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Don't be fooled; high list prices at hospitals do matter

The list price for many procedures in Hernando County hospitals is higher than the charge listed for the same care at most Tampa Bay area hospitals.

OCTAVIO JONES | Times

The list price for many procedures in Hernando County hospitals is higher than the charge listed for the same care at most Tampa Bay area hospitals.

Don't worry, hospitals say.

It doesn't matter.

Those outrageous prices — $1.50 for a single generic acetaminophen tablet, $77 for a box of gauze pads, the big-as-a-mortgage hospital bills that these sums add up to — are irrelevant to most of us.

They have nothing to do with the prices that Medicare and big insurance companies negotiate for hospitals' services. And, probably, you don't even pay those prices.

Not if you're covered.

Not if you're one of the fortunate ones.

And if you're not? If you have spotty coverage or no coverage at all?

Well, then these prices definitely matter, as Steven Brill documented in his recent epic story in Time magazine.

Brill told of patient after patient whose lives had been ravaged by hospital stays costing hundreds of thousands of dollars. He wrote that these bills, the leading cause of bankruptcy in this country, are based on list prices seemingly pulled out of thin air or, more like it, the very high sky.

It was shocking enough to prompt the federal government to release prices charged by hospitals all over the country — which is when Hernando County residents got their real shock.

Even in this realm of exploitative pricing, our hospitals' prices stand out.

The costs for most routine procedures at Oak Hill Hospital and Brooksville Regional and Spring Hill Regional hospitals are far higher than the state average, the Times' Tony Marrero wrote last week, and in many cases higher than at any other hospitals in the Tampa Bay area.

A hip replacement costing $43,370 at one hospital in Tampa will run you $118,735 at Oak Hill. Brooksville Regional charges $33,219 for chest pain care that, judging from its negotiated price with Medicare, is worth about one-tenth that amount — $3,329.

What do our hospitals have to say about this?

What hospitals everywhere say — that nobody actually pays these prices.

Definitely not people on Medicare, which is a lot of people in Hernando — a major reason that only 15 percent of the county's adult population is entirely uninsured.

A considerable percentage of those uninsured people are poor enough that they receive charity care, though you can bet hospitals don't exactly advertise that this assistance is available.

Patients who don't qualify for aid can always negotiate a discount with the hospitals, though with these prices, even a heck of a discount could leave patients with a devastating bill.

So, yes, those initial prices can matter to people without insurance. And to many people with insurance.

Say you have a plan that pays policyholders a lump sum. You're on your own to negotiate with the hospitals, with those very high prices as the starting point.

Now let's look at how insurers negotiate the prices they pay.

In big markets, with lots of hospitals, the insurance companies are likely to negotiate up from the lower Medicare charges, health care economists told me.

In a market the size of Hernando, with only two hospital companies from which to choose, the starting point is more likely to be those high list prices, meaning the end point is likely to be higher, too.

Insurers in such markets "are certainly at a disadvantage when they sit down with hospitals," said Jeffrey Harman, an associate professor at the University of Florida's College of Public Health.

"I've heard them say that the hospitals are extorting us."

And if your policy has holes that you are required to fill — and most do these days — the insurers' high costs become your high costs.

If you are unlucky enough to receive a hospital bill, check it out for yourself. If your bills are like mine, you can see the hospital's list price, how much of it was discounted to the insurer and how much you are required to cover.

When you write your check, see if you don't think it matters.

Follow Dan DeWitt on Twitter: @ddewittimes.

Don't be fooled; high list prices at hospitals do matter 05/24/13 [Last modified: Saturday, May 25, 2013 6:28am]
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