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Disparities in Commercial Pricing for Clinical Lab Tests: Examining the Impact on Patients and the Healthcare System

Blood tests and clinical lab tests are vital components of medical care, serving a variety of purposes, from prevention and diagnosis to monitoring various medical conditions. In the United States, these tests are the most common healthcare service, with approximately 14 billion tests ordered annually across 260,000 laboratories. However, recent research has uncovered a concerning trend: hospital outpatient departments are billing private insurance three times more for the same lab tests compared to physician offices and independent laboratories.


A study conducted by the Health Care Cost Institute (HCCI) utilized a comprehensive commercial claims dataset to compare prices of clinical lab tests between hospital outpatient departments and physician offices/independent labs. The analysis revealed significant markups for lab tests performed in hospital outpatient departments. The median prices for tests such as lipid panels and comprehensive metabolic panels were three to five times higher in outpatient departments than in physician offices.

Moreover, the analysis examined price variations across five categories of lab tests: chemistry tests, microbiology tests, blood count tests, urine tests, and toxicology tests. In each category, lab tests conducted in hospital outpatient departments exhibited higher price markups compared to physician offices and independent labs. Urine and blood count tests experienced the highest markups, with toxicology and microbiology labs also displaying substantial differences in median prices across different settings.

While the volume of lab tests has grown consistently across settings, the total spending by employer-based insurance has increased significantly for lab tests billed by hospital outpatient departments. Between 2012 and 2019, spending on lab tests from outpatient departments grew by 32%, contrasting with a mere 1% growth in spending on lab tests from offices and independent labs. This disparity in spending growth can largely be attributed to the higher prices charged by outpatient departments for identical lab tests.

The study also analyzed state-level price markups associated with hospital outpatient department lab tests, revealing substantial variations. Markup ratios ranged from just under 2x to over 6x, indicating significant price differences across states. Some states had markups exceeding 6 times the median price for labs from physician offices. Even within states, variations in price markups were observed. These discrepancies demonstrate the complexities and inconsistencies in pricing structures for lab tests across different regions.

The disparity in prices for clinical lab tests has tangible effects on patients and employers. For the 40% of lab tests subject to cost sharing, patients faced higher out-of-pocket costs when tests were billed by hospital outpatient departments rather than physician offices. Patients may also be surprised to discover that their physician's practice is billed as an off-campus hospital outpatient department, leading to unexpected higher costs. Overall, the increasing spending on lab tests contributes to the rising health insurance premiums, impacting employers, patients, and consumers alike.

To tackle the issue of inflated prices for hospital outpatient-based lab tests, potential interventions and policy measures are necessary. State policymakers could implement site-neutral payment policies for insurance plans regulated at the state level, which would reduce the markups associated with outpatient hospital-based lab tests. Insurers and self-insured employers could also negotiate payment differentials, limiting the impact of site-based pricing on their enrollees and employees. Such interventions have the potential to protect patients from unexpected price markups and lower overall healthcare spending and insurance premiums.

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