How Much Does a C-Section Cost? At One Hospital, -2-

All of Sutter's hospitals showed significant spreads in their negotiated prices on the seven inpatient procedures, though the largest variations in dollar values came with the priciest types of care. One example is the Modesto hospital cardiac code, which is for cardiac-valve and other major procedures involving catheterization, performed on patients with risk factors.

Seven insurers pay the lowest negotiated rate, $89,752, for their Medicare plans. The lowest price for a commercial-insurance plan, the type offered to employers, is $197,900. At the top end, the charge is $515,697 for patients whose health plans don't have the hospital in-network.

For hip- and knee replacements, Medicaid and Medicare plans paid the lowest prices at the Modesto hospital, $3,264 and $16,349, respectively. The lowest price paid by a commercial insurer totaled $51,895. The highest rate reached $81,617, again for patients whose insurance didn't include the Modesto hospital in-network.

The rates paid by Medicaid and Medicare plans generally don't cover costs, a Sutter spokeswoman said.

Around the country, hospitals have bought up rivals and tied in doctor groups and other types of healthcare. That has given them huge leverage in rate negotiations with insurers, according to researchers and health-insurance executives.

Research suggests hospital prices rise with consolidation, healthcare economists said. The hospital industry has said its mergers aim to add efficiency and improve quality. One recent study found no quality gains after deals.

Sutter's rates are generally high compared with other hospitals, according to prior research by the Rand Corp. think tank.

Mr. Dean, Sutter's chief financial officer, rejected the idea that the level of its prices or their range across health plans reflected greater leverage for the hospital system in negotiations with payers. "The variation in the data reflects robust competition in the markets for commercial insurance," he said.

Insurers give priority to some services for pricing negotiations over others, depending on the health plan network and members covered by the plan, he said. Plans also negotiate prices for groups of services, not individually.

Also, a big insurer will likely have several rates for the same hospital service among the types of plans it offers. For instance, at a Sutter hospital in Berkeley, Calif., Anthem Inc. is paying several different prices for a vaginal birth. Its Medicaid plan pays $6,337, according to the Sutter data. But the rate listed for Anthem's commercial plans is more than double that, at $14,928.

An Anthem spokeswoman said its contracts with hospitals "achieve sizable overall savings for our members and employers," and "looking at a list of prices without the full context makes it impossible to draw meaningful conclusions."

C-section prices at the Van Ness location of Sutter's California Pacific Medical Center provide a fuller picture of the results of the behind-the-scenes price-setting process.

As is typical, the lowest rates are for insurers' plans under programs such as Medicare and Medicaid. That's the case for the $6,241 price tag at Sutter's Van Ness location for the Health Plan of San Mateo, a nonprofit that mostly covers Medicaid enrollees. A spokeswoman for the plan said it pays hospital rates mandated by the state.

There's a significant jump from those prices to the rates paid by commercial insurers. Among the lower of these is the $15,753 Sutter charges its own plan, and a $16,922 rate it charges for patients covered by a UnitedHealth Group Inc. product with a limited network of healthcare providers.

Major national insurer Cigna is paying $29,257 for the C-section. At the top of the scale, in some cases, Sutter is charging $60,584 for the procedure when the hospital is out of the insurer's network. And for those patients who pay cash, the listed rate is $38,264.

Sutter's Mr. Dean said that its own plan and the UnitedHealth plan help integrate care within its system, so "we can deliver greater value at a lower cost."

A UnitedHealth spokesman said that its plan may have lower rates "because we work with high-performing providers to lower healthcare costs through improved health outcomes, data sharing, and a more-coordinated care experience."

A Cigna spokesman said it supports price transparency, and the limited example examined by the Journal "is in no way indicative of value nor cost competitiveness."

Write to Anna Wilde Mathews at [e-mail], Tom McGinty at [e-mail] and Melanie Evans at [e-mail]

(END) Dow Jones Newswires

02-11-21 0900ET