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BUSINESS DAY | NYT NOW
Hospital Charges Surge for Common Ailments,
Data Shows
By JULIE CRESWELL, SHERI FINK and SARAH COHEN JUNE 2, 2014
Charges for some of the most common inpatient procedures surged at
hospitals across the country in 2012 from a year earlier, some at more than
four times the national rate of inflation, according to data released by
Medicare officials on Monday.
While it has long been known that hospitals bill Medicare widely
varying amounts sometimes many multiples of what Medicare typically
reimburses for the same procedure, an analysis of the data by The New
York Times shows how much the price of some procedures rose in just one
years time.
Experts in the health care world differ over the meaning of hospital
charges.
While hospitals say they are unimportant Medicare beneficiaries
and those covered by commercial insurance pay significantly less through
negotiated payments for treatments others say the list prices are
meaningful to the uninsured, to private insurers that have to negotiate
reimbursements with hospitals or to consumers with high-deductible
plans.
Youre seeing a lot more benefit packages out there with co-insurance
amounts that require the holders to pay 20 percent of a lab test or 20
percent of an X-ray. Well, 20 percent of which price? asked Glenn
Melnick, a professor who holds a Blue Cross of California endowed chair at
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the University of Southern California. Some hospitals will charge 20
percent of what Blue Cross Blue Shield will pay; others will play games.
Charges for chest pain, for instance, rose 10 percent to an average of
$18,505 in 2012, from $16,815 in 2011. Average hospital charges for
digestive disorders climbed 8.5 percent to nearly $22,000, from $20,278
in 2011.
In 2012, hospitals charged more for every one of 98 common ailments
that could be compared to the previous year. For all but seven, the increase
in charges exceeded the nations 2 percent inflation rate for that year,
according to The Timess analysis.
Experts say the increase in the price of some of the most common
procedures may be offsetting rising technology or drug costs, declines in
the number of patients being admitted to hospitals and a leveling out of
reimbursements from Medicare. Between 2011 and 2012, Medicare
increased payment rates by only 1 percent for most inpatient stays.
The number of patients admitted for chest pain under Medicares fee-
for-service plans plummeted more than 28,000, to 107,224 in 2012, and
inpatients with digestive disorders decreased more than 29,000, to
217,514.
Over all, the number of Medicare patients discharged from hospitals
for the comparable 98 most common diagnoses dropped from 7.5 million
to 7.2 million. The total amount Medicare paid for their care also declined
somewhat between 2011 and 2012, from $62.8 billion to $61.9 billion.
In an effort to reduce overall health care costs, hospitals have been
encouraged to admit fewer patients for conditions like asthma, for
example, in favor of less expensive outpatient care.
Still, hospital charges make up nearly a third of the nations $2.7
trillion health care bill.
The data for 3,317 hospitals, released for the first time last year by the
Centers for Medicare and Medicaid Services, again shows broad variations
in what hospitals charge for the same procedure. While experts debate
why one hospital charges significantly more than another for the same
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procedure, Medicare does pay slightly higher treatment rates to certain
hospitals like teaching facilities and hospitals in areas with high labor
costs.
Reasons for other discrepancies are less clear.
In 2011, the Wuesthoff Medical Center in Rockledge, Fla., a hospital
with 300 beds near Cape Canaveral, charged patients admitted for a severe
irregular heartbeat an average of $25,361. A year later, the average charge
more than doubled to $53,597.
In Muncie, Ind., the price of treating a kidney or urinary tract
infection at Indiana University Health Ball Memorial Hospital jumped 70
percent to $38,873 in a year. And at Baptist Medical Center in San
Antonio, the charge for esophagitis and other digestive disorders rose 34
percent to more than $46,000. A call and emails to Ball Memorial were
not returned, and a spokeswoman for Baptist said the hospital didnt have
the time to analyze the data itself.
The new hospital charge data follows the release in April of
Medicares physician billing records for 2012. To some, the data is
bringing increased transparency and fueling the ongoing national dialogue
about financially debilitating health care bills faced all too often by
consumers.
We think this is a big deal. We think its very important that people
can have conversations about prevailing charges and variation in charges
among hospitals, said Niall Brennan, acting director of the Offices of
Enterprise Management at the Centers for Medicare and Medicaid
Services. Mr. Brennan made his comments in Washington at Health
Datapalooza, a conference focused on digital innovation in health care.
The administration also announced a platform called openFDA, which
includes data on millions of drug-related adverse events and errors
reported to the Food and Drug Administration by doctors and members of
the public from 2004 to 2013.
But the charge data may also, in part, reflect a huge shift among
hospitals.
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The industry has been caught up the biggest wave of mergers since the
1990s, a reaction, in part, to President Obamas signature health care law,
the Affordable Care Act. That law, experts say, is transforming the
economics of health care and pushing a growing number of hospitals into
mergers.
On top of that, hospitals are spending enormous amounts of money
buying up physicians practices and groups while investing billions of
dollars to upgrade to digital health records.
While those and other moves have caused hospital spending on
administrative costs to soar, they still do not explain the continued surge in
charges, experts say.
It just isnt clear what has gone into the increase in hospital charges
for the past decade, said Dr. Hamilton Moses III, chairman of the
consulting firm Alerion Advisors and an adjunct professor of neurology at
Johns Hopkins University. But if you look at the Veterans Administration
and the amount of administrative costs that are eating up the moneys that
should go to direct health care, thats a pattern that is repeated
everywhere.
And while there is still broad debate over whether the investment that
hospitals are making in information technology will ultimately lower costs
by, for instance, reducing unnecessary tests, there are growing concerns
that the wave of consolidation may be increasing prices. Bigger hospital
systems are viewed by some as having increased leverage in negotiating
prices with commercial insurers.
Nowhere may the impact of hospital mergers be more visible than
with Wuesthoff Medical Center. A nonprofit system that traces its roots
back to 1941 when it opened a 10-bed community hospital, Wuesthoff was
acquired in 2010 by the for-profit hospital giant Health Management
Associates, recently bought by Community Health Systems.
Over all, the prices charged at Wuesthoff went from 12 percent below
the national average to 32 percent above it, based on its case mix.
Between 2011 and 2012, prices for 77 out of the 98 most common
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ailments for which patients were admitted to the hospital increased.
Treatment for a simple case of pneumonia rose by about 25 percent from
$39,217 to $49,284. The average hospital charged $38,384 in 2012.
But Wuesthoffs charges for a major a small- or large-intestine
procedure rocketed 168 percent to $152,047 in 2012 from $56,704 in 2011.
The average hospital charged $68,982 in 2012.
In an email, Sara Virgin, a spokeswoman for Wuesthoff Health
System, said, Although the hospitals charges increased, the amount the
hospital is actually reimbursed for these services has not significantly
changed. She added that Medicare determines what it will pay for
services, commercial payers negotiate rates, and the hospital offers
discounts to the uninsured.
When considering the cost of health care, what matters most to
consumers is the actual amount paid for their care, not the hospitals
charges, she said.
Correction: June 3, 2014
An earlier version of this article misstated the number of Medicare
patients discharged from hospitals in 2011 for the comparable 98 most
common diagnoses seen in The Timess review of data for 2011 and 2012.
The number was 7.5 million, not 7.45 million.
A version of this article appears in print on June 3, 2014, on page B1 of the New York edition with
the headline: Hospital Charges Surge for Common Ailments, Data Shows.
2014 The New York Times Company