Oregon insurers pay widely varying amounts for procedures

Insurance companies continue to pay hospitals widely varying amounts for the same procedures within hospitals, among hospitals, and across the state, according to a report released Thursday by the Oregon Health Authority.

In its third year of publication, the Oregon Hospital Payment Report details the median amounts paid by commercial insurers for the most common inpatient and outpatient procedures performed in Oregon hospitals in 2016.

“The Oregon Hospital Payment report is another way to shine a light on the cost of health care in Oregon,” said Jeremy Vandehey, OHA’s director of health policy and analytics. “For policymakers, it’s another tool to use as we look for ways to control the rising cost of health care.”

The goal of the report is to provide transparency about hospital reimbursement. Hospital care accounts for as much as 32 percent of health care spending in the state, according to the National Health Expenditure Accounts (NHEA) survey. This annual report is based on data collected in Oregon’s All Payer All Claims (APAC) database.

In 2016, inpatient procedures increased by an average of 6.4 percent from 2015, the most of any category. No other procedure category increased by more than 2.6 percent and imaging and diagnostic procedures showed a slight average decrease in paid amount from 2015. Inpatient procedures already have the highest median paid amounts of any category, and are increasing at a faster rate.

Other highlights of the report include:

Most procedures show sizable variations in paid amounts, both within and among hospitals. Among common outpatient procedures, studies of electrical activity in the heart were reported to have the highest median paid amount at $38,800. Among common inpatient procedures, heart valve replacement surgeries were reported to have the highest median paid amount at $96,000. Among common diagnostic and imaging services, nuclear medicine evaluations of the cardiovascular system were reported to have the highest median paid amount at $2,300. The procedure with the largest dollar increase in median paid amount from 2015 was heart valve replacement surgeries, increasing by $11,200. The procedure with the largest percent increase in median paid amount from 2015 was spinal decompression surgeries, increasing 32 percent.

Reimbursement for a procedure in a hospital depends on many factors. These factors should be considered when comparing charges among facilities. Some reasons that account for variations include:

Rate negotiation: Each hospital negotiates with each insurance provider they accept for each procedure’s reimbursement rate. This paid amount will vary depending on the hospital and the insurance company. Case complexity: An insurance company may reimburse a hospital within a range of amounts for a given procedure up to a predetermined maximum. This range is influenced by how sick the patient is and how many extra services were required to perform the procedure. Geographic factors: The amount a hospital is paid depends on its location. Communities with higher costs of living have higher salary, lease, and utilities costs. These differences in hospital operating expenses should be considered when comparing paid amounts. Economies of scale: Hospital volume influences how much they are paid. Hospitals that perform the procedure hundreds of times will often accept a lower paid amount for each case because they make the difference up in larger volumes.

For more details on the 2016 Oregon Hospital Payment Report, visit the OHA Health Policy and Analytics website at https://www.oregon.gov/oha/HPA/ANALYTICS/Pages/Hospital-Reporting.aspx.