Who pays the piper for hospital 1,000% price mark-ups?

healthcare piper paymentFifty hospitals in the U.S. charge more than 10 times what Medicare allows for the costs of care, according to a study published in Health Affairs. These medical facilities – with a lone exception – live up to their nature as for-profits by marking up prices by as much as 1,000%. However, hospital representatives say that what they charge does not actually reflect what patients pay. Huh? That does beg the question; who is indeed paying for the difference? All signs point to uninsured patients.

The 50 hospitals that overcharge the most are:

1. North Okaloosa Medical Center Crestview, FL

2. Carepoint Health-Bayonne Hospital Bayonne, NJ

3. Bayfront Health Brooksville, FL

4. Paul B Hall Regional Medical Center Paintsville, KY

5. Chestnut Hill Hospital Philadelphia

6. Gadsden Regional Medical Center Gadsden, AL

7. Heart of Florida Regional Medical Center Davenport, FL

8. Orange Park Medical Center Lakeside, FL

9. Western Arizona Regional Medical Center Bullhead City, AZ

10. Oak Hill Hospital Brooksville, FL

11. Texas General Hospital Grand Prairie, TX

12. Fort Walton Beach Medical Center Fort Walton Beach, FL

13. Easton Hospital Easton, PA

14. Brookwood Medical Center Birmingham, AL

15. National Park Medical Center Hot Springs National Park, AR

16. St. Petersburg General Hospital St. Petersburg, FL

17. Crozer Chester Medical Center Chester, PA

18. Riverview Regional Medical Center Gadsden, AL

19. Regional Hospital of Jackson Jackson, TN

20. Sebastian River Medical Center Sebastian, FL

21. Brandywine Hospital Coatsville, PA

22. Osceola Regional Medical Center Kissimmee, FL

23. Decatur Morgan Hospital-Parkway Campus Decatur, AL

24. Medical Center of Southeastern Oklahoma Durant, OK

25. Gulf Coast Medical Center Panama City, FL

26. South Bay Hospital Sun City Center, FL

27. Fawcett Memorial Hospital Port Charlotte, FL

28. North Florida Regional Medical Center Gainesville, FL

29. Doctors Hospital of Manteca Manteca, CA

30. Doctors Medical Center Modesto, CA

31. Lawnwood Regional Medical Center & Heart Institute Fort Pierce, FL

32. Lakeway Regional Hospital Morristown, TN

33. Brandon Regional Hospital Brandon, FL

34. Hahnemann University Hospital Philadelphia

35. Phoenixville Hospital Phoenixville, PA

36. Stringfellow Memorial Hospital Anniston, AL

37. Lehigh Regional Medical Center Lehigh Acres, FL

38. Southside Regional Medical Center Petersburg, VA

39. Twin Cities Hospital Niceville, FL

40. Olympia Medical Center Los Angeles

41. Springs Memorial Hospital Lancaster, SC

42. Regional Medical Center Bayonet Point Hudson, FL

43. Dallas Regional Medical Center Mesquite, TX

44. Laredo Medical Center Laredo, TX

45. Bayfront Health Dade City Dade City, FL

46. Pottstown Memorial Medical Center Pottstown, PA

47. Dyersburg Regional Medical Center Dyersburg, TN

48. South Texas Health System Edinburg, TX

49. Kendall Regional Medical Center Miami, FL

50. Lake Granbury Medical Center Granbury, TX

This list includes “the hospitals that have the highest markup of all 5,000 hospitals in the United States,” professor Gerard Anderson of the Johns Hopkins Bloomberg School of Public Health and study co-author said. “This means when it costs the hospital $100, they are going to charge you, on average, $1,000.” He adds that “they are price-gouging because they can. They are marking up the prices because no one is telling them they can’t.” For instance, a Carepoint Health-Bayonne Med­ical Center spokesman said that state law limits – though allows might be a more accurate term –the maximum that hospitals can charge uninsured patients to 115%. The New Jersey hospital is happy to oblige and charges 12.6 times the actual cost of care – tying in first place with North Okaloosa Medical Center in Florida. “These hospitals have markups (ratios of charges over Medicare-allowable costs) approximately 10 times their Medicare-allowable costs compared to a national average of 3.4,” the researchers wrote.  

More numbers:

·         20 of the hospitals are in Florida.

·         49 are for profit.

·         46 are owned by for-profit hospital systems.

As assistant accounting professor at Washington and Lee University and a study co-author Ge Bai says, “for-profit players appear to be better players in this price-gouging game.” But Carepoint Health – owner of the Bayonne hospital as well as two others in Hudson County – replied that charge-pricing affects less than 7% of total patient interactions. A spokesman said that “our safety-net hospitals risk closure” without mark-ups or proper reimbursements, of which urban hospitals receive less than suburban ones. Additionally, Community Health Systems of Franklin, Tennessee said in a statement that “last year, our organization provided over $3.3 billion in charity care, discounts and other uncompensated care for those who can't afford healthcare services. Our hospitals also paid millions of dollars in taxes that help fund critically important services in every community where we operate.”

Meanwhile, the Nashville-based Hospital Corporation of America HCA said in its own statement that “uninsured patients are eligible for free care through our charity care program or they receive our uninsured discounts, which are similar to the discounts a private insurance plan gets.” Finally, the Federation of American Hospitals said “that the listed hospitals provided nearly $450 million in uncompensated care in 2012 alone,” which, if recognized, “would have had a significant effect on the charge-to-cost-ratio reported, and therefore the implications of the study’s results.” Which is all well and good, but it just may still be apples to the oranges that Anderson and Bai are trying to draw attention to. After all, it doesn’t make a whole lot of sense to “mark something up 10 times what it actually costs and then give a discount,” said Anderson.

For starters, hospital pricing in particular and the U.S. healthcare system in general are about as transparent as FIFA is. Healthcare costs may be covered by private insurers, directly by employers, by government-funded systems like Medicare or Medicaid, and directly by patients – and each hospital negotiates differently with each payer. Furthermore, there are both in-network and out-of-network rates. Patients seldom know beforehand how much a procedure or test will cost, or even if their insurance plan will cover it. And medical bills do little to clarify things. Or as Bai told NBC of their own bills when she had a baby: “I looked at the bill and realized I did not understand the bill. If I, a CPA, did not understand a hospital bill, how can an average American understand it? We understand the bills for all the other assets we buy. We do not understand the bill for our most valuable asset. That is our health.” She and Anderson further wrote that “because it is difficult for patients to compare prices, market forces fail to constrain hospital charges.”

For all the talk about discounts and charity, it might be that uninsured patients – who are Legion but have no Medicare or private insurance to help them negotiate lower hospital rates – are the ones getting the short end of the stick. “Clearly they (the hospitals) expect someone to pay these inflated prices,” Anderson said. “While most public and private health insurers do not use hospital charges to set their payment rates, uninsured patients are commonly asked to pay the full charges, and out-of-network patients and casualty and workers' compensation insurers are often expected to pay a large portion of the full charges.”

As a result, the uninsured are at a higher risk of medical bankruptcies, sinking credit scores, and general avoidance of medical care. “We just want to raise public awareness of the problem,” Bai said. “We really want policy makers to read the paper.” Maryland and West Virginia are the only two states that set hospital rates, while California and New Jersey are the only two that mandates discounts to uninsured patients who qualify for them from for profit hospitals.