While the flu shot is free for insured patients, this common health care service serves as "a prime example" of how opaque health care pricing can cost patients in the long run, Phil Galewitz reports for Kaiser Health News (KHN).

Infographic: How to avoid the flu when you fly

How much is a flu shot?

Health insurers are required under the Affordable Care Act (ACA) to cover all federally recommended vaccines for patients, meaning when patients with insurance get their flu shots, it's free.

But the price a single insurer pays for the flu shot can vary significantly from provider to provider, according to Galewitz.

To better understand this variation, KHN looked at a sample of explanations of benefits for employees' flu shots in different locations throughout the country and at different providers. All the employees were covered by Cigna.

The sample revealed "dramatic differences" in the cost of the shot among its employees, Galewitz writes.

For instance, the insurer paid $32 for a shot administered at a CVS in Washington, D.C., and $40 to a CVS that was less than 10 miles away in Maryland. However, on the other side of the country, Cigna paid $47.53 to a provider in Long Beach, California, and $85 to Sutter Health in Sacramento for the shot.

Further, according to KHN, $85 was more than three times the $25 Sutter's website said it charged for the flu shot for people without insurance. In comparison, Medicaid pays providers significantly less for a flu shot, reimbursing $19 in Connecticut and $15 in Washington, D.C.

According to KHN, the variance in pricing echoes the findings of a separate analysis, which found insurers in 2017 paid anywhere between $28 and $80 for the same type of flu shot.

"There is always going to be some variance in prices," according to Glenn Melnick, a health economist at the University of Southern California. But when you consider that millions of Americans get the flu shot each year, "$85 as a negotiated price sounds ridiculous," he said.

Why insurers pay some facilities a lot more

According to Ge Bai, an accounting and health policy professor at Johns Hopkins University, the variation in the cost of the flu shot isn't the result of the drug itself. These prices are the result of negotiations between insurers and providers, which insurers typically treat as "closely guarded secrets," so they can maintain a competitive market, according to Galewitz.

When asked about the different prices for the flu shot offered at the same location, Sutter said "pricing can vary based on a number of factors, including the care setting, a patient's insurance coverage, and agreements with insurance providers."

Cigna offered a similar explanation in a statement. "What a plan reimburses … for a flu vaccine depends on the plan's contracted rate with that entity, which can be affected by … location, number of available pharmacies/facilities in that area (a.k.a. competition), and even the size of the plan (a.k.a. potential customers)," Cigna said.  

The bigger issue

While patients are insulated from the direct cost of the flu shot, after a while, higher prices, such as the $85 per shot, add up for insurers, leading them to push the expenses back onto members through higher premiums, Galewitz reports. So while patients are "immune from the cost" up front,  they "eventually … pay a higher premium," according to Bai. "[T]hey are the losers."

And since the ACA mandates that insurers cover flu shots at no cost to consumers, it's difficult if not impossible for insurers to direct patients to lower-cost options, since patients aren't incentivized to comparison shop, Bai explained. 

The issue goes beyond flu shots, demonstrating a general issue with the U.S. health system: a lack of price transparency, according to Melnick.  

"We see the same pattern for more expensive services like MRIs or knee replacements," said Cynthia Cox, VP of the Kaiser Family Foundation.

Melnick said, "We don't have a functioning health care market because of all this lack of transparency and opportunities for price discrimination," He continued. "Prices are inconsistent and confusing for consumers. The system is not working to provide efficient care, and the flu shot is one example of how these problems persist" (Galewitz, California Healthline/Kaiser Health News, 11/18).