By Katie Kerwin McCrimmon

The cost of giving birth in 2010 was so exorbitant in Steamboat Springs that Kathleen Huron and her husband, both teachers, opted to have their second daughter at home with a midwife.

They paid about one-third as much in out-of-pocket costs — about $2,500 compared to $7,500 —and had a much more peaceful experience.

“You have to have thousands of dollars socked away in order to have a baby,” said Huron. “Even people who have insurance don’t really know how expensive something is until you have to use it.”

A chef named Scott who works at a Steamboat resort hotel had to take out a loan when his wife gave birth there in 2012.

“I’m on salary. I couldn’t pick up extra shifts,” said Scott, who asked that his last name not be used.

So he and his wife took out a $2,500 loan to help cover their share of the birth costs.

“It’s definitely frustrating. We’re still paying on it,” he said.

Yampa Valley Medical Center in Steamboat Springs had the highest median price in the state in 2012 for an uncomplicated vaginal birth — $11,665. By comparison women with insurance who were giving birth at less expensive hospitals from Lafayette to Montrose and Denver would have found prices closer to $5,000 or $6,000. For many, their insurance would have covered most of the bill. But with higher deductibles and co-payments increasing, consumers will have to open their eyes more to total costs.

People like Scott know that everything costs more in Steamboat, a popular skiing, hiking, resort community. From rent to gas and day care to diapers, Steamboat residents face higher prices than some other parts of the state. But higher costs in resort areas can’t explain all the price variations for births and common surgeries.

Starting today, consumers will get to lift the veil and peer more closely into the mysterious and confounding world of health care pricing. They can now tap a new shopping tool called Colorado Medical Price Compare, www.comedprice.org. Created under Colorado law to allow more transparency in health care pricing, Colorado’s All Payer Claims Database will allow consumers for the first time to see how prices vary for four common services at Colorado hospitals: vaginal births, cesarean births, total knee replacements and total hip replacements.

The variations are striking. Among the revelations so far:

• Coloradans in some parts of the state including ski towns and the northern Colorado communities of Greeley and Fort Collins have paid significantly higher prices — sometimes two and three times as much — for comparable procedures in other parts of the state.
• The prices to give birth are significantly higher in some ski resort towns. While Steamboat topped the list for vaginal birth prices in 2012, the median price for a cesarean birth at Vail Valley Medical Center that same year was a whopping $19,000. That compared to c-section prices closer to $8,000 to $10,000 at other hospitals. Two hospitals that see a high volume of Kaiser Permanente patients – Good Samaritan in Lafayette and St. Joseph’s in Denver — had the lowest prices in the state in 2012. But Kaiser pays its doctors as employees and the actual prices for births at these hospitals could be about $2,500 to $3,000 higher once doctors’ fees are added.
• Price variations were most pronounced for total knee replacements. The most expensive median price for knee surgery in 2012 was at North Colorado Medical Center in Greeley, where insurance companies paid about $58,000. Fort Collins’ Poudre Valley Hospital nearby also had a high median price of about $52,000. Driving an hour away to OrthoColorado at St. Anthony’s in Lakewood could have saved patients thousands of dollars. The median price there for a total knee replacement was about $26,000.
• The price swings were not quite as pronounced for hip replacement surgeries. The highest median price for that procedure in 2012 was about $35,000 at St. Mary’s Hospital in Grand Junction. Good Samaritan came in lowest at about $21,000. As with births, not all doctors’ fees at the Lafayette hospital were included in surgery prices there.
• Medicaid prices are significantly lower than those that private health plans and their customers are paying. For instance, a total knee replacement surgery that cost nearly $60,000 for a patient with private insurance in Greeley cost as little as $12,000 for a Medicaid patient at Memorial Hospital in Colorado Springs.
• Even among Medicaid patients, payments to hospitals for births can vary. The University of Colorado Hospital, for example, received nearly $10,000 for cesarean births from Medicaid. The Medicaid price at Denver Health was $8,700 for higher complexity cesarean births. Meanwhile, a c-section for a Medicaid patient could cost as little as $4,900 at Parkview Medical Center in Pueblo or at Platte Valley Medical Center in Brighton. Medicaid managers say the reimbursement rates vary based on the complexity of patients. Teaching hospitals like CU and Denver Health also receive higher payments as do hospitals like Denver Health that see sicker patients.

While the data are limited, more revelations will emerge later this year and in future years as Colorado’s All Payer Claims Database continues to capture and publicize more and more cost data. By the end of 2014, comparison data will be available for nine procedures. That number is expected to grow to 25 by next year.

Today’s release does not include Medicare data for older patients and costs for companies that insure their own employees. So far, those self-insured businesses have not been forced to share their health expenditures with Colorado’s All Payer Claims Database. The new release does, however, include Medicaid data for low-income patients along with costs for people insured through the individual and group markets. Altogether, these 3 million people represent more than half of the state’s 5.3 million population.

Data revolution

This data release is revolutionary because it names hospitals, reveals their pricing and gives patients, doctors and competitors the first opportunity to see how hospitals stack up against one another.

Representatives at Vail Valley and North Colorado Medical Center did not respond to requests for comment on their comparatively high prices.

At Yampa Valley in Steamboat, managers said the newly publicized information marks “the first time we have been able to view the payment data and how our prices compare to other hospitals in Colorado.”

Said Karen McRight, senior director of business development and marketing at Yampa Valley: “Our goal is to provide fair and reasonable pricing for all of our services. As always, our priority is to provide our patients with safe, personalized, quality care.”

Unlike other expensive items that consumers purchase like houses, cars and appliances, health care has been a mystery expense, obscured by complex formulas and murky, sometimes nonsensical pricing.

Shoppers buying cars often arm themselves with “blue book” prices before they head to a dealer or peruse Craigslist for a used car.

Until now, that has been impossible in health care. Patients often go in for procedures clueless about how much they’ll have to pay — even if they have insurance.

To make matters more complicated, hospitals charge inflated sticker prices, then cut deals to lower prices for some insurance companies. Uninsured people sometimes get charged the full amount, then must haggle to bring down the cost. Meanwhile, the government pays entirely different rates for Medicare and Medicaid patients. Hospitals say they lose money on uninsured patients and those with government insurance. So they transfer those costs to people with private insurance.

“The basic way to think of it is the difference between the list price on a car and what you actually pay. Hospital charges are like the list price on a car,” said Edie Sonn, acting CEO for the Center for Improving Value in Health Care, CIVHC, the group responsible for developing Colorado’s All Payer Claims Database.

“Very few people actually pay the list price. Instead, that is used as the starting point for negotiations between a hospital and an uninsured patient or insurance company.”

Now, patients can use CIVHC’s new cost calculator to get a sense of how much their health plan may cover for various procedures and how much they’ll have to pay out of pocket. (To get to the cost calculator, go to medical service prices then click on a particular procedure and a particular hospital. Once you select the hospital, in the upper right corner, click on the calculator symbol that says “My Price.”)

“We are finally enabling consumers to shop for health care,” Sonn said.

She expects the cost calculator and website to keep getting more robust as more procedures are added such as ER visits, scans and common tests like colonoscopies.

Confounding question: why so much cost variation?

What’s unclear is why costs vary so much.

Kevin Downey, a spokesman for the Colorado Hospital Association, cited a raft a possible reasons ranging from sicker patients to more expensive technology to higher labor costs and “payer mix.” Some hospitals see more uninsured patients or those who are covered through government programs.

“Medicare and Medicaid generally pay hospitals at rates less than the costs of providing care,” Downey said in a written statement. “Hospitals cannot remain financially viable if payments are consistently below costs. Hospitals provide services to all patients that access the emergency department regardless of their ability to pay.”

Brian Newsome, a spokesman for SCL Health, owner of the hospitals with some of the lowest costs — St. Joseph’s and Good Samaritan (formerly known as Exempla hospitals) — said the SCL system has been working to drive down costs.

“I can’t speak for other hospitals’ prices, but we’ve been very focused on trying to create more value for our consumers. Holding ourselves accountable is one of our core values,” he said.

Newsome called the new transparency of the cost calculator a “step in the right direction,” but cautioned that the data set is very limited.

“Health care pricing is extremely complex. It’s pretty hard to compare apples to apples,” he said.

For instance, he said Denver has higher labor costs and he also cited other expenses like new technology and more complex patients that can increase costs.

“I would caution consumers from going to the calculator and saying, ‘this is what I’m paying.’ This is a first step. This will become a more and more usable tool for consumers.”

Managers at Denver Health also offered a caution that uninsured people should not look at the prices on the new site and assume that is what they’ll have to pay.

“If you’re an uninsured patient at Denver Health and many other hospitals, the charge reflected isn’t what you’re going to be paying. We have sliding fees,” said Peg Burnette, Denver Health’s chief financial officer.

She said Denver Health has long had to be transparent about its pricing and she’s very pleased that other hospitals will now be revealing theirs. If Denver Health can stay afloat charging significantly less overall than other hospitals, that may inspire downward price pressure at other hospitals.

With respect to Medicaid pricing for births, Denver Health received higher reimbursements than most other hospitals for cesarean births. Burnette said that’s because most of those patients had health problems that made the birth more difficult.

“They might be drug users or have diabetes, a heart condition or some other difficulty. Or they didn’t access prenatal care,” she said. “The patients are sicker is the bottom line. Because we provide a lot of uninsured care, our patients sometimes have difficulty with transportation or are homeless.”

As a safety net provider and a teaching hospital, Denver Health also receives higher Medicaid reimbursement rates.

John Bartholomew, finance director for Colorado’s Medicaid programs, said the cost variation for Medicaid births is based on a formula that tries to factor in additional fees for complications for both mother and baby.

While prices for privately-insured mothers are much higher for cesarean births, among Medicaid patients, the cost of a complex vaginal birth is quite similar to a simple cesarean birth: about $4,000 to $5,000.

That’s because Medicaid managers started reimbursing less for cesarean births in 2011 to try to discourage elective c-sections, said Jeremy Tipton, a payment reform manager at Colorado’s Medicaid agency.

“We wanted to decrease the incentive to do more c-sections,” Tipton said.

Medicaid managers hope publicity about all pricing will bring costs down.

But unlike Denver Health and other safety net providers who have a high percentage of Medicaid patients, some for-profit hospitals and providers have long posted hefty profits and paid doctors very high salaries. Time will tell if shining a light on hospital prices will shake up the market.

Consumers will ‘speak with their feet and their dollars’

Consumer advocates expect the new transparency to force costs down.

“This is really the tip of the iceberg,” said Adam Fox, director of strategic engagement for the Colorado Consumer Health Initiative.

He said he’s not surprised by the wild variations in pricing because consumers regularly call the Health Initiative to complain about what they see as unreasonable prices in some parts of the state.

Now, if people have the opportunity to research costs in advance, they can make educated decisions and influence the health care market.

“The All Payer Claims Database is going to start to provide opportunities for consumers to speak with their feet and their dollars. And it’s going to definitely push providers to make themselves more competitive,” Fox said.

“Whether or not consumers start to use this right away, I guarantee you providers will be looking at this to see where they fall and to know the ramifications that this could have for them,” Fox said.

“It can definitely be a tool that will drive some costs down. Providers don’t want to be known as the most expensive in their area. They don’t want to be identified as an agency that is gouging consumers. That’s bad public relations.”

Until now, consumers haven’t had solid information to shop for health care.

Michelle Gross is a self-employed audiologist who lives in Fort Lupton. She has a connective tissue disease called Sjögren’s Syndrome. Like arthritis, it can cause joint and ligament problems. In September, Gross was flying to a conference in Minnesota when she ruptured her ACL in her left knee.

“I took a step and it exploded. It was a resounding bang,” said Gross, 54.

While Gross needs to be very active in her job, crawling around on the floor to check babies’ ears or getting up and down constantly to fix hearing aides for older clients, she tried to get by without surgery. She did four rounds of intensive physical therapy and tried to strengthen her thighs. Even wearing a fancy, $1,500 custom brace, her knee would buckle.

Once a track-and-field athlete and a gymnast, Gross kept falling or nearly falling.

Finally, she decided she had to have surgery on her knee.

She wasn’t thrilled with the orthopedic surgeons in her community, and since she’s in health care and knows that provider quality varies, she was very careful about picking someone with a good track record.

“I didn’t do a lot of price shopping. I did a lot of doctor shopping,” Gross said.

She ultimately decided to seek care outside of Fort Lupton and drive to Denver and see a knee specialist at University of Colorado Sports Medicine. And rather than having the surgery at the large CU hospital, she had it at a small stand-alone surgical center in Lone Tree. She figured that staff members there would be better and that she’d have less of a chance of getting an infection than at a large hospital.

After paying out-of-pocket for health coverage for 33 years, Gross was able to buy insurance through Colorado’s health exchange this year. She bought the most comprehensive plan she could and made sure her doctors were covered through Rocky Mountain Health Plans.

Gross had her surgery three weeks ago and is pleased with the results. She’s already back at work and she recently headed to the mountains to see wild flowers.

What remains a mystery is how much she’ll owe.

“I have no idea,” she said. “I had to have it done. I fell or came close to falling five or six times in a week.”

Gross had a $5,000 deductible on her insurance that she had already paid before the surgery. She’ll owe 20 percent of the surgery costs and hasn’t seen the bill yet.

She said she would have loved to have had a way to shop for both price and provider quality.

“I think that’s a huge value,” she said.

She liked the idea of a cost calculator for consumers.

“It’s a wonderful tool,” she said. “Cost is very important for all of us. In the end, it’s the result you’re looking for. People need to investigate physicians and not just trust that the first person you call has got the right answers. People forget that they do have choices and they should do some research on their own.”

‘She was a $10,000 baby’

That’s exactly what Kathleen Huron of Steamboat did when she was having her second child. She hadn’t been happy with either the hospital experience or the price tag for her first birth.

Before her daughter, Emerald, was born on June 18, 2010, Huron found out that she was in the breach position. Huron’s doctor recommended a c-section. In retrospect, Huron wishes that she had tried to have acupuncture and have the baby turned inside her belly so she could have had a vaginal birth.

“Our plan was to try to have a natural delivery…but my doctor said to ‘respect the breach. Don’t mess with it,’” Huron said.

Huron has high regard for her doctor, so she followed the advice and she was fearful that the cord might get wrapped around her baby’s head, Huron said she was “scared into letting it be.”

She had the c-section and baby Emerald was born healthy, except for some concerns about hip dysplasia.

“Even though the hospital staff was wonderful, I didn’t enjoy being in there and being poked and prodded. It was uncomfortable being in that bed and I never got any sleep,” Huron said.

Right after the c-section, she only got to hold Emerald for about one minute, then was separated for her for about 30 minutes while she was in recovery.

She estimates that the cost for the birth including her obstetrician, the anesthesiologist and the pediatrician added up to about $8,500. After Emerald was born, doctors wanted to keep checking on Emerald’s hips. That required multiple trips to the orthopedist plus multiple x-rays. The Hurons’ out-of-pocket costs for their first daughter were about $7,500 since they had to pay one deductible of $2,500 in the first trimester, another $2,500 deductible for the next year and another $2,500 for Emerald’s care.

The following year, doctors wanted to check a small dimple they saw on Emerald’s spinal cord. For that, they had to see a neurologist and have an MRI. Huron saved the bill. For a few hours in the hospital, the procedure added up to $1,562 for the MRI, $2,082 for hospital charges and another $936 for the anesthesiologist. Again, they quickly paid their $2,500 deductible.

“She was a $10,000 baby,” Huron said.

Huron and her husband are both teachers. When they became pregnant again, Kathleen did her homework and shopped around for a much more affordable option. She wanted to consider a vaginal birth, but said her hospital prohibited VBACs (vaginal births after a c-section).

“My doctor suggested I go to Vail because they would do a VBAC.”

But Huron was worried about driving two hours to Vail while she was in labor.

Some friends had opted for home births and Huron began learning more about a midwife in her community.

“She has delivered hundreds and hundreds of babies,” Huron said.

Baby Adelyne was born on Aug. 17, 2012.

“It was wonderful! It was awful, but it was wonderful. The whole experience from beginning to end was much more peaceful. I just felt like the midwife was so much more in tune with what was going on with me,” Huron said.

Her midwife used massage and diet techniques to help Huron before the birth. She had to deal with a long labor — about 28 hours in all. But her midwife checked on her throughout the birth and her fee included care at home for both mother and baby after the birth.

In all, that fee was $5,000 for the birth and pre- and post-natal care. Huron was pleased and surprised to find that insurance covered about half of it.

Huron is not surprised that Steamboat’s hospital has some of the highest birth prices in Colorado, according to the new data released today.

“It’s outrageous. To get anything done at our hospital is outrageous,” she said.

Even tests that would cost much less at a doctor’s office are pricey. She said a simple stool test for one of the girls was $500. She and her husband both have needed hernia operations and those have also been costly.

The last time Huron was hospitalized, she brought her own Tylenol and insisted on being released as soon as possible after surgery.

“There’s no competition. We have a high cost of living and it’s a really nice hospital. They’re always talking about the upgrades, the new machinery, the new rooms they’re putting in to make services even better,” she said.

She also wonders if the cost of keeping hospitals in rural areas fully staffed even when volume is lower than in urban areas causes the price per person to rise.

“I don’t know all the reasons,” she said.

Huron sat on the health insurance advisory board for her school district and has been dismayed to see premium prices go up and up.

“It’s definitely expensive to get anything done around here,” she said. “It’s been a real frustration.”

“It’s been a constant conversation: do we encourage people to go to Denver to get procedures done? What can we do as consumers to get costs down? It doesn’t feel like we have any power.”