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Medicare data provides reminder of wide range of health care prices, payments

When Medicare patients checked into Catholic Medical Center in Manchester complaining of chest pain, the hospital sent the government an average bill for more than $24,000.

Across the river at Elliot Hospital, the average price for treating chest pain: $12,000.

But both hospitals received, on average, between $3,500 and $4,200 from Medicare, according to 2011 data, released last week by the agency that oversees Medicare and Medicaid.

The massive spreadsheet reveals little more than a reminder that in most cases, Medicare payments aren’t connected to the prices hospitals charge, and nor are they tied to the actual cost of the services.

“The take-away from the data is, there is a lot of variation in pricing. That is not news,” said Tyler Brannen, health policy analyst at the New Hampshire Insurance Department. “What we want to do about it is still fertile ground. To empower the consumer to take action in some way or another, putting the information out there is the first step.”

While New Hampshire hospital prices were generally at or below the national average, the disparities within the state can be wide. Get a hip replaced in Derry and the average price tag is almost $70,000. The same procedure in Keene is priced at less than $32,000.

But, again, in both cases, Medicare would pay between $13,000 and $15,000, because it provides standard payments for specific treatments based on regional costs, with some additional funding for teaching hospitals.

Fourteen of New Hampshire’s hospitals weren’t even in the database because they’re considered critical-access hospitals for rural areas, which are paid under an entirely different Medicare formula based on a calculation of their costs.

The federal data released last week shows only what Medicare pays relative to the hospitals’ prices. New Hampshire is one of few states that also has pricing information available for consumers using private insurance.

‘It’s a complicated web’

In 2003, New Hampshire made major steps toward transparency by allowing the Department of Insurance to collect and analyze billing data from hospitals and insurers in the state, after removing all patient identification. It allowed the state to study what hospitals were charging and establish a website where consumers could see what their costs would likely be for a procedure at any hospital.

Thanks largely to that law and the website it authorized, New Hampshire was one of two states to receive an “A” rating on an independent score card grading states’ transparency in health care pricing in March.

The site isn’t perfect, because the predictions are based on past billing information. And calculations can be done only after the department collects enough bills in each category, so not every procedure is listed.

But like Medicare, private insurers also don’t pay the “sticker price” because they negotiate with hospitals and doctors for lower rates in return for the providers being part of the insurance network.

Prices are “driven off historical pricing that has been around, but we look at those to try to make sure they are somewhat tied to the cost of the services now,” Concord Hospital Chief Financial Officer Bruce Burns said. “Over time, because it’s interrelated with payment contracts the insurance companies have with us, it can change.

“It’s a complicated web.”

Instead, the only patients who are likely to see the full price of any procedure are the 10 percent of the New Hampshire population without insurance, who don’t have Medicare or an insurance company negotiating for them.

But often even they don’t pay the full price.

‘Just a symptom’

State law and the Affordable Care Act require hospitals to provide patients without insurance a discount similar to what they offer insurance companies, usually about 40 percent.

At Concord Hospital, patients who pay up front or within a set amount of time get an additional discount, and can sign up for payment plans or charitable care, said Burns.

Hospitals are then left trying to offset charitable care and reimbursements from the government that are below their costs with payments from private insurance that are more than cost.

“The commercial payers end up picking up as much as practical, as much as we can negotiate. It’s not a perfect system,” said Jill Batty, chief financial officer at Cheshire Medical Center/Dartmouth-Hitchcock in Keene.

The release of pricing and Medicare payment data might be confusing to consumers who use private insurance and probably won’t move the discussion about health care forward, she said

“I’m not sure what releasing it does to improve transparency. I don’t mean we don’t want to work on this issue, but it is frustrating and makes patients think there’s something wrong. There is, but it’s not the charge system. What’s wrong is more systemic to the way health care insurance works, and so these charge structures are just a symptom.

“This symptom doesn’t get you at the underlying disease.”

The state website with information about pricing for patients with private insurance is nhhealthcost.org.

(Sarah Palermo can be reached at 369-3322 or
spalermo@cmonitor.com or on Twitter @SPalermoNews.)

Related

INTERACTIVE GRAPHIC: Medicare payments vs. hospital charges in New Hampshire

Monday, August 12, 2013

Compare what each hospital charges for nine different health care services by selecting one from the left-hand menu bar. The left side of the graph is how much each hospital receives from Medicare for that service, and the right side is how much the hospital charges. The amount is represented by the height of each colored section, not by the … 0

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