High-tech means high cost in U.S.

November 23, 2009
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Most know that high-tech medical scans cost patients and insurers more in the U.S. than anywhere else in the developed world. But a comparative report recently released by the International Federation of Health Plans revealed how much more these procedures cost in the U.S. than in five European nations and in Canada, and the differences are startling.

The report, which is based on pricing data for 2009, compares the fees for abdomen, head and pelvic CT scans and an MRI scan in the U.S. with the cost for the same procedures in Canada, France, Germany, the Netherlands, Spain and the United Kingdom.

The findings show that in most cases, the charges in the U.S. are three, four and five times higher. For the MRI comparison, the average U.S. price is nearly seven times what is charged in the U.K.

Why do such large pricing discrepancies exist for procedures that are largely mechanical? IFHP Chief Executive Tom Sackville said there were various reasons for the differences. He said one reason could be that providers in the U.S. are in a “more powerful position” than purchasers and that real competition in the industry is being stifled.

“However, it is not our job to speculate on that. We are just presenting the facts for others to interpret,” said Sackville in an e-mail sent to the Business Journal from his office in London, where IFHP has its headquarters.

Here is a summary of the report’s findings:

  • CT abdomen scan: The average U.S. cost is $750. The fee in Spain is $161, and $179 in the U.K. It is $248 and $258 in France and the Netherlands, respectively. Germany charges $319. Canada has the second-highest cost at $613.

  • CT head scan and pelvis scan: The average U.S. cost is $950. Spain and the U.K again have the lowest fees at $161 and $179. France charges $212, the Netherlands $258 and Germany $319. Canada has the second-highest cost at $571.

  • MRI scan: The average U.S. cost is $1,200. The fee in the U.K is $179, $235 in Spain and $436 in France. The Netherlands charges $567, Canada $824 and Germany $839.

“What we wanted to point out is this: Health costs are much higher in the U.S. than in comparable countries, not just because U.S. doctors are prescribing more treatment per care episode (perhaps because the system incents them to do so) than their counterparts elsewhere, but because (doctors), hospitals and pharmaceutical companies charge U.S. health payers far more than they should for each procedure or drug, and are getting away with it,” Sackville said.

The IFHP report also lists the reimbursements that Medicare pays for scans, and those payments fall roughly in the middle of the fee range charged in the European counties. Across the imaging procedures, the fees in the Canadian system are higher than Medicare.

The report also contains a comparison of physician fees, hospital charges, total physician and hospital costs for four procedures, fees for tests and cultures, and drug prices. In all cases, costs are much higher in the U.S. than in the comparative nations.

“Somehow your health care debate has failed to focus on (the pricing differences), which unless controlled will eventually price an even greater proportion of American families out of health care as we know it,” said Sackville.

The IFHP was founded in 1968 by a group of health insurance industry leaders. Members are in 30 nations, and the membership totals about 180 companies and associations. George Halvorson, chairman and CEO of the Kaiser Foundation Health Plan, is IFHP president.

IFHP members in the U.S. include Aetna, the American Association of Health Plans, the Blue Cross & Blue Shield Association, BCBS of Wyoming and Massachusetts, the HIP Health Plan of New York and the Kaiser Foundation Health Plan Inc.

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