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Big swings in medical prices make for a wild market, but savvy patients can benefit

A lower-back MRI test costs, on average, $1,545 in the Tampa Bay area. The same test costs more in South Florida ($1,750), but substantially less in the Jacksonville area ($1,055). 
Published Oct. 26, 2015

An MRI can cost $413 in the Tampa Bay area.

It can also cost $2,566, depending on where you have it done.

The whopping $2,153 price difference is one example of how health care costs can vary dramatically within the same region, according to a new analysis by the health care information technology company Castlight Health.

The swings can be even more wild from city to city and state to state. In Pensacola, for example, an MRI of the lower back can cost as much as $5,546. Some providers in Utica, N.Y., however, offer the procedure for just $213.

"It is a chaotic landscape, which is why it is so difficult for consumers and employers to navigate," said Castlight vice president Kristin Torres Mowat.

So what gives?

For one, the market for health care doesn't behave like most other markets. Consumers usually don't know how much a procedure costs until after they've had it, and it can be challenging to compare prices beforehand. That means providers can set their rates somewhat independently of normal market forces — the forces that keep prices consistent at neighboring gas stations.

"It's hard to find a market that deviates more from the perfectly competitive structure," said Bruce Vogel, an associate professor of health policy at the University of Florida.

There are theories that can help explain the discrepancies between cities. For example, some procedures — but not all — cost more in metropolitan areas because the overhead costs are higher.

But how do you explain the variance in a single region?

A 2014 study published in the journal Health Affairs found that hospitals with strong reputations or a large share of the market tend to charge higher prices.

Prices can also vary based on the type of facility you choose. An MRI or CT scan, for example, can cost more at a hospital than a radiology center or outpatient center because the hospital has more overhead costs. Some hospitals may also pass along the costs of treating uninsured patients.

The Castlight analysis isn't the first to point out fluctuations. Vogel said the trend has long been driving a conversation about paying providers based on outcomes instead of services.

In the meantime, there is some good news for consumers. The wide price swings provide an opportunity to shop around in nonemergency situations.

"If you know you are going to be planning for a procedure — something like an MRI or a joint replacement — you should treat it like you are shopping for a car," said Kate Mezzanotte, a health analyst for the financial education website NerdWallet. "You should try to uncover the different prices that are available to you."

Tips on how to get the best prices:

Do your homework. Plenty of online resources can give you an idea of how much a procedure should cost. Among them: NerdWallet Health's Best Hospitals tool (nerdwallet.com/health/hospitals) and the site ClearHealthCosts.com. The state Agency for Health Care Administration also publishes price ranges at floridahealthfinder.gov.

Remember, though, high cost doesn't always mean high quality. Research outcomes and patient satisfaction, too.

Pick the right facility. You can sometimes save money by going to an outpatient clinic or imaging facility instead of a traditional hospital. The strategy may not make sense, though, if you are at risk of complications.

Ask for the price before the procedure. Don't be afraid to talk cost with your provider. The subject isn't taboo these days because most patients must meet high deductibles and share a portion of the costs.

"Patients can no longer be passive," Mezzanotte said. "They have to stand up for themselves as consumers."

Negotiate. If you have health insurance, your insurer has negotiated a rate with the provider. But if you are willing to pay cash — and not go through insurance — you may be able to get a deeper discount. Providers typically like the idea of getting their money up front rather than going through the normal claims process, which can take months.

"I always tell people, try to get the cash rate before you even say you have insurance," said Michelle Katz, a national health care advocate and author of the book Healthcare Made Easy.

Katz also recommends telling the provider if you've seen a better price elsewhere.

"If you tell them how much (another provider) is charging down the block, they may beat the price," she said.

Contact Kathleen McGrory at kmcgrory@tampabay.com or (727) 893-8330. Follow @kmcgrory.

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