Crazy, irrational hospital billing (with no connection to quality)

May 8, 2013 in health care costs, health care quality, Hospital Bills

Try explaining this…

One hospital in my state, Massachusetts, bills Medicare $75,197 to take care of a patient with heart failure, another charges $13,960.

There’s a huge gap in the charge for patients with breathing problems who are put on a ventilator: $23,044 to $120,888.

Thanks to The Washington Post for this article with a great graphic that shows how much prices vary in each state, using data released today, by the Centers for Medicare and Medicaid Services.

Why are there huge differences in what hospitals charge?

Don’t expect a satisfying answer.

The more expensive hospitals will tell you that they have sicker or more complicated patients or that their charges include the cost of training medical students.  But the bottom line is that hospitals charge whatever they want because they can.

AND, there’s typically no reason to think that a higher price will buy you better care. In fact, the are many examples where the more expensive hospitals have lower quality scores than their less expensive competitors.

Maryland, the only state that puts some limits on what hospitals can charge, had the lowest average rate for many common procedures, according to The Washington Post.

Keep in mind, hospital charges are just a number if you have health insurance.  Hospitals typically get reimbursed at a much lower rate that is set during negotiations.

The differences are really important for uninsured patients or those with skimpy coverage.

And wildly inconsistent hospital bills are “often compounded by aggressive billing and collections that can have long-term adverse impacts on patients’ financial health, such as home foreclosures, wage garnishment and medical debt,” says Jessica Curtis, Director, Hospital Accountability Project at Community Catalyst,

So do patients care?  As far as I can tell, patients with health insurance don’t pay much, if any attention to price differences between hospitals.  We go where our doctor tells us to go or to a particular doctor who did a great job taking care of someone we know.  People are starting to get annoyed or angry about health care charges that don’t make any sense, but are they ready to either:

1) decide where to check in based on price or quality or both? Or,

2) let the government set prices, perhaps within a range?

I don’t see either, yet.

2 responses to Crazy, irrational hospital billing (with no connection to quality)

  1. Based on Mr. Levy’s comment on this subject on the ComonHealth blog, I think you are framing the question wrong, Martha. This so-called “billing” information may not have any relation to quality but it also appears to have no relation to billing either. No one gets a bill with these amounts on it.

    Please ask the Hospital Association what the numbers are for. They appear to me to be oddly computed cost accounting numbers and Mr. Levy seems to confirm that. Why are they even sent to Medicare? Are these same sorts of numbers that Attorney General Coakley used in her health costs study? If not, what’s her source?

  2. Hey Dennis – great to hear from you. I hope all is well.

    And I agree with your assessment – that’s why I say that these charges are just numbers with little relation to what hospitals are paid.

    The AG uses commercial data as far as I know.

    Take care!

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