Newly released government figures of wildly varied hospital charges further illustrate a complicated and confusing health care system.
For example, costs related to joint replacement ranged from $5,300 at a hospital in Ada, Okla., to $223,000 at a hospital in Monterey Park, Calif.
For that same procedure, charges ranged from $23,447 at Kansas Surgery and Recovery Center to $77,785 at Wesley Medical Center, both in Wichita.
Those figures are among the data released this week by the Centers for Medicare and Medicaid Services for more than 3,000 hospitals across the country.
The information shows the internal price lists that hospitals typically charge the uninsured and those who pay out of pocket – commonly called a “chargemaster.” The federal agency released information on the 100 most common Medicare inpatient procedures.
Actual amounts paid by private insurers and government programs such as Medicare and Medicaid are usually much lower than the chargemaster price.
The information was released 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.
For virtually every procedure, the data shows great variation in charges from hospitals – even within the same city.
Inpatient charges to treat heart failure in Denver hospitals, for example, ranged from a low of $21,000 to a high of $46,000, while the same procedure ranged from $9,000 to $51,000 at hospitals in Jackson, Miss.
In some cases, there can be differences even among hospitals operated by the same group.
For chest pain, for example, the Via Christi Hospital on St. Francis charged $18,128, while the Via Christi Hospital on St. Teresa charged $17,501. For its hospital in Pittsburg, the charge was $14,174. Mercy Regional Health Center in Manhattan, which is part of Via Christi Health, charged $6,889.
Reasons for variation
Hospital officials say there are many factors in how hospitals determine charge rates.
Jon Blum, director of the federal Centers for Medicaid and Medicare Services, said the cost variations could reflect the health status of patients, 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.
He said the center didn’t see any correlation between the charges and the quality of care provided.
David Hadley, chief financial officer for Via Christi Health, said the oversimplified reason that charges for the same procedure may vary within a hospital system is that the chargemaster rates are determined by the average cost of care for previous patients with the same diagnosis, including whether they received more care, like X-rays or other tests.
He said the listed price could also be affected by how the patients were admitted, whether they came into the ER or were directly admitted by a physician; whether multiple physicians were involved in care; and how long a patient had to stay in the hospital.
Whether the patients had other health issues also could affect the chargemaster rates, Hadley said.
“Patients who walk into St. Francis are usually more sick and more acute versus patients at St. Teresa, who are usually not as sick,” Hadley said of the discrepancy in price for chest pain.
Cindy Samuelson, vice president of member services and public relations for the Kansas Hospital Association, said that other factors for varying charges could be hospital mission, patient population, subsidies and specialized services.
“Hospitals that have community outreach services, like a trauma or burn unit or NICU, have a different payment structure to afford to cover that kind of care,” she said.
“Hospitals that provide training to physicians and other medical professionals, and research hospital or hospitals with a large number of under or uninsured individuals is also something they have to account for. Every hospital has unique prices depending on those unique factors.”
Hadley pointed out that most consumers don’t pay the chargemaster prices.
“For the vast majority of the population with insurance, the gross charges really don’t end up impacting how their bill gets paid by insurance because we have negotiations with insurance carriers to pay a certain amount for a diagnosis or hospital stay,” Hadley said.
“For the uninsured, it could be an issue for them to know what those (rates) are, but we offer significant discounts based on their ability to pay, and we have an extensive charity care program for those who can’t pay anything.”
Kansas Hospital Association’s Samuelson said that the chargemasters don’t really show how much people pay for care and that payment information would be more valuable for consumers.
“What people really need to ask is, ‘Is anybody really seeing this charge?’ ” Samuelson said.
She noted that the Affordable Care Act requires tax-exempt hospitals to have a written financial assistance policy that limits the charges for individuals who qualify for financial assistance, and that they can’t be charged more than the Medicare rate or a blend of the Medicare and other private insurance.
Wesley Medical Center officials declined an interview for this story.
Paul Petitte, vice president for marketing and public relations at Wesley, said in an e-mail, “The bottom line is this charge data involves concepts that are very complicated and impossible to explain in a brief statement.”
His e-mail continued: “With regard to the information released by CMS, what patients pay has more to do with the type of coverage they have than charges. Government programs like Medicare and Medicaid determine how much they reimburse hospitals. Insurance plans negotiate their payments. Everyone else is eligible for our charity care program or they receive our uninsured discounts, which are similar to the discounts a private insurance plan gets.”
In addition to the release of this data, Health and Human Services is allocating $87 million in funding to states to “enhance their rate review programs and further health care pricing transparency,” according to a news release from CMS.
Contributing: McClatchy News Service