to make sense of numbers that went public with no warning. Novant’s Seehausen said the same.

“We were kind of caught by surprise,” Gombar said.

In the past, reimbursement negotiations have taken place in private. Seehausen said the Blue Cross disclosure is “absolutely” intended as a tactic to put pressure on those at the high end of the scale.

But he, Gombar and Ray said Blue Cross is just as likely to face questions from those at the low end. “It’s hard to tell yet what role a tool like this might have,” Ray said.

Blue Cross touted the new data as a tool for consumers. They emphasized that the prices listed are only “one data point” for comparison shopping, and acknowledged that they tell nothing about what patients pay out of pocket.

Price reporting alone hasn’t changed consumer behavior in states such as New Hampshire that pioneered public disclosure, according to a Kaiser Health News report. Instead, patients made cost-based decisions only when they reaped the benefits or paid the extra price.

However, that September article reported that hospitals in New Hampshire and California voluntarily lowered prices for fear of losing business once those prices were made public.

The Novant and Carolinas Healthcare executives said they believe it’s helpful for consumers to understand costs, though that’s not likely to be the only factor in medical decisions.

“Personally, I’m not looking for the cheapest surgeon,” Seehausen said. “But I am looking for a good value.”

John Murawski of the Raleigh News & Observer and Julie Appleby of Kaiser Health News contributed.

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