Hospital prices for same services vary widely

Published: Thursday, May. 9, 2013 - 12:00 am | Page 1B
Last Modified: Wednesday, May. 28, 2014 - 5:16 pm

Hospital pricing data released Wednesday by the Obama administration offer a glimpse into a system where costs vary wildly even within the same region, such as Sacramento.

To scan a list of typical hospital charges in the four-county Sacramento region is to get an inside look at an erratic pricing system that lacks transparency.

And transparency is exactly the goal of the federal Department of Health and Human Services, which for the first time distributed nationwide hospital prices in order to call attention to the need for cost reform.

Currently, hospitals keep dockets of prices called chargemasters that are starting points for negotiation with health insurance companies and the government's Medicare and Medicaid programs.

If you are uninsured, though, you have to bear the entire chargemaster cost, sometimes 10 times the amount of the negotiated costs that insurers wind up paying.

Consider a trip to the hospital for chest pains – not even a cardiac event, but discomfort that's disturbing enough for you to seek care.

On average, in the four-county region, you'll face a $35,342 bill for hospital treatment of chest pains. The uninsured are stuck with that, regardless of whether they can pay.

If you have insurance such as Medicare or Medi-Cal, California's version of Medicaid, the hospital gets paid an average of only $4,879.

What accounts for the difference?

The sky-high price is listed on the hospital chargemaster, and the far lower price has been negotiated down by Medicare, Medi-Cal or health care insurance providers.

Chargemaster prices vary wildly among hospitals in the region, although the negotiated price that insurers pay each hospital winds up being much closer.

• At Mercy Hospital of Folsom, for instance, chest pains will cost a chargemaster rate of $30,691. Negotiated prices drop to $4,187.

• At Mercy General Hospital in Sacramento, chest pain is listed at $36,154; negotiated payment is $4,880.

• At Sutter Roseville Medical Center, chest pain will bring a bill of $24,086; negotiated payment is $4,118.

• At Marshall Medical Center in Placerville, chest pain costs $49,314; negotiated payment is $4,672.

• At Rideout Memorial Hospital in Marysville, chest pain is listed at $22,616; negotiated payment is $4,246.

• At Sutter General Hospital in Sacramento, chest pain treatment cost is listed at $24,998; negotiated payment is $4,840.

• At UC Davis Medical Center in Sacramento, chest pain brings a charge of $46,838; negotiated payment is $6,902.

Hospital pricing experts say there is little rhyme or reason behind the vast differences in chargemaster rates, or in how much hospitals are ultimately willing to come down in price during negotiations with insurers.

The price disparity puzzled John Blum, director of the federal Centers for Medicaid and Medicare Services.

Blum said the charges "don't seem to make sense to use from a consumer standpoint. There's no relationship that we see to charges and the quality of care that's being provided."

Rich Umbdenstock, president of the American Hospital Association, said the hospital price lists represent a part of the health care system that urgently needs updating.

In the meantime, consumers continue to face a vexing situation when trying to anticipate the cost of health care.

In the UC Davis Hospital System, for example, the chargemaster price for a case of simple pneumonia and pleurisy runs as high as $62,186 – with the negotiated payment of $12,451.

At the opposite end of the spectrum sits Kaiser Permanente Medical Center in Sacramento, which charges $25,407 to treat a simple pneumonia and pleurisy case – with the negotiated payment $7,444.

Anthony Wright is executive director of Health Access California, a consumer group, and has been advocating for health care reform for years.

"Health plans would admit that certainly the billed charges have no relation to the actual cost of the care," Wright said.

"They certainly have no correlation to the quality of the care provided."

Call The Bee's Cynthia H. Craft, (916) 321-1270. Follow her on Twitter @cynthiahcraft. Tony Pugh of the McClatchy Washington Bureau contributed to this report.

© Copyright The Sacramento Bee. All rights reserved.

Read more articles by Cynthia H. Craft



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