The original bill sent to Medicare for treatment for a stroke with major complications is nearly three times as high at Palmetto Health Richland as at Providence Hospitals, according to statistics released last week by the Centers for Medicare and Medicaid Services.
The data was publicized in part to help consumers make decisions, but the information also indicates how complicated healthcare billing can be.
For instance, the average charge for the stroke care was $48,808.99 at Palmetto Richland or $16,818.05 at Providence, but the average total payments for the service to the hospitals was much less – $9,901.56 at Palmetto Richland and $5,969.57 at Providence.
The original charge is paid by few patients. Medicare and insurance companies negotiate steep discounts on that price. Some of those with no insurance are written off as charity cases.
Uwe E. Reinhardt, an economics professor at Princeton, wrote in The New York Times that “charges are the prices that a totally inebriated foreign billionaire would pay a U.S. hospital if his wife were not around to control the bloke.”
The lower figure – the average payment per procedure – is what Medicare or insurance companies typically pay plus the out-of-pocket expense for patients. It’s more indicative of the cost differences from hospital to hospital – usually. Palmetto Health said their higher payment in the stroke example primarily results from Medicare’s practice of paying more to facilities that are teaching hospitals and that treat a higher percentage of uninsured patients.
Tony Keck, director of the S.C. Department of Health and Human Services, doesn’t think the data will help consumers much in decision-making. But if it prompts changes, the move by CMS might help in the long run make the entire payment system easier to understand.
Keck compared it to his release of data about the profitability of S.C. hospitals last month. “I wanted to start a conversation and get people to ask more questions,” he said.
Hospital officials downplay the importance of the data in the CMS report, especially the average charges.
“Federal Medicare policies have also created incentives for hospitals to set their charges high so that they can recoup a portion of their losses on the most complex, costly Medicare patients, known as outliers,” said Barney Osborne, vice president for finance and reimbursement at the S.C. Hospital Association.
The hospital association is working with hospitals to overhaul the hospital charge system without violating strict federal anti-trust guidelines, Osborne said.
Healthcare officials suggest consumers consider the cost figures as one of many factors. In fact, patients might be more interested in the number of times a hospital performs a certain procedure, which also is in the CMS report.
The CMS report has lots of information, chronicling the top 100 procedures at every hospital in the country. The State has made it easier by breaking down only the South Carolina hospital data at thestate.com/hospital-charges.