Houston hospital prices vary substantially, data shows in Baker Institute report

HOUSTON – (March 11, 2024) – Houston hospitals have significant gaps in their federally mandated price reporting, leading to significant price differences for the same services for consumers, according to a new report from Rice University’s Baker Institute for Public Policy.

Since Jan. 1, 2021, hospitals operating in the United States have been required by federal law to provide clear, accessible pricing information online about the items and services they provide. As of July 1, 2022, health insurers have also been required to post pricing information — allowing customers to compare the prices they can expect to pay at different hospitals, depending on their insurance plan.

Although the transparency in coverage (TiC) regulations require health plans to list the prices of all covered services and the House of Representatives recently passed the Lower Costs, More Transparency Act that reiterates the TiC regulations, there are substantial gaps in price reporting for Houston hospitals, said Vivian Ho, lead author and the James A. Baker III Institute Chair in Health Economics.

“It may be beneficial for Houstonians to call hospitals and shop around for the best prices,” Ho said. “For example, customers with Blue Cross Blue Shield coverage would see the average price of a hospital stay for 25 common diagnoses vary by more than double across Houston hospitals.”

The issue brief examined the negotiated prices released by Blue Cross and Blue Shield of Texas (BCBSTX) and Aetna in compliance with TiC to compare the price of inpatient and outpatient services at Houston area hospitals. The data showed that there is a wide price variation across hospitals and even within hospital systems.

For instance, Houston Methodist in the Texas Medical Center (TMC) has average negotiated prices for a hospital stay of $20,071, but Houston Methodist could only negotiate an average price of $18,131 with BCBSTX for these same diagnoses when treated at its Clear Lake facility.

For those with Aetna coverage, six common diagnoses had different prices at each of the hospital systems: Memorial Hermann had the highest average price ($19,261), followed by $10,847 at CHI St Luke’sand $10,719 at HCA Houston for their flagship hospitals located in the TMC.

Rising health care costs are the primary barrier to affordable health insurance for uninsured and underinsured Americans, Ho argues. But most Americans receive health insurance through their employer — Ho explains that closely tracking hospital pricing data will help determine whether employers are doing their part to find high quality care for their workers at the lowest possible cost.

“The initial round of price data released by insurers is quite incomplete,” she said. “That’s why we’re partnering with Mathematica, so we can rely on their computing infrastructure to collect more complete price data from Houston and other cities as it becomes available.”

Written by Avery Ruxer Franklin for Rice News.