Springs Memorial Hospital in Lancaster is among the top 50 hospitals in the United States charging rates 1,000 percent more than the cost Medicare allows, according to a report in Health Affairs.
Springs ranked 41st in the survey that looked at data from 2012 to 2013 compiled by the Centers for Medicare and Medicaid Services. It was the only South Carolina hospital on the list.
The hospital cost data does not reflect what patients pay, however.
Springs officials said hospital reimbursement is a complex issue with multiple players and that charges vary from hospital to hospital because each has a different mix of payers, patients and services.
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“Hospital charges do not accurately portray what consumers pay for their health care,” Springs officials said in a statement. Medicare and Medicaid set the rates they pays hospital. Health care insurers typically negotiate a reimbursement contract with health care providers.
Uninsured patients and out-of-network patients are the most likely to “pay a large portion” of a hospital’s full charge, said study authors Ge Bai, an accounting professor at Washington and Lee University in Lexington, Va., and Gerard Anderson, a professor of health policy at the Johns Hopkins Bloomberg School of Public Health, in Baltimore, Md.
The researchers studied data from 4,483 hospitals. Their review showed a rise in hospital charges to Medicare costs ratio. In 1984, it was 1.34, meaning if Medicare-allowed costs were $100, hospitals on average charged $134. The ratio has risen since then. For 2012, the average was 3.4.
High hospital markups, the authors of the study wrote, “subject many vulnerable patients to exceptionally high medical bills, which often leads to personal bankruptcy or the avoidance of needed medical services.”
The U.S. Census estimates 17.4 percent, or about 13,534 people, in Lancaster County were uninsured in 2012.
Lynn Bailey, a health care economist in Columbia, said the authors’ findings were not new, nor surprising, reflecting a long-term trend in the industry.
She noted that the cost-to-charge ratio was “consistent model” often used in health care economics, but “it’s a cost allocation model that’s 50 years old.”
The real problem, Bailey said, is the difficulty in determining the real price of health care.
“Nowhere in our economy do we have a relationship that is as bizarre or byzantine as health care. We have bills no one can understand,” she said. There is more transparency in buying a used car than there is in health care, Bailey said.
The study authors also called for more transparency in health care and that federal and state policy makers “need to recognize the extent of hospital markups and consider policy solutions to contain them.”
Springs and its parent company, Community Health Systems of Franklin, Tenn., said hospitals provide medically necessary emergency medical care for patients regardless of their ability to pay. In its statement, Springs said it provides “substantial discounts for those who are uninsured and we offer charity care for those who qualify.”
At Springs, patients whose household income is at, or below, 100 percent of the current federal poverty income guidelines are eligible for charity care.
In 2014, Springs provided $88 million in charity and uncompensated care to the area’s most in-need residents and paid $2.37 million in property taxes that support local civic resources and other state or federal purposes.
Springs officials also said their fiscal management allows the hospital “to remain a vital contributor to the quality of life and economic health of the community,” and to reinvest in its facilities. Recent upgrades to the hospital include a $4.3 million Emergency Department renovation and a $3.1 million geriatric psychiatric unit that will open in November of this year.