In California, an ACL surgery can cost $4,400 at one hospital or $63,800 at another—both using the same insurer and located just 75 miles apart. The only real difference is which contract applies and which facility performs the service. The care is the same. The billing is not.
This is not a rare outlier. It’s a vivid snapshot of how broken the commercial healthcare pricing system has become. For self-insured employers, it highlights a growing reality, you’re paying more than you should and often without knowing why.
How the System Creates Extreme Price Disparities
Across Northern California, identical ACL procedures come with drastically different price tags depending solely on where they’re performed. The difference had nothing to do with patient need or surgical complexity. It came down to which facility was chosen—and which contract applied.
These kinds of price swings reflect a deeper problem. PPO contracts often prevent employers from guiding members to lower-cost providers, leaving them stuck in networks that offer the appearance of savings without any real leverage. The result is a system where price has little to do with value and everything to do with who holds the power.
Hospital Transparency Rules Are Being Ignored
Under federal law, hospitals are required to publish both cash prices and negotiated rates in machine-readable files. Yet, compliance remains low. Nationwide, only 36% of hospitals reviewed were fully compliant with the Hospital Price Transparency Rule.
Nationally, hospital transparency is in decline. A recent report showed that just 21% of hospitals met the federal requirement, down from 34% earlier in the year.
Even when hospitals do publish prices, they’re often misleading. At some facilities, the posted “cash price” is actually higher than the average commercial rate, undermining the point of transparency entirely.
Insurer Contracts Are Not Designed to Save You Money
Many employers assume that their carrier is negotiating the best possible deal. The numbers suggest otherwise. The average commercial rate for ACL surgery in this analysis was $22,600, yet the reference-based pricing (RBP) benchmark set at 140% of Medicare landed around $11,340—almost half the commercial average.
Many hospitals already perform the procedure well below even that RBP level. These pricing gaps are not about cost, they’re about leverage. Employers are the ones losing.
Why Reference-Based Pricing Makes Sense Now
RBP works because it resets the equation. Instead of accepting arbitrary charges or opaque discounts, RBP reimburses providers based on a transparent, fixed multiple of Medicare.
In the case of ACL surgery, RBP offers savings of 50% or more compared to commercial rates—without sacrificing access or quality. Employers who use pure RBP are not only saving money, they’re demonstrating active cost control, which strengthens fiduciary protection under ERISA.
How aequum Helps Plans Navigate the Pricing Chaos
aequum supports self-insured plans with the legal strength, data insight and compliance structure needed to take control of healthcare costs in a system that resists accountability.
aequum helps employers:
- Implement and support pure RBP to reduce costs and improve plan defensibility.
- Recover overpayments and audit claims for excessive charges tied to flawed PPO logic.
- Challenge shared savings arrangements and opaque payment flows that drain plan assets.
- Enforce CAA 2021 compliance and improve vendor oversight.
- Protect participants from balance billing and unfair collection practices.
In a market where the same surgery can cost $4,400 or $63,800, the need for action is clear. You can’t afford to rely on carrier contracts or hospital price lists to manage your plan. You need a proactive strategy that enforces pricing discipline, transparency and legal protection.
Contact aequum today to learn how we can help you implement smarter pricing strategies, protect your plan’s assets and reduce fiduciary exposure in a system that too often works against employers.