National News

May 9, 2013

High hospital bills go public, but will it help?

WASHINGTON — For the first time, the government is publicly revealing how much hospitals charge, and the differences are astounding: Some bill tens of thousands of dollars more than others for the same treatment, even within the same city.

Why does a joint replacement cost 40 times as much at one hospital as at another across the country? It’s a mystery, federal health officials say.

“It doesn’t make sense,” Jonathan Blum, Medicare deputy administrator, said Wednesday. The higher charges don’t reflect better care, he said.

And the amounts are too huge to be explained by obvious differences among hospitals, such as a more expensive regional economy, older or sicker patients, or the extra costs of running a teaching hospital, he said.

The average charges for joint replacement range from about $5,300 at an Ada, Okla., hospital to $223,000 in Monterey Park, Calif., the Department of Health and Human Services said. That doesn’t include doctors’ fees.

Hospitals within the same city also vary greatly. At Beth Israel Medical Center in New York, the average charge to treat a blood clot in a lung is $51,580. Down the street at NYU Hospitals Center, the charge for the same care would be $29,869.

At the Mayo Clinic in Minnesota, the list price is $16,861.

That isn’t necessarily what you pay.

Medicare pays hospitals on its own fee schedule that isn’t based on the listed charges, Blum said. And insurance companies routinely negotiate discount rates with the hospitals.

But patients who are uninsured can be billed the full amount. And some with private insurance may find their share of the bill is inflated as a result of a hospital’s higher charges, officials said.

Blum said the Obama administration hopes that releasing the information, at the website www.cms.gov, will help lead to answers to the riddle of hospital pricing — and pressure some hospitals to lower their charges.

The database also will help consumers shop around, he said.

The variations shouldn’t be a surprise, since hospitals might violate antitrust regulations if they shared “proposed or negotiated rates” with each other, said Rich Umbdenstock, president of the American Hospital Association. Forty states do require or encourage hospitals to make some payment information publicly available, he said.

“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.

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.

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 actually pay out-of-pocket, depending on what medical coverage they have. The Dartmouth Institute for Health Policy has long 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.

At Suburban Hospital in Bethesda, Md. — serving an affluent community at the gates of the National Institutes of Health — the average charge for simple pneumonia was $5,284. Compare that to $79,365 at Hahnemann University Hospital in Philadelphia.

The database lists the average charges for the 100 most common Medicare inpatient services at more than 3,000 hospitals. The prices, from 2011, represent about 60 percent of Medicare inpatient cases.

“Hospitals that charge two or three times the going rate will rightfully face scrutiny,” Health and Human Services Secretary Kathleen Sebelius told reporters.

And consumers will get insight into a mystifying system that too often leaves them with little way of knowing what a hospital will charge or what their insurance companies are paying for treatments, Sebelius said.

Previously, the price information that the government collects from hospitals wasn’t available to the average consumer, although the data could be purchased for uses such as research, officials said.

The department also is making $87 million in federal money available as grants to states to improve their hospital rate review programs, research why hospital charges vary so much, and get more information to patients.

Todd Park, an assistant to President Barack Obama on technology issues, said he envisions entrepreneurs creating apps to help consumers compare hospitals and researchers combing through the data to explain the cost differences.

“Transparent marketplaces are more competitive, and more competitive marketplaces drive down costs,” Park told reporters at the White House. “And that’s certainly the hope here.”

———

Online:

CMS data: http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Medicare-Provider-Charge-Data/index.html

1
Text Only
National News
  • NASA’s space station Robonaut finally getting legs

    Robonaut, the first out-of-this-world humanoid, is finally getting its space legs.

    April 19, 2014

  • Documents detail another delayed GM recall

    Government documents show that General Motors waited years to recall nearly 335,000 Saturn Ions for power steering failures despite getting thousands of consumer complaints and warranty repair claims.

    April 19, 2014

  • Captain of sunken SKorean ferry, 2 crew arrested

    The captain of the ferry that sank off South Korea, leaving more than 300 missing or dead, was arrested Saturday on suspicion of negligence and abandoning people in need. Two crew members also were taken into custody, including a rookie third mate who a prosecutor said was steering in challenging waters unfamiliar to her when the accident occurred.

    April 19, 2014

  • Asia seeks Obama’s assurance in territorial spats

    As President Barack Obama travels through Asia this coming week, he will confront a region that’s warily watching the crisis in Ukraine through the prism of its own territorial tensions with China.

    April 19, 2014

  • Delay won’t quell 2014 wrangling over Keystone XL

    Democrats sweating this year’s elections may be hoping that the Obama administration’s latest delay to the proposed Keystone XL pipeline takes a politically fraught issue off the table for the midterms.

    April 19, 2014

  • 5 features an Amazon phone might offer

    A report this week in The Wall Street Journal that Amazon is planning to release a smartphone has prompted industry analysts and technology blogs to muse about what the device might offer.

    April 19, 2014

  • Colorado deaths stoke worries about pot edibles

    A college student eats more than the recommended dose of a marijuana-laced cookie and jumps to his death from a hotel balcony. A husband with no history of violence is accused of shooting his wife in the head, possibly after eating pot-infused candy.

    April 19, 2014

  • Boston prepares for huge wave of marathon visitors

    With an expanded field of runners and the memory of last year’s bombings elevating interest in one of the world’s great races, the 2014 Boston Marathon could bring an unprecedented wave of visitors and an influx of tourism dollars to the area.

    April 19, 2014

  • Autopsy to ID dead boy; body cast off side of road

    All Massachusetts authorities could say for sure is that they found the lifeless body of a small boy, apparently cast off the side of a highway.

    April 19, 2014

  • 10 Things to Know: This Week’s Takeaways

    Looking back at the stories to remember from the past week:

    April 19, 2014