One hospital bills patients for more than $200,000 for a procedure with a Medicare-allowed price of about $8,000.

(Bloomberg) — The two biggest U.S. hospital chains operate many of the facilities named in a new report as charging some patients prices far higher than what government programs pay — 10 times as much, in some cases.

Community Health Systems Inc. (NYSE:CYH) and HCA Holdings Inc. (NYSE:HCA) accounted for about half of the 50 hospitals with list prices higher than anywhere else in the United States, when compared with what they’re allowed under Medicare. The research was published Monday in the journal Health Affairs.

The study compared hospitals’ 2012 list prices with the the maximum allowed charges through Medicare, the U.S. health insurance program for the elderly and disabled. Across the country, hospitals charged uninsured and out-of-network patients an average of 3.4 times more than the Medicare amounts.

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“All hospitals mark it up, but the for-profits are doing it for a much higher rate than the non-profits,” said Gerard Anderson, a professor of health policy and management at the Johns Hopkins Bloomberg School of Public Health. “The American public needs to know that they are getting price gouged for the shareholders of these companies.”

While the study looked only at 2012, many markups continued in 2013, according to data from Medicare compiled by Bloomberg. Hospitals listed prices for some common heart procedures that were four to five times Medicare’s allowed charges. One hospital listed prices for degenerative nervous system disorders that were 28 times more than the Medicare amount.

Hospital markups

The huge difference between hospital list prices, which come from what’s called a charge master, and the Medicare rates highlights the difficulty in getting a handle on American health spending. The United States spent $2.9 trillion on health care in 2013, and of that, hospital care made up $936.9 billion, according to the Centers for Medicare & Medicaid Services (CMS).

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Patients with health insurance — either through Medicare or through private plans — rarely pay hospital list prices. However, those who don’t have coverage can be charged the higher list prices, as can insured patients who go to health care facilities outside their insurer’s network.

List prices rarely reflects what consumers pay, said Tomi Galin, a spokeswoman for Community Health. For-profit hospitals also say that they provide charity care to many patients who can’t afford their bills.

The hospitals identified in the study provided nearly $450 million in uncompensated care in 2012 and have programs that provide discounts to uninsured and under-insured patients, said Chip Kahn, chief executive officer of the Federation of American Hospitals, an industry trade group.

Pricing

Medicare and Medicaid establish their own prices, while private insurance companies negotiate rates, said Ed Fishbough, a spokesman for Nashville, Tenn.-based HCA. Fishbough disputed the idea that list prices reflect the real world.

“The amount patients pay for hospital services has more to do with the type of coverage they have than prices listed in the charge master,” Fishbough said in an e-mail. “Uninsured patients are eligible for free care through our charity care program or they receive our uninsured discounts, which are similar to the discounts a private insurance plan gets.”

Charity care doesn’t apply to all patients, Anderson said.

“More and more insurance companies are having narrow networks, so they only have a limited number of hospitals,” he said. “If you are out of network, you will be expected to pay these rates. If you are uninsured, you will be asked to pay these rates.”

Continuing trend

Data on procedures from 2013 showed a similar trend to 2012.

Heart procedures got the highest mark-ups in 2013, based on Medicare data for the 100 most common inpatient stays at more than 3,000 U.S. hospitals.

For an artery-clearing procedure called angioplasty, hospitals charged an average of $75,331, five times Medicare’s $15,250 price. Those who needed a stent to keep the artery propped open were charged $70,729, compared with the Medicare’s $14,875 price.

The biggest case of price inflation in 2013 was at CarePoint Health’s Christ Hospital in Jersey City, N.J., for 14 cases of degenerative nervous system disorders. Patients were charged an average of $223,767, compared with the $8,083 allowed by Medicare.

More than half of CarePoint’s patients are charity care, uninsured or covered by Medicaid, the U.S. health insurance program for the poor, said Jarrod Bernstein, a company spokesman.

“Being out of network is not a business strategy, it’s a survival strategy,” he said. “We would like to be in network with every insurer in our state, provided they could offer us a workable rate of reimbursement that takes into account our obligation to provide care for the underinsured and uninsured.”

 

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