back December 2, 2005 Ryan: Hearing Offers Chance to Examine Why Wisconsin Ranks Among Areas With Higher Health Care Prices and Find Solutions To Lower Consumers’ Costs OAK CREEK, WI -- First District Congressman Paul Ryan said that today’s hearing held by the House Ways and Means Subcommittee on Health provides an excellent opportunity to get answers about the U.S. Government Accountability Office’s findings about why certain areas – including Wisconsin communities – have higher health care prices.  The hearing follows the release of an August 2005 report by the U.S. Government Accountability Office (GAO) regarding health care price variation within the Federal Employees Health Benefits Program. It provides an opportunity to examine issues raised in that report regarding geographic differences in health care prices and how the level of competition among health care providers impacts prices.  “This hearing gives us a chance to take a closer look at the GAO’s findings and get detailed answers about what drives higher health care prices in certain areas – including many of our Wisconsin communities,” Ryan said. “The GAO report shows how less competition spells higher prices for patients. We need to examine this link and take steps to boost consumers’ bargaining power and give them the complete information and resources they need to get quality health care while lowering their costs at the same time. There is a health care cost crisis in Wisconsin, and we need to take effective steps to get to the heart of the problem and fix it. Today’s hearing will give us valuable information to help us do this.” More than three years ago, Congressman Paul Ryan and Milwaukee Mayor Tom Barrett – who was serving in the U.S. House of Representatives at the time – asked the GAO to investigate why Milwaukee and Southeastern Wisconsin pay more for health care than comparable cities and markets elsewhere in the country. In response to this request, the GAO compared hospital prices, physician prices, and health care spending per enrollee across metropolitan areas nationwide using 2001 medical claims data from enrollees under age 65 in selected national preferred provider organizations (PPOs) participating in the Federal Employees Health Benefits Program (FEHBP). The FEHBP is the nation’s largest health care plan, consisting of approximately 8 million covered lives.  The GAO’s final report looks at the variation in hospital and physician prices and spending in metropolitan areas throughout the United States. As part of its analysis, GAO ranks 232 areas around the nation by hospital prices  and 319 areas by physician prices. This report confirms that health care prices in the Milwaukee area and other Wisconsin communities are high relative to the other metropolitan statistical areas (MSAs) in the study. Specifically, among the report’s details, GAO found that: Hospital prices varied more than physician prices nationwide. The Milwaukee-Waukesha area ranked fifth highest by adjusted hospital prices, with hospital prices about 57% above the national average. The La Crosse, Wisconsin-Minnesota area ranked tenth highest by hospital price, with prices nearly 39% above the national average. Metropolitan areas in Wisconsin had physician prices ranked among the highest in the study: of the 10 metropolitan areas with the highest physician prices, eight were located in Wisconsin. The GAO found physician prices were highest in the La Crosse WI-MN area, with prices 48% above the national average. A chart listing the top ten GAO-ranked areas by physician price appears below. In addition, Sheboygan ranked 11th, Milwaukee-Waukesha ranked 16th, and Kenosha ranked 18th highest by physician price. On average, PPOs paid higher hospital and physician prices in metropolitan areas in the Midwest and lower prices in the Northeast.  The GAO assessed factors that could contribute to the geographic differences in hospital and physician prices, concluding that areas where there was less competition among hospitals and less HMO capitation (indicative of less price-bargaining leverage) had higher prices, on average. Overall, the GAO found that many metropolitan areas in its study had low levels of competition, and the least competitive areas also tended to have smaller populations.  The GAO found no evidence of cost shifting. In other words, PPOs did not pay higher prices in areas with a higher percentage of Medicaid or Medicare beneficiaries, a larger uninsured population, or lower Medicaid payments. In fact, physician prices were lower, on average, in metropolitan areas with lower adjusted Medicaid payment rates and proportionately larger uninsured populations. Click here to view the GAO Report: Federal Employees Health Benefits Program, Competition and Other Factors Linked to Wide Variation in Health Care Prices Below is a chart adapted from Table 16 (Appendix III) of the GAO Report, listing the ten most expensive areas by adjusted physician prices. Rank  Metropolitan Area Percent prices were above the average 1  La Crosse, WI-MN           48% 2 Wausau, WI           46% 3 Eau Claire, WI           42% 4 Madison, WI           41% 5 Jonesboro, AR           35% 6 Janesville-Beloit, WI           32% 7 Great Falls, MT           29% 8 Green Bay, WI           28% 9 Appleton-Oshkosh-Neenah, WI           27% 10 Racine, WI           24%  Print Contact: Kate Matus (202) 226-7326