Fifty hospitals in the United States
are charging uninsured consumers more than 10 times the actual cost of
patient care, according to research published Monday.
All
but one of the these facilities is owned by for-profit entities, and by
far the largest number of hospitals — 20 — are in Florida. For the most
part, researchers said, the hospitals with the highest markups are not
in pricey neighborhoods or big cities, where the market might explain
the higher prices.
Topping the
list of the most expensive hospitals is North Okaloosa Medical Center, a
110-bed facility in the Florida Panhandle about an hour outside of
Pensacola. Uninsured patients are charged 12.6 times the actual cost of
patient care.
Community Health Systems operates 25 of the hospitals on the list; Hospital Corp. of America operates another 14.
“They
are price-gouging because they can,” said Gerard Anderson, a professor
at Johns Hopkins Bloomberg School of Public Health, co-author of the study in Health Affairs. “They are marking up the prices because no one is telling them they can’t.”
He
added: “These are the hospitals that have the highest markup of all
5,000 hospitals in the United States. This means, when it costs the
hospital $100, they are going to charge you, on average, $1,000.”
The
researchers said other consumers who could face those high charges are
patients whose hospitals are not in their insurance company’s preferred
network of providers, patients using workers’ compensation and those
covered by automobile insurance policies.
Carepoint
Health-Bayonne Medical Center in Bayonne, N.J., for example, also
charges rates 12.6 times the actual cost of patient care. But state law
limits the maximum that hospitals can charge uninsured patients to 115
percent, a spokesman said.
By comparison, the researchers said, a typical U.S. hospital charges 3.4 times the cost of patient care.
Officials
representing the 50 hospitals disputed the findings, saying they
provide significant discounts to uninsured and underinsured patients to
help cover their out-of-pocket costs.
Understanding
hospital pricing and charges is one of the most frustrating experiences
for ordinary consumers and health-care professionals alike. It’s
virtually impossible to find out ahead of time from the hospital how
much a procedure or stay in the facility is going to cost. Once the bill
arrives, many Americans have difficulty understanding them.
Most
hospital patients covered by private or government insurance don’t pay
full price because insurers and programs like Medicare negotiate lower
rates for their patients.
But the
millions of Americans who don’t have insurance don’t have anyone to
negotiate on their behalf. They are most likely to be charged the full
hospital price. As a result, uninsured patients, who are often the most
vulnerable, face skyrocketing medical bills that can lead to personal
bankruptcy, damaged credit scores or avoidance of needed medical care.
Researchers
said the main factors leading to overcharging are the lack of market
competition and the fact that the federal government does not regulate
the prices that health-care providers can charge. Only two states,
Maryland and West Virginia, set hospital rates.
In
the United States, hospitals have something called the chargemaster, a
lengthy list of the hospital’s prices for every procedure performed in
the facility and for every supply item used during those procedures,
such as the cost of one Tylenol tablet, or a box of gauze.
Most
patients don’t pay the chargemaster rates because the federal
government and private insurers negotiate lower rates for their
patients. The government almost always pays fixed amounts based mostly
on patients’ conditions.
In
determining the size of markups, researchers used as their benchmark
what Medicare allows for the costs of care. That includes direct patient
costs, such as emergency room and operating room care, and indirect
costs, such as administration and pharmacy. It does not include private
doctors’ costs.
The study looked
at government reports for all Medicare-certified hospitals between May
2012 and April 30, 2013. To calculate those with the highest markup,
they tallied up the total charges, then divided by the patient care
cost, which they defined as total costs Medicare agrees to pay for those
with its government-subsidized health insurance.
“For-profit
players appear to be better players in this price-gouging game,” said
Ge Bai, an assistant accounting professor at Washington and Lee
University and a co-author.
Carepoint
Health, which owns the Bayonne Hospital and two other hospitals in
Hudson County, N.J., said charge-pricing affects less than 7 percent of
total patient interactions system-wide. Without it or adequate
reimbursements, “our safety-net hospitals risk closure,” Carepoint said
in a statement. Urban hospitals are reimbursed by insurers at lower
rates than suburban ones, a spokesman said.
Officials
at Community Health Systems of Franklin, Tenn., which operates 25 of
the hospitals, and Hospital Corp. of America, based in Nashville, which
operates 14, said hospital charges rarely reflect what consumers
actually pay. They said their hospitals offer significant discounts to
uninsured patients and charity care for those who qualify. Community
Health Systems said in a statement that it provided $3.3 billion in
charity care, discounts and other uncompensated care for consumers last
year. It also noted that several of its hospitals were not owned by CHS
at the time the data were reported.
Anderson
said researchers chose to show the current ownership status because the
company bought the hospitals knowing about the inflated prices.
HCA
said in a statement that its uninsured patients are eligible for free
care through its charity care program or they receive discounts that are
similar to the discounts a private insurance plan receives.
The
Federation of American Hospitals, which represents for-profit
hospitals, said the listed hospitals provided nearly $450 million in
uncompensated care in 2012 alone. Including the discounts “would have
had a significant effect on the charge-to-cost-ratio reported, and
therefore the implications of the study’s results,” it said in a
statement.
Anderson said it made
little economic sense to “mark something up 10 times what it actually
costs and then give a discount.” He added: “Clearly they expect someone
to pay these inflated prices.”
He
noted that the cost of workers’ compensation and auto insurance polices
are higher in the states where hospital charges are unregulated because
companies have to pay the higher rates.
The
idea for the paper came when co-author Bai received a hospital bill six
years ago after her son was born. “I realized that I could not
understand the bill,” said Bai, a certified public accountant. She
thought to herself that if she couldn’t figure it out, how could the
average American? Bills for other items that consumers buy are
relatively easy to understand, she noted.
“But we do not understand the bills for this, our most valuable asset,” she said. “This is ridiculous and sad.”
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