Aug 22, 2014 - chest pain in 2012 was anywhere from $13,361.93 to $77,973.86, depending on where the patient went for ca
Hospital Sticker Shock John George Philadelphia Business Journal | August 22, 2014 Here’s a lesson in the complex and opaque world of health-care economics. Data released this summer by the Centers for Medicaid & Medicare Services (CMS) shows the average charge for treating a Philadelphia-area Medicare recipient for chest pain in 2012 was anywhere from $13,361.93 to $77,973.86, depending on where the patient went for care. That’s a swing of more than $64,000 for, in this example, two hospitals — Roxborough Memorial Hospital, a community medical center, on the low end and Temple University Hospital, a tertiary-care teaching hospital, on the high end — separated by less than five miles.
With businesses facing consistently rising costs to provide health benefits, and employers responding by pushing more of the financial burden for health coverage onto employees, the demand for hospital price transparency is greater than ever. Hospitals as well as insurers, the government and private companies are all working to provide comparative data, but all agree the effort is in its early stages.
Here’s where it gets complicated: Medicare doesn’t pay a hospital’s charges. It pays a fixed flat fee for the care a patient receives based on the diagnosis. Payments are adjusted for how ill the patient is. Medicare also will pay more to teaching hospitals and more to those in areas with high labor costs. The same CMS data that lists charges shows the average payment to area hospitals for treating those Medicare patients with chest pain was between $2,125.07 and $6,535.28.
“Charges exist for the purpose of having a price list,” said Andy Carter, president of the Hospital & Healthsystem Association of Pennsylvania (HAP). “Price lists in any industry are a starting place for a conversation with customers, consumers or, in our case, patients about what it costs to provide a service. They are only a starting point. We know the public is demanding that there be increased transparency about what they ultimately pay.”
Hospital officials have long argued charge data is meaningless because they don’t reflect the discounted rates medical centers negotiate with the private insurers or the fee schedules used by the Medicare and Medicaid programs. And, under provisions in the Affordable Care Act, hospitals can no longer try to collect full charges from uninsured patients.
Until such data are readily available, consumers of health services will be hard pressed to become smart shoppers — and spotting and fixing inefficiencies in the delivery systems is troublesome at best.
Carter noted hospitals have, for the last 50 years worked in a system where commercial insurers and the government have been the primary payors of medical services. “[Providing consumers with price information] is not something we taught ourselves to be able to do for patients,” Carter said, “but we’re learning rapidly.”
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HAP recently formed a committee to study how hospitals can provide better transparency. That committee is studying what pricing information its members should be providing to patients, and what standards and guidelines should be used to gather and disseminate the data. The panel is expected to report its findings to HAP’s hospital members by the end of this year. The implementation of those programs could begin at some hospitals within a year to 18 months, Carter said. “What we are working to do is respond to consumer expectations to understand not so much charges, but what they will be on the hook to pay,” he said. Some hospitals as well as health insurers are already offering such services. Crozer-Keystone Health System is among those that recently started proving patients with estimates of out-of-pocket expenses for hospital services. One of the Delaware County-based system’s hospitals — Crozer-Chester Medical Center in Upland — is among those in the region with the highest average Medicare charges. “We acknowledge that Crozer-Keystone Health System has had a historically high charge structure,” the health system said in a statement. “It does not mean, however, that we are receiving high or unreasonable payments from consumers or insurers. The CMS report focuses on charges, not the more meaningful payment data. We are glad that the CMS report gives all hospitals an opportunity to revisit their charge structures, and we support efforts to make hospital charges and bills more transparent and accountable for patients and taxpayers.” Search for meaning Not everyone agrees hospital charges are meaningless. “I hear hospitals say they don’t matter, that they are a work of fiction, but you can’t have it both ways,” said Neil Goldfarb, executive director of the Greater Philadelphia Business Coalition on Health. “If they are unhappy with people using charge data to make comparisons, they should be more transparent about their prices.” The Greater Philadelphia Business Coalition on Health was established in 2011 to represent the employer community in working with health plans, providers, and other stakeholders in the region’s medicaldelivery system to improve the value of healthbenefit spending.
Goldfarb said the CMS charge data is not meaningless for the coalition and its members as it provides information, such as how many patients each hospital is treating for a certain diagnosis and the “relative magnitude” of expenses at competing hospitals. “If you see a charge that is twice as high at one hospital compared to another hospital, it’s a good indicator that the first hospital is going to be a more expensive place to receive care,” he said. “It helps identify places where we should ask questions.” So why is it so hard for people to get a price from a hospital? “There are a lot of reasons. First and foremost is the health-care system is complex and unlike other parts of the American economy where pricing is transparent and easy to get,” said Marty Rosen, Executive Vice President, Marketing, at Health Advocate, a Plymouth Meeting company that helps people get the most out of their health benefits. Health Advocate introduced its own “health-cost estimator” tool for clients about five years ago, and continues to refine it. Later this year, or early next, it will add a benefits calculator to help people keep better track of their deductible and co-payment requirements. “When I go to Best Buy, I can get the price for every flat-screen television they sell,” Rosen said. “In health care that’s still not the case.” Rosen said most patients with insurance have historically had “pretty generous” benefits so people had no incentive to ask hospitals about prices. That has changed with the growth of consumer-directed health plans with high deductibles that must be reached before regular insurance kicks in. “Consumers are beginning to become aware, painfully so in some cases, that they can save money or be penalized based on where they go,” Rosen said. “Going to the emergency room [for non-emergencies] is the classic example.” Rosen said most people don’t realize that even in the same ZIP code, the cost for certain health-care services can vary by as much as 100 percent. “Not all ERs are created equally,” he said. “A level-one trauma center is going to have higher overhead costs.”
Philadelphia Business Journal | August 22, 2014
Tom Buckley, vice president of revenue cycle management for Virtua in South Jersey, said charges are to hospitals prices what the manufacturer’s suggested retail price is to car buying. “You can see a manufacturer’s suggested retail price, but everybody ends up paying a price that is lower than that,” he said. Robert Sagen, Virtua CEO, said a big reason for the confusion is the different way government health insurance programs and private health insurers pay hospitals — which could be fixed rates by diagnosis, per diem rates, or bulk rates by procedure. “It’s the evolution of insurance companies that have gotten us to where we are today,” Sagen said. The price transparency issue even confounds people inside the industry. Dr. Joseph Bernstein, a Philadelphia orthopedic surgeon, assisted by his daughter Jillian, conducted a study on price transparency at 20 Philadelphia hospitals. The results were published in the medical journal “JAMA Internal Medicine” last December.
Joseph Bernstein called the 20 hospitals, identified himself as a self-paying patient without health insurance, and asked what he would have to pay for an electrocardiogram — a test that measures heart rate. Only three of the hospitals were able to provide a figure — and those figures varied from $137 to $1,200. When Jillian Bernstein asked how much it would cost to park at the hospital, 19 of the 20 were able to provide specific dollar figures. In their study, the Bernsteins concluded: “Hospitals seem to be able to provide prices when they want to, yet for even basic medical services, prices remain opaque.” Joseph Bernstein said their study was motivated by an earlier study, with which he was involved, that showed a lack of transparency in hip replacement prices and a wide disparity in the prices that were available. “We tried to refute a hypothesis — that hospitals are not nefariously hidings prices — and we failed,” Bernstein said. “The hospitals were making prices obscure. Of course we did not prove ‘nefariousness,’ just that the obscurity was likely deliberate.”
Philadelphia Business Journal | August 22, 2014
