Main menu


How much for this CT scan? It could be $4,000 or $134 at the same hospital.

featured image

Imagine both you and your neighbor needing brain CT scans – common imaging procedures using special X-ray equipment. You both have commercial health insurance and you go to the same hospital for the procedure. But your scan costs 10 times more than your neighbor’s.

This is the level of disparity in prices negotiated between hospitals and commercial health insurers for some common healthcare services, according to a new study published in the journal Radiology. In a quarter of the hospitals surveyed, the maximum price negotiated with a commercial health plan for a brain CT scan was at least 10 times higher than the minimum price.

When looking at radiology services such as CT scans, MRIs, mammograms and ultrasounds, the researchers found that, on average, the highest bargained price was almost four times the lowest bargained price for the same service in the same hospital. The study also found that when a single insurance company manages multiple health plans contracting with the same hospital, there can also be wide price gaps for services within the same hospital-insurance company pair.

Ge Bai, professor of accounting and health policy at Johns Hopkins University and co-author of the study, said the data show that commercial health plans “leave money on the table” when they negotiate prices with hospitals for some popular services. Insufficient negotiation could mean higher out-of-pocket costs for insured patients who bear a portion of the cost of services, and contribute to higher premiums for workers and employers who sponsor health plans, he said.

Bai said that while insurance companies that negotiate lower prices may offer lower premiums that will attract more enrollees, their incentives are not fully aligned with consumers’ needs. Federal rules limit insurers’ profits to a certain percentage of the amount spent on care. And many major employer-sponsored health plans are self-insured, meaning the employer pays the bills.

The new research underscores broader concerns about the rising cost of healthcare. Average healthcare costs for employers are expected to rise 6.5% next year to over $13,800 per employee, according to Aon AON.
For Affordable Care Act marketplace plans, insurers have proposed a median premium increase of 10% for 2023, based on an analysis of preliminary rate applications filed in July by the Kaiser Family Foundation.

New federal disclosure rules give researchers insight into healthcare pricing variations. Starting last year, hospitals were required to post prices for their services online, and this year group or individual health insurance regulators should also start posting new price details.

“If we have more competition, more transparency, the pivot point will change,” and insurance companies will focus more on reducing prices, Bai said. Health insurance trade group AHIP said insurance providers are working hard to negotiate lower prices, but disclosing privately negotiated rates could create a floor rather than a ceiling for prices and raise costs.

In the radiology study, some of the more expensive services tended to have wider price differentials in hospitals. In an extreme example, Bai said, a single hospital is negotiating brain CT scan prices ranging from $134 to $4,065 — about 30 times the top price, the lowest price.

The study found that where a single insurance company has multiple health plans with the same hospital, the average highest negotiated price for a service is 1.2 times the lowest price for the same hospital-insurance company pair.

Within these pairs, the highest price was at least twice the lowest price for services such as abdominal ultrasounds or MRIs of the lower spinal canal in a quarter of cases. The researchers found that the prices a hospital negotiates with a single insurance company for brain MRI or CT scans can vary by five or six times between plans.