LI hospital fees vary widely for same care

There exists wide variations in what hospitals charge

There exists wide variations in what hospitals charge patients that are on display after the federal Centers for Medicare & Medicaid Services published charges for the top 100 most frequently billed conditions in 2011 at about 3,000 hospitals nationwide. Photo Credit: iStock

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The average charge for removing a gall bladder by laparoscope at Stony Brook University Hospital is $24,688. Fifteen miles away at Brookhaven Memorial Hospital Medical Center in East Patchogue, the charge is almost four times higher, $93,418.83.

North Shore University Hospital's average charge for treating someone with chronic obstructive pulmonary disease is $49,004.78. At Glen Cove Hospital, also part of the North Shore-Long Island Jewish Health System, the average charge is $28,382.68.

These are among the wide variations in what hospitals charge patients that are on display after the federal Centers for Medicare & Medicaid Services published charges for the top 100 most frequently billed conditions in 2011 at about 3,000 hospitals nationwide.

Hospitals -- and analysts -- say these charges bear little relation to what they actually get reimbursed by either the government or private insurers and that very few patients end up paying full charges.

"This measure of charges has been rendered so irrelevant," said Kevin Dahill, chief executive of the Nassau-Suffolk Hospital Council. "The government pays what the government pays and commercial insurers negotiate rates."

Arthur Levin, director of the nonprofit advocacy group Center for Medical Consumers in Manhattan, called the published figures "a joke."

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"It doesn't help anyone to have these imaginary charges -- although some people may end up paying retail," he said.

CMS said it published the data to allow consumers to do some comparison shopping and to put pressure on hospitals to lower high prices.

The agency also published what Medicare paid hospitals for those same 100 conditions -- and showed a vast gap between charges and reimbursements. Medicare on average reimbursed Brookhaven $14,465.58 for laparoscopic gall bladder surgery, six times less than what the hospital charged. North Shore got only about $2,700 more than Glen Cove on average for its treatment of COPD.


But for a small percentage of uninsured who don't qualify for any kind of financial assistance or don't have the wherewithal to negotiate with the hospital, the charges can be catastrophic, analysts said.

No one appears to have figures on how many people "end up paying retail," as Levin put it. But The Commonwealth Fund, a nonprofit health research group, found in a survey published last month that about 41 percent of working-age adults had trouble paying their medical bills last year and nearly one in five had been contacted by a collection agency.

Glenn Melnick, a health care researcher at Rand Corp. in Santa Monica, Calif., likened these charges that CMS listed to going to a restaurant and ordering a hamburger. "Everybody's got a coupon that means you pay $10 for the hamburger," he said. "If you have no coupon, the same hamburger is $1,000. The restaurant says 'You don't have the coupon? Well, we'll give you a 50 percent discount,' but you still end up paying way more than $10."


Policy required

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Proposed regulations under the Affordable Care Act would require nonprofit hospitals to have a written policy that includes who is eligible for financial assistance and how charges are calculated. They would also limit amounts charged for emergency or other medically necessary care to not more than that billed to people with insurance. A spokesman for the Internal Revenue Service, which has oversight of the regulations, said it was unclear when they might be finalized.

Gary Bie, Stony Brook's chief financial officer, said the charges that CMS posted are an artifact of a time decades ago when hospitals had to itemize charges for indemnity insurance plans. But now private insurers negotiate rates up front and Medicare reimburses hospitals according to set rates and set criteria, such as whether a hospital is a teaching hospital or treats a large number of very sick patients.

Bie said the posted charges among hospitals vary so widely because legally they aren't allowed to share the numbers.

As for variations among hospitals in the same health system, Robert Shapiro, North Shore-LIJ's chief financial officer, explained that, for his health system, it hasn't been worth the time or money so far to make charges uniform -- although once it goes to one billing system in the next few years, they will be.

"Until then, I don't want to spend the money or time on it if it doesn't have any impact," he said.

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Tracking costs

Hospital financial officers said that while the charges bear little relation to what they get reimbursed, the charges do serve an internal function: to track the cost of care for each patient.

This can vary widely, said Colleen Blye, chief financial officer for Catholic Health Services, depending on how sick the person is or whether he has other complications, needs other services or is discharged home or even how the doctor practices medicine.

"It's a management tool that helps us understand clinical delivery," Blye said.

Timothy Reilly, assistant vice president for financial planning and reimbursement at Winthrop-University Hospital in Mineola, said the listing of these charges helps "to capture the costs of all the services rendered." And to some degree, they can help hospitals negotiate with private insurers, he said.

But they are a tool many in health care think could be improved upon.

Dahill said that as the Affordable Care Act unfolds, he hopes the use of these charges "could re-emerge as more relevant."

"As you seek to reduce variation in practice patterns by employing evidence-based medicine, you should theoretically get a better handle on costs because they are standardized," Dahill said. "Then you could say with confidence, 'Here's what a hip replacement in my hospital costs.' "

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