WASHINGTON — In the Byzantine world of health care pricing, most people wouldn’t expect that the ubiquitous flu shot could be a prime example of how the system’s lack of transparency can lead to disparate costs.The Affordable Care Act requires health insurers to cover all federally recommended vaccines at no charge to patients, including flu immunizations. Although people with insurance pay nothing when they get their shot, many don’t realize that their insurers foot the bill — and that those companies will recoup their costs eventually.In just one small sample from one insurer, Kaiser Health News found dramatic differences among the costs for its own employees. At a Sacramento, Calif., facility, the insurer paid $85, but just a little more than half that at a clinic in Long Beach. A drugstore in Washington, D.C., was paid $32.
The wide discrepancy in what insurers pay for the same flu shot illustrates what’s wrong with America’s health system, said Glenn Melnick, a health economist at the University of Southern California.“There is always going to be some variance in prices, but $85 as a negotiated price sounds ridiculous,” he said.Flu shots are relatively cheap compared with most health services, but considering the tens of millions of Americans who get vaccinated each year, those prices add up.Health plans pass those expenses to consumers 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.KHN 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, Md.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.For years, Sutter has faced criticism that is uses its market dominance to charge higher rates. In October, it settled a lawsuit brought by the state attorney general, employers and unions that accused the hospital giant of illegally driving up prices.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.”An unintended consequence of the health law making flu shots free for insured patients is that health plans have little ability to direct patients to providers that offer the vaccine for less cost because patients have no reason to care, Bai said.Around the country, retailers like Target and CVS offer various incentives such as gift cards and coupons to entice consumers to come in for their free flu shots in hopes they shop for other goods, too. Some hospital systems such as Baptist Health in South Florida have also started providing free flu shots for people without insurance.Bai said that while hospitals like Baptist should be praised for helping improve the health of their communities, there are other factors in play.“There is a hidden motivation to use free flu shots as a marketing tool to improve the hospital’s reputation,” she said. “If people come to the hospital for a flu shot, they may like the facility and come again.”Kaiser Health News is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation which is not affiliated with Kaiser Permanente.Look Back: 1918 Spanish Flu epidemic
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Members of the Red Cross Motor Ambulance Corps in St. Louis transport influenza patients from a house at Etzel and Page avenues. The Spanish Flu epidemic killed 1,703 in St. Louis in fall and winter 1918-19, but the city’s draconian order closing schools, churches and many other public places helped to make the local death rate the lowest among the nation’s largest cities.
St. Louis Post-Dispatch
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U.S. Rep. Jacob Meeker, who died Oct. 16, 1918, of Spanish Flu in Jewish Hospital. He had toured Jefferson Barracks the week before and probably contracted it there. Seven hours before he died, he married his secretary, Alice Redmon, in the hospital. Meeker, a Republican, represented part of St. Louis. (Post-Dispatch)
St. Louis Post-Dispatch
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St. Mary’s Infirmary, at 1536 Papin Street, one of more than 50 hospitals in St. Louis at the time of the Spanish Flu epidemic. Among patients who died there of the flu were Clara Breunig of 2585 Hebert Street, her son Edward, 5, and her daughter, Dolores, 4. They died within three days of each other in December, 1918, and were buried in Hermann, Mo. The hospital, built in 1877 and a predecessor to St. Mary’s Health Center in Richmond Heights, closed in 1966 and later was a state prison honor center. Long vacant, it is partially collapsed. (Post-Dispatch)
St. Louis Post-Dispatch
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At left is Barnes Hospital, Kingshighway and Euclid Avenue, in 1921. Among the patients who died there of Spanish Flu was Dr. Roscoe Healy, 24, who contracted it while treating patients as a staff doctor. He died Dec. 7, 1918. The building at rear right was the Washington University School of Medicine. That building and some of the hospital remain as parts of the Washington University Medical Center. (Post-Dispatch)
St. Louis Post-Dispatch
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St. Louis City Hospital, 1515 Lafayette Avenue, circa 1940. The hospital cared for many patients during the Spanish Flu epidemic in 1918-19. The hospital, built in 1907 to replace one that was destroyed in the 1896 tornado. The city closed it in 1985, and has been converted into condos. (Post-Dispatch)
Post-Dispatch file photo
Spanish Flu food delivery
Members of the Red Cross Motor Ambulance Corps prepare to deliver broth and food to influenza patients in St. Louis during the Spanish Flu epidemic of 1918-19.
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The hospital at Jefferson Barracks in south St. Louis County around the time of World War I. American soldiers spread the Spanish Flu to Europe, and the barracks was the likely source of the outbreak in St. Louis. On the day Dr. Max Starkloff, city health commissioner, ordered the closing of schools and most public places, two soldiers died at the base hospital. (Missouri History Museum)
MISSOURI HISTORY MUSEUM
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Alice Redmon, who married U.S. Rep. Jacob Meeker in Jewish Hospital on Oct. 16, 1918, the day he died of Spanish Flu. Redmon, a widow, was his secretary. She formerly had been secretary of the Republican City Central committee. (Post-Dispatch)
St. Louis Post-Dispatch
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Ida Britton and Grace Semple, both members of the Red Cross Motor Ambulance Corps in St. Louis, wear masks while caring for influenza patients during the Spanish Flu epidemic.
Post-dispatch file photos
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Mayor Henry Kiel, who served in office from 1913 to 1925, backed Dr. Max Starkloff in the draconian order closing many public places during the Spanish Flu epidemic. Kiel said many businessmen lobbied hard to loosen the order, but he stuck with the health commissioner. (Post-Dispatch)
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Dr. Max Starkloff, city health commissioner for 30 years. On Oct. 7, 1918, Starkloff ordered and enforced the closing of schools, churches, taverns, pool halls and other public places to reduce the spread of Spanish Flu, a deadly influenza that killed many more people worldwide than did World War I. His effort is credited with keeping the St. Louis death rate the lowest among major American cities. (Post-Dispatch)
Post-Dispatch staff
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A ward in Barnes Hospital in 1914, the year the hospital opened. Information on the photograph describes the scene as “one of the spacious and brilliantly lighted medical wards” at the new hospital. (Post-Dispatch)
St. Louis Post-Dispatch
