Cut-Rate Surgery

A bunch of new companies are helping people who pay out-of-pocket for hospital services get better prices. To date, those people have been getting completely screwed:

Extrapolating from federal Medicare data, Vimo (vimo.com), a small Web start-up in Mountain View, Calif., tries to estimate the fees negotiated by insurers for a variety of hospital procedures.

While the price for a cornea transplant at Wills Eye Hospital in Philadelphia is an estimated $15,000, for example, the reimbursement rate negotiated by insurers is likely to be closer to $4,700, according to the Web site.

The reimbursement rate nationally is still lower: $3,900, by Vimo's calculation. "We were shocked," said Chini Krishnan, chief executive of Vimo. "We had no idea that the pricing inefficiencies could be so extreme."

The eventual goal–some minimum level of transparency:

The varying reimbursement schedules, negotiated between the nation's 850,000 providers and more than 6,000 health plans, have been kept all but secret. Consumers almost never get information on prices before treatment. Even insurers do not know what other health plans are paying.