The star­tlingly high cost of the ‘free’ flu shot

Orlando Sentinel - - HEALTH & FITNESS -

through higher pre­mi­ums, econ­o­mists say.

“The pa­tient is im­mune from the cost, but they are the losers be­cause even­tu­ally they pay a higher pre­mium,” said Ge Bai, an ac­count­ing and health pol­icy pro­fes­sor at Johns Hop­kins Univer­sity’s cam­pus in Wash­ing­ton, D.C.

Bai said the vari­a­tion in pay­ments for flu shots has noth­ing to do with the cost of the drug but is a re­sult of ne­go­ti­a­tions be­tween health plans and providers.

Typ­i­cally, health in­sur­ers’ re­im­burse­ments to pri­vate health providers are closely guarded se­crets. The in­sur­ers ar­gue se­crecy is needed for com­pet­i­tive busi­ness rea­sons.

But there’s one place those dol­lar fig­ures ap­pear for any­one to see: the “ex­pla­na­tion of ben­e­fit” forms that in­sur­ers send to mem­bers af­ter pay­ing a claim.

Kaiser Health News re­viewed forms that one of its in­sur­ers, Cigna, paid for some col­leagues to get flu shots this fall in Wash­ing­ton, D.C., and Cal­i­for­nia.

Cigna paid $32 to CVS for a flu shot in down­town Wash­ing­ton and $40 to CVS less than 10 miles away in Rockville, Mary­land.

In South­ern Cal­i­for­nia, Cigna paid $47.53 for a flu shot from a pri­mary care doc­tor with Me­mo­ri­alCare in Long Beach. But it paid $85 for a shot given at a Sacra­mento doc­tors’ of­fice af­fil­i­ated with Sut­ter Health, one of the big­gest hos­pi­tal chains in the state.

Health ex­perts were not sur­prised in­sur­ers paid Sut­ter more, though they were stunned just how much more.

“Sut­ter has huge clout in Cal­i­for­nia, and in­sur­ers have no other op­tion than to pay Sut­ter the price,” Bai said.

The $85 was not just far more than what Cigna paid else­where but also more than triple the price Sut­ter ad­ver­tises on its web­site for peo­ple with­out in­sur­ance: $25.

How does Sut­ter jus­tify its higher prices as well as dif­fer­ent prices for the same shot at the same lo­ca­tion?

Sut­ter of­fi­cials had no sim­ple ex­pla­na­tion. “Pric­ing can vary based on a num­ber of fac­tors, in­clud­ing the care set­ting, a pa­tient’s in­sur­ance cov­er­age and agree­ments with in­sur­ance providers,” Sut­ter said in a state­ment.

Cigna also said many is­sues are con­sid­ered when de­ter­min­ing its var­ied pay­ments.

“What a plan re­im­burses a pharmacy/clinic/ med­i­cal cen­ter for a flu vac­cine de­pends on the plan’s con­tracted rate with that en­tity, which can be af­fected by a num­ber of fac­tors in­clud­ing lo­ca­tion, num­ber of avail­able phar­ma­cies/fa­cil­i­ties in that area (a.k.a. com­pe­ti­tion), and even the size of the plan (a.k.a. po­ten­tial cus­tomers),” Cigna said in a state­ment. “It is im­por­tant to keep in mind that hos­pi­tals and phar­ma­cies have dif­fer­ent eco­nomics, in­clud­ing the cost to ad­min­is­ter.”

It’s also note­wor­thy that Med­i­caid, the state-fed­eral health in­sur­ance pro­gram cov­er­ing more than 72 mil­lion low-in­come Amer­i­cans, pays providers far less for a flu shot. In Wash­ing­ton, D.C., Med­i­caid pays $15. In Con­necti­cut, $19.

Na­tion­ally, self-in­sured em­ploy­ers and in­sur­ers paid be­tween $28 and $80 for the same type of flu shot ad­min­is­tered in doc­tors’ of­fices in 2017, ac­cord­ing to an anal­y­sis of more than 19 mil­lion claims of peo­ple un­der 65 years old by the Kaiser Fam­ily Foun­da­tion in part­ner­ship with the Peter­son Cen­ter on Health­care. (Kaiser Health News is an ed­i­to­ri­ally in­de­pen­dent pro­gram of the foun­da­tion.)

“Your health plan could end up pay­ing more than dou­ble the cost for the same flu shot de­pend­ing on where you get it,” said Cyn­thia Cox, a vice pres­i­dent at the foun­da­tion.

“We see the same pat­tern for more ex­pen­sive ser­vices like MRIs or knee re­place­ments,” she said. “That vari­a­tion in prices is part of what’s driv­ing in­sur­ance pre­mi­ums higher in some parts of the coun­try.”

The wide dis­crep­ancy in costs for the same ser­vice high­lights a ma­jor prob­lem in the U.S. health care sys­tem.

“We don’t have a func­tion­ing health care mar­ket be­cause of all this lack of trans­parency and op­por­tu­ni­ties for price dis­crim­i­na­tion,” Mel­nick said.

“Prices are in­con­sis­tent and con­fus­ing for con­sumers,” he said. “The sys­tem is not work­ing to pro­vide ef­fi­cient care, and the flu shot is one ex­am­ple of how these prob­lems per­sist.”

/JOHN GIB­BINS / TNS

The flu shot is a prime ex­am­ple of how the health care sys­tem’s lack of trans­parency can lead to dis­parate costs.

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