Big differences in national, valley hospital bills for like procedures

Bee Washington BureauMay 8, 2013 

— The actual cost of hospital care became a lot clearer for consumers Wednesday when the Obama administration released the average prices charged by more than 3,000 U.S. hospitals for the 100 most common medical procedures.

The 2011 data, which show wide cost variations at hospitals across the country — and in the same city or geographic region — raise questions about how treatment prices are determined and why the information has been so hard to get in the past.

The findings are available on the Department of Health and Human Services website, www.hhs.gov, at the so-called chargemaster rates, or internal price lists that hospitals typically charged uninsured patients and those who pay out of pocket. (Click here for searchable database for California hospitals).

Rates paid by private insurers and public health plans such as Medicare and Medicaid are typically much lower.

The cost information is being released for the first time with the intent to "save consumers money by arming them with better information that can help them make better choices," said Health and Human Services Secretary Kathleen Sebelius.

In the greater Modesto area, payments for two common admissions — treatment of a heart attack and implantation of a cardiac pacemaker — showed relatively little difference among hospitals.

The average payment related to a heart attack ranged from a low of $13,546 at Memorial Medical Center in Modesto to a high of $16,084 at Doctors Medical Center in Modesto. The bills sent by hospitals vary widely. Doctors, for instance, had the highest listed charge for heart attack patients — $162,349 — compared with $87,556 at Memorial and $60,049 at Mercy Medical Center in Merced.

For a pacemaker, two not-for-profit hospitals — Emanuel Medical Center in Turlock and Memorial — received average payments of about $19,000, while Doctors was higher at $23,568. And the list price was higher at Doctors ($157,207) compared with Emanuel ($133,506) and Memorial ($117,725).

Across the country, inpatient costs related to joint replacement ranged from $5,300 at a hospital in Ada, Okla., up to a high of $223,000 at a hospital in Monterey Park in Southern California.

Why such variation?

That kind of price disparity puzzled Jon Blum, director of the federal Centers

for Medicaid and Medicare Services. He said the cost variations possibly could reflect the health status of the patient, whether a hospital charges more because it trains future doctors, and even whether a hospital has higher capital costs that are passed on to patients.

But Blum added: "Those reasons don't seem very apparent to us."

He said the charges "don't seem to make sense to us from a consumer standpoint. There's no relationship that we see to charges and the quality of care that's being provided."

In a statement, Rich Umbdenstock, president and CEO of the American Hospital Association, said the hospital price lists were a part of the health care system that urgently needs updating. He said variations in the prices were a "byproduct of the marketplace, so all parties must be involved in a solution, including the government."

"The complex and bewildering interplay among 'charges,' 'rates,' 'bills' and 'payments' across dozens of payers, public and private, does not serve any stakeholder well, including hospitals," Umbdenstock said in the statement. "This is especially true when what is most important to a patient is knowing what his or her financial responsibility is."

Consumer advocates said making the charges public is significant, even if most patients don't pay those rates. "I think the point is to shame hospitals," said Chapin White of the nonprofit Center for Studying Health System Change.

Sebelius predicated, "Hospitals that charge two or three times the going rate will rightfully face greater scrutiny. And those that charge lower rates may gain new customers."

'Crazy' system

Dr. David Goodman, co-author of the Dartmouth Atlas of Health Care, said, "It does show how crazy the system really is, and it needs some reform."

Goodman argues that hospitals should be required to go further and post the charges that patients pay out-of-pocket, depending on what medical coverage they have.

The Dartmouth Institute for Health Policy long has found wide geographic variation in Medicare payments for the similarly ill, yet people who receive more expensive care don't necessarily receive better care. Sometimes hospitals just add tests or treatments they don't really need.

A hospital's charges are akin to a car dealership's "list price." Hospitals say they frequently give discounts to the uninsured — $41 billion in financial aid in 2011.

But some people pay full price, or try to afford it, because they don't know they can seek a discount, White said.

And even for those who do bargain, the listed charge "is the opening bid in the hospital's attempt to get as much money as possible out of you," he said.

On the Net:

http://is.gd/L0byX3

The Associated Press contributed to this report.

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