Streams

New Data Shows Hospital Charges All Over the Map

Tuesday, December 10, 2013

Bellevue Hospital and NYU Medical Center are adjacent and work closely together, but charge widely different prices. (Fred Mogul/WNYC)

New York State has pulled back the curtain on hospital expenses. A new database shows what each hospital across the state charges for 1,400 different procedures, and what the “real costs” are at each place.

The differences can be dramatic: at Bellevue Hospital, the median charge for an uncomplicated birth  is $6,330, and at NYU Langone Medical Center, next door, the median charge is $12,222.  Lutheran Medical Center in Sunset Park, Brooklyn, typically charges $5,686 and Maimonides Medical Center, a dozen miles away, $14,763.

Patterns can be difficult to discern, and can vary from procedure to procedure. Overall, academic medical centers are more costly, because of the additional staff needed to provide medical training, the greater use of technology, and the severity and complexity of patients. But those factors do not account for why at Westchester Medical Center the median charge for a vaginal delivery is $22,143, and at New York Presbyterian Weill Cornell Medical Center, it is $11,900.

The Greater New Hospital Association said the information is “complex and can be confusing,” because “hospital charges do not reflect the far lower payments hospitals actually receive for the services they provide.” Medicare and Medicaid set much lower rates than what hospitals charge, and insurers and managed care companies negotiate rates that, likewise, have little to do with what hospitals ask to be paid.

People without insurance, however, are subject to these sticker prices. In practice, hospitals typically work out some kind of payment plan less than the charged amount and write off losses – but the payments can still be onerous.

Dr. Fred Hyde, from Columbia University’s Mailman School of Public Health, said the relationship between charges and underlying costs is tenuous at best.

“To a large extent, in the hospital field, we take our charges in accord with what we think we’re going to be paid, not in any relationship to the cost of goods sold or the combination of wages and materials or anything else that would go into a genuine cost measurement,” said Hyde, a physician who has been the head of two hospitals and a managed care company.

Experts say patients trying to evaluate potential hospital charges for upcoming treatments should use the state database cautiously, if at all, because the charges listed are likely to be only loosely connected to the prices a patient will see. Instead, patients should try to get information about their out-of-pocket expenses in advance from the hospital and insurance carrier — though in practice that can be difficult, if not impossible.

Making medical costs more transparent is a goal for both consumers and the institutions that pay for most medical treatment, insurance companies and the federal government.

Suzanne Delbanco, from the Catalyst for Payment Reform, said New York and the rest of the country should look to New Hampshire as a model. Its state website allows consumers to plug in their insurance plan, hospital and procedure, and get an accurate projection of real out-of-pocket costs.

Delbanco said New York's new database “is a good step, but a baby step” toward greater transparency.

In the meantime, she said, people should avoid falling into the trap of assuming places that charge more provide better care.

“Countless studies have looked at the relationship between cost and quality,” Delbanco said. “And the relationship just isn’t there.”

James Tallon, from the United Hospital Fund, said he hopes the newly released data will illuminate the true underlying costs of medical procedures and the wide variations in charges – perhaps eventually making the case for a return to stronger price controls that were in place, before deregulation in the 1980s.

“That’s an open political question – we’re nowhere near that now,” Tallon said, noting that New York “some three decades ago felt it perfectly reasonable public policy to standardize all these rate-setting decisions.”

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Comments [7]

Peter from Brooklyn, NY

What if the insured has something so rare that the only physicians and hospitals with the expertise are out of network? It is a triple nightmare. (1) the disease itself(2) Insurance pays minimally if at all even if catastrophic riders are in effect (3) even with payment, it comes as a check and "explanation of benefit" made out to the insured which has to be matched to a particular bill. This happened in my family. Chordoma: 300 cases diagnosed per year in the US; two brain surgeries each followed by weeks of intensive rehab; six weeks of special proton radiation -- the equipment, an atom smashing cyclotron, does not exist in our home town. Approximate amount billed was $600,000. The paperwork would fill a suitcase.

Jan. 01 2014 12:40 AM
Hepzibah from Murray Hill, NYC

I've had the experience of discussing the details of a hospital bill with a patient representative* whose job is disecting and explaining the bills. She couldn't do it and referred me to a more senior money manager. EVEN HE COULD NOT DECIPHER THE CODES.

Perhaps while not meant to deceive or swindle anyone, bills are coded so that you'd need the people who wrote the program to translate it all. This may be why it's nearly impossible to make cost comparison.

*At George Washington University Hospital in Washington, D.C.

Dec. 11 2013 05:39 PM
Steve

Maimonides is 12 blocks from Lutheran, not 12 miles.

This story highlights the absurdity of our capitalist health care system, but what do we do about it? Obamacare is just a band-aid on a societal cancer.

On another note, I heard the release from transit bodies that they can't afford to improve their infrastructure ... where is the money? Oh, right, it's in the pockets of Bloomberg, Buffett, Forbes, Gates et al. Because all of these individuals and their families could pay for every infrastructure improvement the world needs but, thanks to capitalism, it instead buys mansions, boats, elections, good will through drop-in-the-bucket philanthropic acts ... and is not available for public use to improve lives everywhere.

Dec. 11 2013 02:22 PM
Michelle from NJ

Regarding that "fair price by law" - are consumers obligated to pay the overcharges by physicians once they have been compensated that "fair price by law" through the insurance companies? Between the non-disclosure of fees and "fair pricing by law" enforced by the insurance companies - these overcharges seem more like a scam than an effort to cover real costs. If somone could explain the legalities in plain English, it would be greatly appreciated.

Dec. 11 2013 10:32 AM
Evie from New Jwrsey

If you are thinking about any sort of operation, wether big or small, consider doing it in another country. Even with your hospital stay, the procedure with be 1/3 the cost of anything here in the USA, and the hospital stay will be a more pleasurable experience. Supply and demand is the only motivator in a Capatalistic country like the US, and change will only occur when there is loss of revenue for the Medical community.(including insurance companies) Real competition resolves everything.

Dec. 11 2013 10:31 AM
Thomas Dargan from New Rochelle

If you want to pick up this snake from the other end, look at what Medicare pays, "the fair price by law" ("Bitter Pill," Steve Brill, Time Magiazine, March 2013). The fair price is often a small fraction of the list price. Only the poor, the young, and nervous immigrants pay the full list price.

You can look up the Medicare price on the Medicare.gov site:

http://www.cms.gov/apps/physician-fee-schedule/

This is not an easy site to navigate. I have posted a PDF/ Powerpoint of my E-Z navigator guide to it, here:

https://docs.google.com/presentation/d/1HrE3la4kMCD14J_4PkeciWEIIADiDjkDO-5RFQM8aQs/edit?usp=sharing

Dec. 11 2013 09:03 AM
Den from nnj

Why not look into the charges from outpatient surgical centers. Hospitals provided an essential community service(now often for free). Outpatient centers provide great income streams.

Dec. 11 2013 07:43 AM

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