50 hospitals flagged for sky-high charges say report doesn't show what's actually paid

These hospitals charge the uninsured and certain other payers more than 10 times the amount they charge Medicare, but critics say there's a big difference between what hospitals charge and what they are paid.

Researchers who compiled new list that shows 50 hospitals that charge the uninsured and certain other payers more than 10 times the amount they charge Medicare hope the report could lead to more state and federal regulations of healthcare costs. But hospital operators and critics of the study say there’s a big difference between what hospitals charge and what they are paid.

The study published this month in Health Affairs singled out these 50 hospitals for charging significantly more than the national average of 3.4 times the charge to Medicare. All but one is for-profit, and most are run by major systems like Tenet and Healthcare Corp. of America.

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But HCA, which has 14 hospitals on the list, said the amount patients pay for hospital services has more to do with the type of coverage they have than the prices listed in the hospital chargemaster. The chargemaster is a list of the hospital’s prices for every procedure and supply item used during a procedure. The rates are established by individual hospitals.

Society of Actuaries Health Research Actuary Rebecca Owen did not comment directly about the study, but said overall, neither Medicare nor commercial plans are going to pay 100 percent of the billed charge.

“For a long time it hasn’t been clear that billed charges and the actual cost of billed services are aligned,” she said.

Overhead costs that are included in most business billing, differ by hospital, according to Owen.

Meanwhile, 25 hospitals on the list are owned by Community Health Systems, including the one in the top slot, North Okaloosa Medical Center in Florida.

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The 110-bed North Okaloosa charges uninsured patients 12.6 times the actual cost of patient care, according to the study.

CHS did not respond to a request for comment.

The study is meant to call attention to patients without insurance and other payers that do not have the clout to negotiate for a lower rate, according to study co-author Ge Bai, an assistant professor in accounting at Washington and Lee University.

This includes the uninsured, those on workers compensation and casualty insurance and patients taken to hospitals out of network for emergency reasons, she said.

Hospitals do not need competitive pricing, as consumers find it difficult enough to understand their cost of care to shop around, she said.

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Only two states, Maryland and West Virginia, have regulations over what may be charged, she said, adding that without the force of the free market or regulation, hospitals charge higher prices because they can, she said.

“Nobody tells them they should not charge high prices,” Bai said. 

HCA spokesman Ed Fishbough said the study does not include the amount of charity care or discounts hospitals provide to uninsured patients.

“In addition, we were one of the first providers to make detailed pricing information publicly available; we have been providing this information on hospital web sites since 2007,” he said.

The Federation of American Hospitals said the listed hospitals provided nearly $450 million in uncompensated care in 2012, and offered significant discounts.

FAH Hospital policy blogger Chip Kahn accused the study’s co-authors of having a “myopic focus” that misses the mark. “Indeed, had the authors instead compared the actual payment-to-cost ratio of these hospitals compared to the national average, they would have discovered virtually no difference between the two groups – 1.3 for the 50 hospitals and 1.2 for the national average,” Kahn wrote on June 8.

“Even patients not covered by Medicare, Medicaid or private insurance are almost never expected to pay full charges,” he wrote.

Twenty of the hospitals on the list are in Florida, which has an environment friendly to for-profit hospitals, according to Bai.

Seven of the hospitals are located in Pennsylvania;  five in Texas; five in Alabama; three in California; three in Tennessee; and one each in Oklahoma, Virginia, Arkansas, Arizona, Kentucky, South Carolina and New Jersey.

Forty-six of the hospitals are owned by a hospital system.

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All but Crozer Chester Medical Center in Pennsylvania is a for-profit hospital.

The Affordable Care Act promises transparency, but it does not apply to for-profit hospitals, Bai said.

“The ACA says not-for-profit hospitals should provide these accounts to uninsured patients,” she said.

In determining the size of markup, researchers Bai and John Hopkins Bloomberg School of Public Health professor Gerard F. Anderson used as a benchmark what Medicare allows for the cost of care. They reported the 50 hospitals with the highest charge-to-cost ratios in 2012.

“This idea was sparked when I received my hospital bill five years ago, after my son was born,” said Bai. “I’m a CPA, I didn’t understand the bill.”

She has insurance, but said she wondered about those who didn’t and the price paid by all when premiums rise.

“We want to raise public awareness,” she said. “It affects every single patient, all of us. Patients have limited power against the hospitals. Consumers need protection from the legislators. There are watchdogs like us.”

Twitter: @SusanMorseHFN