A federal report released this month shows a wide disparity in the prices charged by area hospitals for dozens of the most common medical procedures paid for by Medicare, but the factors that make up those charges are so varied and complicated that experts say the database is of little practical use to consumers.
“I’m not sure the report is useful for consumers now, but it is a step in the right direction,” said Tony Keck, director of the S.C. Department of Health and Human Services. “I think it has helped to start a conversation among policy makers about how do we get good, helpful information to consumers.”
The report – from the federal Centers for Medicare and Medicaid Services – includes prices charged by more than 3,000 U.S. hospitals, including Grand Strand facilities, for fiscal year 2011. Kathleen Sebelius, secretary of the U.S. Health and Human Services agency, said in a news release that the report is aimed at helping consumers shop for better health care deals and is part of an $87 million program to create health care pricing data centers in every state.
The initial data, however, hardly reflects the reality of health care costs for most consumers, experts say.
For one thing, consumers almost never pay the full amount reflected in a hospital’s price list, called a chargemaster. Private insurers negotiate prices with hospitals that are much lower than the chargemaster amount and the federal Medicaid and Medicare programs have maximum limits that they will pay for procedures that are a fraction of the hospital’s published price list. Even consumers without insurance coverage can qualify for rates much lower than those published in the federal report simply by asking for a discount, and indigent patients can usually qualify for free health care.
While there can be differences ranging from tens of thousands of dollars in the published prices at hospitals just miles apart, any number of behind-the-scenes variables – how long one hospital keeps a patient versus another, the cost of different brands of devices and implants used at competing facilities, the layers of administration a hospital has and which national purchasing vendor a hospital uses, for example – can skew the chargemaster price for a broad procedure category such as a hip or knee replacement.
Other factors affecting prices include the number of indigent patients a hospital treats and whether a teaching hospital helps fund medical education for its staff. Some hospitals also post high charges to counter insurance companies looking for discounts, and those hospitals with a large number of Medicare or Medicaid patients might have higher charges in hopes of making up some of their costs with private insurers.
“What patients pay has more to do with the type of coverage they have than charges,” said Joan Carroza, spokeswoman for Grand Strand Regional Medical Center in Myrtle Beach.
Grand Strand Regional typically charges higher prices than most other area hospitals for procedures listed in the report. For example, treatment for a heart attack with no other complications costs $33,264.55 at Grand Strand Regional compared with $14,056.50 at Waccamaw Community Hospital in Murrells Inlet, which typically has this area’s lowest prices.
An analysis of local hospital costs shows Waccamaw Community Hospital had the lowest price for 35 of 62 medical procedures common at area hospitals. Conway Medical Center, a not-for-profit hospital, had the lowest price for 14 procedures. McLeod Health, another not-for-profit which operates hospitals in Loris and Little River, had the highest prices for 36 procedures while Grand Strand Regional was highest for 19 procedures.
Myrtle Beach area consumers could pay twice as much or more for treatment of the same, general procedure category, according to the federal report. For example, a respiratory system diagnosis with ventilator support of less than four days cost $90,028.91 at McLeod compared with $39,258.62 at Waccamaw, according to the hospitals’ chargemaster data. A cervical spinal fusion without complications cost $111,294.44 at Grand Strand Regional compared with $55,960.08 at Conway.
Even common procedures such as a hip or knee replacement have disparate charges – from $82,360.16 at Grand Strand Regional to $42,267.86 at Conway.
“A hospital like Grand Strand Regional that provides highly specialized services, such as emergency room care 24 hours a day, seven days a week, along with trauma, neurosurgery and open heart surgery, has a different cost structure and pricing than a hospital without these services,” Carroza said. “Some hospitals, like Grand Strand, also provide environments for training health care professionals, such as nurses and pharmacists, and take care of a high number of uninsured individuals.”
Conway Medical Center spokeswoman Julie Rajotte could not be reached for comment.
Gayle Resetar – chief operating officer at Georgetown Hospital System, which operates Waccamaw Community Hospital – said consumers can’t make decisions about quality based solely on a hospital’s price list.
“It’s not like buying a car, where the higher-priced car might be better than the lower-priced car,” she said. “There are so many market-specific, socio-economic and other factors that are reflected in a hospital’s charges. For consumers, it’s difficult to take this whole information dump and try to make sense of it.”
Resetar and others say a hospital’s chargemaster prices are largely irrelevant because consumers are more interested in what their insurer will pay and what out-of-pocket costs exist for a particular procedure.
“What consumers really want is information about what they are required to pay out of pocket, which requires transparency on the part of all stakeholders, including insurers,” said Jennifer Schleman, spokeswoman for the American Hospital Association. “Consumers can use this information as a way to start a conversation with their physician and insurer on their best course of treatment and what their financial obligation will be at a specific hospital or health care system.”
Some lawmakers applauded the federal report, calling it a major step in health care transparency.
“The data shows that there is no rhyme or reason to how much hospitals bill patients for common procedures,” U.S. Sen. Max Baucus, D-Mont., told Congressional Quarterly magazine. “Exposing this information to the light of day is a major step forward in the effort to bring down health care costs.”
Keck and others, however, say there still is a long way to go. Keck’s agency last month released a report on the profitability of the state’s hospitals and it is putting together its own database for a website that, within 18 months, will offer South Carolina consumers customized answers to their questions about health care costs at various providers.
“We want more transparency for health care providers, both in terms of cost and quality of care,” Keck said.