Prognosis Profits

May 8, 2013

Huge ranges in hospital prices, rarely seen data show

The charges for hospitals, released by the Obama administration, provides new proof that there’s little consistency in pricing.

A previously unreleased set of hospital prices and resulting payments made public Wednesday revealed a hidden world where charges set by some institutions can be three or four times higher than their competitors’.

For patients with complications from a broken hip or thigh, Alamance Regional Medical Center charged $27,778, while Carolinas Medical Center charged more than three times as much: $85,783.

Need a pacemaker? Prices range from $21,965.40 at Wayne Memorial Hospital in Goldsboro to $75,339.08 at Durham Regional Hospital.

A hemorrhage in the stomach or intestines? FirstHealth Moore Regional in Southern Pines charges $7,797.58. Duke University Hospital charges $32,646.60.

The prices can be found in new data showing hospital charges and Medicare payments for the 100 most common services at more than 3,000 of the nation’s hospitals. The Obama administration said Wednesday that it was releasing the data to make the health care system more affordable and accountable, and to pressure hospitals to set more reasonable rates.

To Jonathan Oberlander, a professor of Social Medicine at UNC-Chapel Hill, the prices and payments were further proof of confusion and distortion in the world of health care.

“It’s another indication that we have a non-system of health care,” Oberlander said. “It’s ‘Alice in Wonderland.’ It just doesn’t make sense.”

Consumer advocates said the data shed light on opaque and wildly inconsistent billing practices.

“Such variance in hospital billing puts a tremendous burden on patients that can least afford it – uninsured and underinsured patients who are charged the full freight,” said Jessica Curtis of Community Catalyst, a consumer advocacy group in Boston. “This practice is often compounded by aggressive billing and collections that can have long-term adverse impacts on patients’ financial health.”

Hospitals have wide latitude to set prices. The amount that they get paid depends on who is paying; Medicare typically pays significantly less than private health insurers, which also are able to negotiate for discounts.

The uninsured and underinsured often get hit with the full charges; some qualify for charity care, and others get some discounts, but those who can’t pay can be turned over to collection agencies in the Triangle. In the Charlotte area, they sometimes are sued by the hospitals.

Hospitals don’t publish their prices. Some insurers have in recent years started to list the prices of some procedures in local markets, but they aren’t widely available to all.

North Carolina data

In North Carolina, the data revealed wide discrepancies in what hospitals charge. For each of the inpatient services, the highest price charged was more than double the lowest. For about three-quarters of the procedures, the highest price was triple or more the lowest price.

For a lower limb replacement, Rex Hospital, which is part of UNC HealthCare, charged $54,346. UNC Hospital, the mother ship of the system, charged significantly less, $41,415.

But Medicare pays UNC Hospital more for the surgery: an average of $20,610, versus $12,515 for Rex.

In fact, the UNC Hospital received the biggest payments for 56 of the 100 inpatient procedures. Two of the state’s two other big teaching hospitals, Duke University Hospital and N.C. Baptist Hospital in Winston-Salem, received the highest payments for almost all the other procedures.

According to the data, the hospital with the highest prices was Frye Regional Hospital in Hickory, which had the top charge for 24 of the 100 procedures. Frye is part of Tenet Healthcare, a for-profit corporation.

A spokeswoman for Frye said it would be a mistake for consumers to choose their provider based on the charge data released Wednesday.

“Patients with private health coverage pay amounts based on the rates negotiated by their insurance provider,” Suzanne Fogleman said in a statement. “For patients who have insurance coverage, the best place to start is with their insurer, who can provide an accurate estimate of their out-of-pocket cost based upon their specific plan.”

Scrutiny at the legislature

North Carolina’s hospitals have been under heightened scrutiny since April 2012, when The News & Observer and The Charlotte Observer published a series of stories revealing nonprofit hospitals’ high profits, huge markups on drugs, and tough stances against patients struggling to pay their bills. The articles were a key factor in legislation the state Senate Finance Committee approved Wednesday.

Pushed by Republicans with the backing of Attorney General Roy Cooper, a Democrat, the bill would require hospitals to post prices and payments for the 50 most common episodes of care. Hospitals would have to list the prices they charge, the amount paid by an uninsured patient, the amounts paid by Medicare and Medicaid, and the amounts paid by large insurers.

The bill also would make hospital bills easier to understand and would prohibit the most extreme forms of bill collecting.

North Carolina hospitals: Here’s a look at what North Carolina hospitals charge for lower limb joint replacements, what Medicare pays, and the number of operations:
Hospital City Charge Medicare payment Procedures
Presbyterian Orthopaedic Charlotte $69,034 $12,532 662
Duke Raleigh Raleigh $55,576 $12,051 373
Rex Hospital Raleigh $54,346 $12,515 686
WakeMed-Cary Cary $54,248 $11,976 87
Carolinas Medical Center Charlotte $54,229 $16,870 104
Carolinas Medical Center Mercy Charlotte $50,359 $12,078 991
WakeMed Raleigh $50,350 $14,981 169
Carolinas Medical Center University Charlotte $48,833 $12,887 66
Duke Regional Durham $46,873 $14,058 299
Duke University Durham $43,551 $18,312 478
UNC Hospital Chapel Hill $41,415 $20,610 90
NC Specialty Hospital Durham $27,918 $11,058 282

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