When Morton Plant Hospital in Clearwater charges $49,370 for a joint replacement and Oak Hill Hospital in Brooksville charges $118,735 for the same procedure, something is out of whack. It turns out that the entire enterprise of hospital billing is largely a farce that is most unfair for those who may be able to afford health care the least. It's one more sign of how America's health care system is in need of reform. Without transparent prices, consumers' care is at the whim of whatever someone else decides they can afford.
A transparency push by the Obama administration has pulled back the curtain on what insiders have long known. The release this week of what hospitals charge versus what Medicare reimburses has left hospital administrators scrambling to explain why the deck is so stacked against the uninsured. It has long been known that hospitals set different prices depending on the insurer. And governments, through Medicaid and Medicare, pay even less.
But keeping prices largely cloaked has allowed hospitals to prevent consumers from comparison shopping and putting downward pressure on prices. The worst affected are those patients not covered by insurance or the government who are quoted inflated prices and may put off needed care — even though a hospital might later discount the cost. It's one more reason why Florida's Legislature should expand Medicaid. The stack is decked against the working poor who can't afford insurance on their own.
Tampa Bay Times staff writer Letitia Stein plumbed the database of hospital billing information made available for the first time by the federal Centers for Medicare and Medicaid Services. She found discrepancies in average charges among Tampa Bay area hospitals so vast that they were divorced from the actual costs of providing patient care. Hospitals affiliated with the for-profit HCA hospital chain had the highest charges for common procedures like joint replacement surgery and pneumonia treatment. Hospitals affiliated with the not-for-profit BayCare Health System charged some of the lowest rates. Even so, Morton Plant's $49,370 charge for joint replacement, while the lowest in the area, was still about four times its average Medicare reimbursement $12,346.
This was true across the country: Hospitals charged patients wildly differing rates for the same procedure and often many multiples of what Medicare paid. Even hospital insiders admit that billing practices are out of control and the charges are unsupportable, even if relatively few patients end up paying the official rate. Steve Short, chief financial officer at Tampa General Hospital, called the charging practices "absurd." Indeed. In other industries, it is called price-gouging.
Long term, the database should allow consumers to find the most cost-effective care for common procedures, which should help bend the medical cost curve and tame health care inflation. But for more complex situations, the patient will remain vulnerable until the industry — or government — demands more accountability. The industry is on notice.