Huge disparities found in medical billing

Posted Thursday, May. 09, 2013  comments  Print Reprints

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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 hospitals for the 100 most common medical procedures.

But in shedding light on the mystery of just how high a hospital bill might go — and whether it’s cheaper to get that care across town — the Health and Human Services Department also raised a lot of questions, especially about vast billing disparities for 100 common Medicare services.

Joint replacements range from about $5,000 at an Ada, Okla., hospital to about $220,000 in Monterey Park, Calif. It’s not just geography — hospitals within the same cities also vary widely.

Consider Tarrant County.

Medicare patients with pneumonia treated at Plaza Medical Center of Fort Worth were billed an average of $38,514, according to the 2011 data released Wednesday. Five blocks away, patients with the same diagnosis were charged only $14,106 at Baylor All Saints Medical Center.

Despite the $24,000 difference, both providers received only a little under $5,000 from Medicare for the same diagnosis.

Medical Center of Arlington had the highest Medicare billing charges among Tarrant County hospitals for patients with chest pains, kidney failure and diabetes.

For diabetics, Medical Center of Arlington charged Medicare an average of $37,751 while Texas Health Harris Methodist Hospital Fort Worth charged only $17,039. Both hospitals received only around $5,500 for those patients.

The most dramatic difference was the charge billed by Medical Center of Arlington for a pacemaker, an average of $123,663. Baylor All Saints billed Medicare an average of $46,638 for the procedure.

The findings are available on the Health and Human Services Department’s website,, at the “chargemaster rates,” or internal price lists that hospitals typically charged uninsured patients and those who pay out of pocket. Rates paid by private insurers and public health plans like Medicare and Medicaid are typically much lower.

The cost information is being released to “save consumers money by arming them with better information that can help them make better choices,” Health and Human Services Secretary Kathleen Sebelius said.

“When consumers can easily compare the prices of goods and services, producers have strong incentives to keep those prices low,” Sebelius said. “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.”

Puzzling gap

Inpatient charges to treat heart failure in Denver hospitals ranged from $21,000 to $46,000, while the same procedure ranged from $9,000 to $51,000 at hospitals in Jackson, Miss.

That kind of disparity puzzled Jon Blum, director of the federal Centers for Medicaid and Medicare Services. He said the cost variations could reflect the patient’s health status, 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 price lists are a part of the healthcare system that urgently needs updating. He said price variations are 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. “This is especially true when what is most important to a patient is knowing what his or her financial responsibility is.”

Burgess bill

Even though more than 40 states require or encourage hospitals to make their charges and payment rates public, the hospital association supports federal price transparency legislation sponsored by Rep. Michael Burgess, R-Lewisville.

Burgess’ proposal would require state Medicaid plans to ensure that states pass laws requiring hospitals to make their charges readily available to the public and to provide information about patients’ estimated out-of-pocket costs.

Umbdenstock said it would create antitrust risks for hospitals to share rate information negotiated by insurers.

Additional hospital cost data, possibly on outpatient charges, will be made public in the future, Blum said, as part of the Obama administration’s goal of increased medical cost transparency and savings.

The agency will provide this and other information to organizations that collect, analyze and publish health pricing data.

Staff writer Andrea Ahles contributed to this report, which includes material from The Associated Press.

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