How Much Is That Hip Replacement In The Window

February 23, 2008
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GRAND RAPIDS — Spectrum Health last week threw back the curtain on how much insurance companies and the government pay for some common procedures at the Grand Rapids-based health system.

Spectrum now is posting to its Web site average payments made by commercial insurers, Medicaid and Medicare, according to Spectrum Health CFO Mike Freed. It is the first health system in Michigan to make commercial insurers’ payment information public, said Jim Lee, vice president of data policy and development for the Michigan Health & Hospital Association, the association for the state’s 146 nonprofit hospitals.

“We certainly, as an organization, are committed to transparency in health care, both in quality information and with financial information, so this is kind of a next logical step for us,” Freed said. “We’re trying to do it in the hopes that we can give consumers the information they need to make better health care decisions.”

In October 2006, Spectrum began posting average hospital prices for nearly 250 inpatient and outpatient procedures for adults. Those pages now draw about 2,000 visitors monthly at the Web site,

“What is on the Web site are list prices,” Freed said. “What will be on the Web site tomorrow will be on average what we’re paid if you’re a Medicare patient, on average what we’re paid if you’re a Medicare patient, and on average what we’re paid if you are commercially insured.”

The information about commercial insurers is disclosed as an average of payments by 15 health plans with which Spectrum Health has negotiated payment agreements, Freed said. Contracts with the insurers prevent Spectrum from posting such information for each company.

“We can’t violate contracts and disclose what is confidential information of those insurance companies, so what we’ve done is combined them all together, which will give people a pretty good idea. By doing that, I’m not disclosing particulars for any one insurance company,” Freed said.

Priority Health, owned by Spectrum Health, and Blue Cross Blue Shield cover the largest number of patients, Freed added.

He cautioned that individual bills vary higher and lower from the price or payment averages posted on the Web, depending on individual services. The information does not include doctors’ fees. The Web site includes supporting information, such as contact information for participating insurers, FAQs, and a phone number and e-mail address.

“They can go in, take a look at that, and multiply by whatever the amount is by whatever co-pay responsibility they might have, and they’ll have a very good idea of what they’ll be paying out-of-pocket. They won’t be too far off,” Freed added.

Lee said information about health care costs has long been difficult for consumers to find.

“As more and more consumers are asked to provide out-of-pocket dollars for their health care, many consumers have health savings accounts or high-deductible health plans where they’re required to pay more out-of-pocket. For consumers to make better informed decisions, they need data; they need more information,” he said.

On Jan. 1, the Michigan Health & Hospital Association launched a Web site called, which posts Medicare payments for common procedures at Michigan hospitals and draws 10,000 visits per month. Lee said MHA intends to add information as time goes on.

Freed said other hospitals have balked at publicizing their commercial insurer payments, which are generally higher than payments received from Medicare or Medicaid. He said they fear a backlash from the business community, which pays ever-increasing premiums for health insurance.

“I think a lot of them would be fearful that the response would be, ‘How come you’re making money on the business community? Why shouldn’t any local business pay the same rate as Medicaid pays?’ That’s a fair question to ask,” Freed said.

“To the contrary, I think we should be paid better by the government,” he added, noting that hospitals rely on commercial insurance to offset losses from government reimbursements.

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