A report that makes Doctors Hospital of Manteca appear to rank as the 29th most expensive hospital in the nation ignores the fact the healthcare provider after it posts actual costs for services then provides discounts to the uninsured that are comparable to current managed care rates that are in place.
Most states don’t limit what hospitals charge for their services, making it easier for hospitals to set billing rates several times higher than what Medicare charges. U.S. hospitals charged on average more than three times the Medicare-allowable costs, according to a study in the June issue of the journal Health Affairs that was released Monday. The study uses 2012 Medicare data to examine hospitals that charge on average more than 10 times their costs.
The study comes amid a national push to increase transparency in hopes of curbing rising health costs. The Obama administration began publishing some data, including hospital spending and the costs of popular procedures, like joint replacements, three years ago in an effort to encourage consumers to compare prices.
However, the study suggests there’s a long way to go and encouraged state and federal lawmakers to require hospitals to publish cost data and for state officials to legislate a maximum amount that hospitals can charge patients. Only Maryland and West Virginia regulate hospital mark-ups, according to the study.
Without such protections, uninsured patients are often charged the full cost and may be sent to bill collectors if they don’t pay. Casualty and workers’ compensation insurers and even insured patients who go out of network may also get hit with unexpectedly high bills, according to the study.
“Hospitals’ high markups, therefore, subject many vulnerable patients to exceptionally high medical bills, which often leads to personal bankruptcy or the avoidance of needed medical services,” according to the study written by Ge Bai of Washington & Lee University in Virginia and Gerard Anderson of Johns Hopkins Bloomberg School of Public Health.
However, the study — as its authors acknowledged— omitted discounts offered by some hospitals listed including Doctors Hospital of Manteca and its sister facility that was 30th on the list, Doctors Medical Center of Modesto.
“Including these discounts would have had a significant effect on the cost-to-charge ratio reported, and therefore the implications of the study’s results,” noted Scott Knight, Doctors Hospital of Manteca Associate Administrator for Business Development & Marketing. “Under Doctors Hospital of Manteca’s and Doctors Hospital of Modesto’s ‘Compact with the Uninsured,” patients without insurance qualify for discounts comparable to our current managed care rates. Doctors Hospital of Manteca and Doctors Hospital of Modesto provide millions of dollars annually in uncompensated and charity care; that reflects the cost of care provided, not what is charged. The rates that we negotiate with managed care companies are far more reflective of what patients actually pay.”
Community Health System, which posted revenue of $4.91 billion in its first quarter, owns 20 of the highest charging hospitals listed in the study, but a spokeswoman for the company said the data used in the study is based on a price list, which rarely reflects what consumers actually pay because it doesn’t account for discounts or charity care for low-income patients.
“Last year, our organization provided over $3.3 billion in charity care, discounts and other uncompensated care for those who can’t afford health care services,” said spokeswoman Tomi Galin.
The Federation of American Hospitals said the hospitals named in the study provided nearly $450 million in uncompensated care in 2012. The organization supports greater price transparency, but said it “will not help the average uninsured or underinsured patient. Absent coverage, the true resolution is having programs in place, like those in our hospitals, which offer discounts so that these patients do not have to prioritize concern about their ability to pay over their own health and well-being,” president Chip Kahn said in a statement.
California and New Jersey are among states mandated by state laws to provide discounts for certain uninsured patients.
The study comes amid criticism of public hospitals by Florida’s Gov. Rick Scott, a former CEO of a for-profit chain of hospitals. He recently suggested that all hospitals receiving taxpayer funds should agree to share profits as the state prepares to lose hundreds of millions of federal funds that help hospitals that treat Medicaid and uninsured patients.
Scott has been locked in a showdown — and is even suing — the Obama administration for allegedly withholding those so-called low-income pool hospital funds because Florida won’t expand its Medicaid program.
Some hospitals officials say they would be forced to shut down or cut services without those federal funds, but the governor contends the hospitals are not in as bad a financial shape as they claim; Scott has circulated hospital finance data to lawmakers to prove it.
He established a commission to examine how hospitals are spending taxpayer funds, including salaries, benefits and lobbying expenses. The Republican governor has been increasingly antagonist toward public hospitals as they have pushed for Medicaid expansion, which Scott is firmly against.
“The governor wants to make sure any hospital that receives tax dollars uses them in the most efficient and transparent way possible,” Scott’s spokeswoman Jackie Schutz said.