As CMS price transparency rules go into effect, and demand grows for publishing provider charges, consumers are becoming aware of how widely healthcare prices can vary

With the COVID-19 Coronavirus pandemic saturating the news, it is easy to forget that clinical laboratories regularly conduct medical tests for influenza, the common cold, and other illnesses, most of which are affordable and covered by health insurance. So, how did a common throat culture and blood draw result in a $25,865 bill?

That was the question a New York City woman asked after a doctor’s visit for a sore throat that resulted in a five-figure charge. This should not simply be dismissed as another example of hidden prices in clinical laboratory testing or the true cost of medical procedures shocking a healthcare consumer. The issue is far from new.

For example:

  • An Indiana girl’s snake bite at summer camp in 2019 resulted in a $142,938 bill, which included $67,957 for four vials of antivenin and $55,578 for air ambulance transport, reported Kaiser Health News (KHN);
  • In 2019, Dark Daily highlighted a New York Times article showing the insurer-negotiated price of a common blood test could range from $11 to $952 in different major cities;
  • In 2018, Dark Daily spotlighted a Kaiser Health News story about a $48,329 bill for outpatient allergy testing; and
  • In 2013, Dark Daily reported on a patient’s $4,317 bill for blood work done at a Napa Valley medical center, which a national lab would have performed for just $464.

Prices Vary Widely Even Within Local Healthcare Markets

As the push for price transparency in healthcare increases, exorbitant patient bills—often tied to providers’ chargemaster pricing—add to that momentum. Consumers now recognize that prices can vary widely for identical healthcare procedures, including clinical laboratory and anatomic pathology group tests and procedures.

However, on January 1, 2021, price transparency will get a major boost when the Centers for Medicare and Medicaid Services (CMS) final rule requiring hospitals to post payer-negotiated rates for 300 shoppable services goes into effect. Clinical laboratory managers and pathologists should be developing strategies to address this changing healthcare landscape.

Until price transparency is the norm, examples of outrageous pricing are likely to continue to make headlines. For example, National Public Radio’s (NPR) December 2019 “Bill of the Month,” titled, “For Her Head Cold, Insurer Coughed Up $25,865,” highlighted a recent example of healthcare sticker shock.

New York city resident Alexa Kasdan’s sore throat resulted in a $28,395.50 clinical laboratory bill (of which her insurer paid $25,865.24) for a “smorgasbord” of DNA tests aimed at explaining her weeklong cold symptoms. NPR identified the likely causes for the sky-high charges. In addition to ordering DNA testing to look for viruses and bacteria, Kasdan’s doctor sent her throat swab to an out-of-network lab, with prices averaging 20 times more than other medical laboratories in the same zip code. Furthermore, the lab doing the analysis, Manhattan Gastroenterology, has the same phone number and locations as her doctor’s office, NPR reported.

In contrast, NPR learned that LabCorp, Kasdan’s in-network laboratory provider, would have billed her Blue Cross and Blue Shield of Minnesota insurance plan about $653 for “all the ordered tests, or an equivalent.”

Ranit Mishori, MD, MHS, FAAFP (above), Professor of Family Medicine at the Georgetown University School of Medicine and Senior Medical Advisor for Physicians for Human Rights, maintains patients should not hesitate to question doctors about the medical tests they order for them. “It is okay to ask your doctor, ‘Why are you ordering these tests, and how are they going to help you come up with a treatment plan for me?’” Mishori told NPR. “I think it’s important for patients to be empowered and ask these questions, rather than be faced with unnecessary testing, unnecessary treatment and also, in this case, outrageous billing.” (Photo copyright: Primary Care Collaborative.)

Hospitals Can ‘Jack-up’ Prices

The Indiana girl’s snake bite at summer camp last year became another example of surprisingly high medical bills. Nine-year-old Oakley Yoder of Bloomington, Ind., was bitten on her toe at an Illinois summer camp. The total bill for treating the suspected copperhead bite was $142,938, which included $67,957 for four vials of antivenin and $55,578 for air ambulance transport, KHN reported.

The summary of charges her parents received from Ascension St. Vincent Evansville hospital included $16,989.25 for each vile of anti-venom drug CroFab, five times as high as the average list price for the drug. Until recently, KHN reported, CroFab was the only antivenom available to treat pit viper bites, which created a monopoly for the drug maker’s expensive-to-manufacture product. Though the average list price for CroFab is $3,198, KHN noted hospitals can “jack-up the price.”

While Yoder’s family had no out-of-pocket expenses thanks to a supplemental insurance policy through the summer camp, Yoder’s father, Joshua Perry, JD, MTS, Professor of Business Law and Ethics at Indiana University Kelley School of Business, knows his family’s outcome is unusual.

“I know that in this country, in this system, that is a miracle,” he told KHN.

The push for healthcare price transparency is unlikely to wane. Clinical laboratory leaders in hospitals and health networks, as well as pathologists in independent clinical laboratories and anatomic pathology groups, should plan for a future in which consumers demand the ability to see pricing information before obtaining services, and regulations require it.

—Andrea Downing Peck

Related Information:

For Her Head Cold, Insurer Coughed Up $25,865

Summer Bummer: A Young Camper’s $142,938 Snakebite

Trump Administration Announces Historic Price Transparency Requirements to Increase Competition and Lower Healthcare Costs for All Americans

That’s A Lot of Scratch: The $48,329 Allergy Test

As the Public Becomes More Aware of the Large Variability in how Clinical Laboratories Price Their Tests, All Labs Need Strategy for Complying with CMS’ Pricing Transparency Requirements

Excessive $48,329 Charge for California Patient’s Outpatient Clinical Laboratory Testing Calls Attention to Chargemaster Rates and New CMS Price Transparency Rule

California Patient Gets Outrageous Clinical Pathology Laboratory Test Bill from Napa Hospital, Almost 10 Times Higher than Similar Testing from Quest Diagnostics