Is there variation in private payor payments to cancer surgeons? A cross-sectional study in the USA

OBJECTIVES: Although demand for price transparency in healthcare is growing, variation in private payors’ payments to surgeons for oncologic resection has not been well characterised. Our aim was to assess variation of private payors’ payments to surgeons for cancer resection using data based on fee-for-service allowed amounts, billed by a large mix of commercial payors and third-party administrators. SETTING: Fair Health (FH), an independent, not-for-profit organisation that collects and compiles claims data from payors nationwide. FH maintains the nation’s largest repository of privately billed medical and dental claims representing over 125 million covered lives in the USA. PARTICIPANTS: We performed a cross-sectional study assessing private payer data for five common types of cancer surgery: simple mastectomy (SM), modified radical mastectomy (MRM), open lobectomy, video-assisted thoracoscopic surgery (VATS) lobectomy and radical prostatectomy during 2012 and 2013. PRIMARY AND SECONDARY OUTCOME MEASURES: To assess variation across regions, we compared regional median allowed payments. To assess intraregion variability, we evaluated the distribution of regional IQRs of allowed payments. RESULTS: Median allowed payments varied substantially across regions. For SM, median allowed payments ranged from $550 in the least expensive to $1380 in the costliest region. For MRM, the range was $842–$1760, for lobectomy $326–$3066, for VATS $317–$3307 and for prostatectomy $1716–$4867. There was also substantial variation within geographic areas. For example, the mean IQRs in surgeon payment within regions were: SM $577 (25th percentile) to $1132 (75th percentile); MRM $850–$1620; lobectomy $861–$2767; VATS $1024–$3122; and prostatectomy $2286–$3563. CONCLUSIONS: There is a wide range of variation both across and within geographic regions in allowed amounts of surgeon payments for common oncologic resections. Transparency about these allowed amounts may have a profound impact on patient and employer choice and facilitate future assessments of value in cancer care.