Hospital Charges

06.10.13 | Abby Lutcher

Problem is, you could end up being billed any of those amounts, depending on which central Pennsylvania hospital takes care of you. That was hammered home recently when the federal government, for the first time, revealed what hospitals across the country charge for 100 treatments and procedures. The charges demonstrate the confounding lack of rhyme or reason pertaining to hospital charges. Many are shockingly high. There's little apparent connection to the actual cost of the medical care. Or how good of a job the hospital did. Or what a hospital 20 miles away charges. Maybe you hope those charges will, at least, provide a general guide to which local hospital has the most affordable prices. You'll be disappointed. Good Samaritan's charges are by no means the lowest for everything. Here's one more thing to exasperate you: Those hospital charges don't reflect what the hospital actually gets paid. That's decided by Medicaid, which has its own payment schedule, or by health insurers, which negotiate with hospitals over payment rates. "It points out the absurdity ... of how costs are developed ... and why there's a great need for more transparency and reform." - Joe Martin For that routine case of pneumonia, for example, Medicare paid Good Samaritan an average of $4,311, while paying PinnacleHealth an average of $5,181. Still, health care advocates say the list prices — charges — are important, and the public needs to see the figures and pay attention. Martin Ciccocioppo, vice president of research at the Hospital & Healthsystem Association of Pennsylvania, said only "a very small percentage of hospital bills are actually paid at charge — no more than 1, 2 or 3 percent." He said people with no insurance typically fill out a financial assessment that, among other things, determines it they are eligible for Medicaid, the health care program for the poor. If they earn too much for Medicaid, they commonly qualify for charity care or discounted care based on a sliding scale, he said. The only ones who pay full charge, he said, are those who are well-off and chose to go uninsured, because they have the means to pay their bill. Asked about the basis of hospital charges, Ciccocioppo said the government has long required hospitals to have a "charge master" list to ensure that all patients are charged the same. But years of accepting payments set by the government or negotiated with private insurers has resulted in charges that are "decoupled" from actual costs, he said. Yet even with that disconnect, hospitals are still required to have the price list, he said. PinnacleHealth said most people with no insurance receive discounted care, rather than being billed the full charge. PinnacleHealth also said its actual charges are low compared with other local hospitals, and that one large local business offers a benefit option that enables employees to save money by using PinnacleHealth. The federal government has posted the charges online, along with the state and national averages for each procedure, and the amount Medicare pays each hospital. However, the spreadsheet contains tens of thousands of lines of data and can be difficult to use. Thankfully, the Washington Post produced a tool that makes it easy to search for individual hospitals or hospitals within a region. The federal government said it posted the charges to increase price transparency, stating that public awareness and understanding of hospital charges is a necessary step toward forcing prices downward, and strengthening the connection between cost and quality. Some advocates say the goal is to embarrass hospitals into more transparent and reasonable pricing. The data show wide disparities in hospital charges nationwide and also within the same communities. The average charge for a joint replacement ranged from $5,300 at a hospital in Ada, Okla., to a high of $223,000 at a hospital in Monterey Park, Calif. In Denver, the average charges to treat heart failure ranged from $21,000 to $46,000. Among the hospitals in the Harrisburg-York-Lancaster region, average charges for heart failure ranged from $10,642 to $19,512. But in some instances, the price difference was much greater. Carlisle Regional said patients who pay out of pocket are billed 64 percent of the official charge. Regarding people who are uninsured or underinsured, Penn State Hershey said, "Our emphasis is on working with them to find pricing and payment options that work best for them." Spokesman Scott Gilbert said Penn State Hershey has 20 full-time financial counselors to connect people with public programs or discounted or charity care from Penn State Hershey. The medical center also said its charges are "considerably lower" than other academic medical centers in Pennsylvania, he said. Some advocates say the next needed step is for the government to collect and publish data on what people with no insurance actually pay. The PHC4's Martin said it's critical to find out the actual cost of medical care, and make the information freely available to the public.