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A number of treatments cost more at LewisGale Medical Center than at Carilion Roanoke Memorial Hospital, according to data.
Thursday, May 9, 2013
Charges for the same medical procedures can vary by thousands of dollars at hospitals across the country — and at the two cross-town rivals in the Roanoke Valley, according to data released Wednesday by the federal government.
At LewisGale Medical Center in Salem, the list price for nearly all of the treatments included in the data was higher than what was charged by Carilion Roanoke Memorial Hospital.
For example, the average cost for a joint replacement at LewisGale was $64,505, compared with $53,441 at Roanoke Memorial.
In fact, Roanoke Memorial was less expensive for all but two of 95 procedures included in the data.
Released by the U.S. Centers for Medicare and Medicaid Services, the figures were touted as the first opportunity for health care consumers to make a hospital-to-hospital comparison.
“Currently, consumers don’t know what a hospital is charging them or their insurance company for a given procedure, like a knee replacement, or how much of a price difference there is at different hospitals, even within the same city,” said Kathleen Sebelius, secretary of the U.S. Health and Human Services Department.
By making the prices publicly available, the government is hoping that providers who charge the most will be forced to reconsider their rates.
“Hospitals that charge two or three times the going rate will rightfully receive greater scrutiny, and those that charge lower rates may gain new customers,” Sebelius said during a teleconference with reporters.
However, the prices listed in a massive database bear little resemblance to what most people actually pay.
The $53,441 for a hip replacement at Roanoke Memorial, for example, is the average “list price” of what that procedure would cost if the patient was not covered by public or private insurance.
What hospitals are actually paid is governed by negotiated rates with private insurance plans or Medicare’s fee schedule, with covered patients often picking up a fraction of the cost.
“The charges [listed in the report] are irrelevant when it comes to what consumers and Medicare actually pay,” LewisGale spokeswoman Nancy May said.
May noted that the CMS data show that Medicare paid LewisGale, on average, 20 percent less than what it reimbursed Roanoke Memorial for the procedures listed.
“We’re committed to giving patients and payers high value for their health care dollars, and this report shows we’re succeeding,” May said.
While acknowledging that many patients do not pay the prices that were released Wednesday, government officials said the wide variations should nonetheless provide a starting point for a more detailed examination.
“We hope that consumers will take a hard look at this data, and we hope that it will … shine a much brighter light on practices that don’t seem to make sense to us from a consumer standpoint,” said Jonathan Blum, deputy director of the Center for Medicare at CMS.
The database lists the average price for the 100 most common Medicare inpatient services at more than 3,000 hospitals across the country. The hospital prices, from 2011, do not include separate physician fees.
Also on Wednesday, the government announced it is making $87 million available to states to improve their rate review programs, in keeping with a push for more transparency that is part of the new federal health care law.
For people who don’t have health insurance and are forced to pay a hospital’s list price, the data will allow them to shop for the best deal, Blum said.
Hospitals countered that they offer discounts for people with low incomes and no insurance, and the most indigent can receive free care.
The variations in price for similar procedures shouldn’t be a surprise, since hospitals might violate antitrust regulations if they shared “proposed or negotiated rates” with each other, said Rich Umbdenstock, president of the American Hospital Association.
Given the highly complicated nature of health care billing, some critics said a simple comparison of list prices does not go far enough.
“The complex and bewildering interplay among ‘charges,’ ‘rates,’ ‘bills’ and ‘payments’ across dozens of payers, public and private, does not serve any stakeholder well, including hospitals,” Umbdenstock said.
Shannon Abell, director of senior services for the LOA Area Agency on Aging, said he didn’t expect the numbers to have a big impact on health care choices made by Roanoke Valley residents.
The notion of “shopping around” is less meaningful in a region with just two major hospitals, he said.
“It’s not like buying a car,” Abell said. “You can shop around for Fords at a lot of Ford dealers.”
In reality, he said, most people who are already covered by insurance will likely go wherever their doctor refers them.
Having said that, Abell added that the numbers released Wednesday do make for interesting comparisons.
As for the two major hospitals in the valley, LewisGale’s charges were at least 50 percent higher than Carilion’s for 42 of the 95 procedures listed. In seven cases, the charge was more than double that at Roanoke Memorial.
The only two procedures that were cheaper at LewisGale were a spinal fusion with no major complications ($90,475) and a respiratory system diagnosis with ventilator support ($112,166).
Don Halliwill, Carilion Clinic’s chief financial officer, said Wednesday that he had not had enough time to examine the numbers and offer a detailed analysis.
Differences in how hospitals operate make comparisons difficult, he said.
“A hospital is not a hospital is not a hospital,” Halliwill said. “There are so many influences that make this complicated and challenging.”
Hospitals that provide more care to uninsured patients and those that serve as teaching hospitals are likely to receive higher reimbursements from Medicare.
But in general, Halliwill said, the data reinforce earlier reports of wide variations in what hospitals charge.
Nationally, the average charges for a joint replacement ranged from about $5,300 at an Ada, Okla., hospital to $233,000 in Monterey Park, Calif., the CMS data showed.
Pat Palmer, founder of Salem-based Medical Billing Advocates of America, said the prices released Wednesday could actually be higher for some patients who require more than the average treatment. “Those patients are going to have complete sticker shock” when they get their bills, she said.
As for the government’s goal of forcing the most expensive hospitals to lower their prices — either by public shame or market forces — Abell said he had his doubts.
“They’re not looking for business,” he said. ”They’ve got all the business they want.”
Staff writers Matt Chittum and Liana Bayne and The Associated Press contributed to this report.
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