Price of health care a well-kept secret

PHOTOGRAPHER: David Lombardo

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Don’t plan on bargain hunting for a hospital visit in the Capital Region.

You won’t find prices for a hip replacement, surgical gown or even a handful of Tylenol listed on hospital websites or in brochures. A hospital stay, whether for a planned procedure or emergency treatment, comes with a surprise price tag at the end.

That is a problem for patient advocates and groups supporting health care price transparency

“Not having price information would be like going into the grocery store and not having price information. No one would shop that way,” said Suzanne Delbanco, executive director of Catalysts for Payment Reform.

Delbanco’s organization wants hospitals to publicize the negotiated rates for services and products that they have set with insurance companies.

The argument for price transparency is that it enables people to make informed decisions about their health care, whether they’re insured or not, said Susan Mattei, executive director of New Yorkers for Patient and Family Empowerment.

Hospitals contend that the complexity of their billing process, which includes different rates for different insurance companies and varied treatments, makes it impossible to advertise prices.

The complexity begins with a “chargemaster”: thousands of pages of prices that are unique to each hospital.

“The chargemaster is a complicated document, and since each patient requires different care and services, the resulting charges can vary greatly,” wrote Darlene Raynsford of Glens Falls Hospital in an email.

Ellen Kerness, spokeswoman for Saratoga Hospital, described a chargemaster in an email as a comprehensive list of procedures, supplies and medication that is annually updated.

“There is no physical copy of the chargemaster; it’s computer based,” she added.

It is this “extremely complex” billing process that Ellis Medicine’s Matt Van Pelt blamed in an email for the lack of prices on the Internet.

“Patients have unique needs and require an individual treatment plan,” he said. “With those variable factors, along with different insurance providers, it would be impossible to list all of the prices.”

None of the hospitals interviewed for this story would share their chargemasters. Officials from Albany Medical Center and Nathan Littauer Hospital kept rescheduling or ignoring two weeks of interview requests and ultimately didn’t comment.

Mattei said complicated billing is no defense for a lack of transparency. She noted that rates need to be explained to the government for Medicaid and Medicare, so the public should be able to get easy access to similar information.

“It should not be rocket science,” she said.

The pricing complexity stems in part from the à la carte fashion of hospital billing, which includes an itemized breakdown for an entire stay. For example, most hospitals don’t have set rates for a surgical procedure, instead the patient is paying for every step of the process, from the anesthesiologist to the bandages to the gown.

Because of rising out-of-pocket costs for people with health insurance, price transparency isn’t just a concern for the uninsured. Delbanco said that as plans with high deductibles become more common, people are thinking twice about where to be treated. It’s not just people without insurance who are looking for savings.

Mattei stressed that many people are surprised by what their insurance will actually cover during a hospital visit. People who are underinsured will often be caught off guard by the final bill.

Price transparency is also complicated by people without insurance, who can pay a variety of prices based on their means. There are state laws that prevent hospitals from charging above certain rates if the person makes less than three times the federal poverty level. For a single person, the federal poverty level is $11,490 in annual income. Prices for the uninsured making above this threshold, like the self-employed, are based on the chargemaster.

This can result in some “sticker shock,” said Mattei, as the uninsured are often initially billed at the chargemaster rates, which are much higher than what health insurance companies or government providers pay. In most cases, the final bill will not be the chargemaster price, with Capital Region hospitals discounting costs by more than 60 percent in some cases. This discounted rate is still usually above what a health insurance company is billed.

There are some ways to broadly estimate a trip to the hospital ahead of time.

Kerness said Saratoga Hospital staff will try to estimate charges for patients, but the process could take a few hours. Van Pelt said Ellis Medicine can provide an estimate of out-of-pocket costs if a patient can provide specific information on their insurance coverage, family income and other factors.

It is also possible to contact your insurance company, which has negotiated rates with certain hospitals. In some cases, though, hospitals restrict insurance companies from disclosing details of their rate agreements. Consumers can only get a vague cost description from their insurance company if such restrictions are in place.

This is all a far cry from price disclosure in New Hampshire, which has a state website that allows health care consumers to shop online for preventative care, emergency visit and surgical procedure estimates. The state-run website allows insured and uninsured patients to search based on nearby options. Uninsured consumers only need to enter their preferred geography and answer seven basic questions before getting an estimate.

Estimates include a median charge, a median charge with a discount, an assessment of patient complexity at that site and a contact for the hospital.

“That is probably the best tool we have today,” Delbanco said.

She said she’s familiar with the different options across the country, as her group recently partnered with the Health Care Incentives Improvement Institute to grade price transparency laws across the country. New York state’s laws got a failing grade.

According to the study, which came out March 18, New York law only requires hospitals to submit price information for their 50 most common diagnostic categories and surgical procedures for a state report. These reports, Delbanco said, often are buried somewhere on a state website.

The state laws only require hospitals to report what people are initially charged and are not required to report what was actually paid, according to the study.

“Our feeling is that there is a role for state laws and to ensure that consumers have access to this information,” she wrote in an email.

Price transparency wouldn’t necessarily create bargains for consumers, according to Delbanco. She said there were two likely possibilities if prices were completely transparent. The best case scenario is that expensive prices in a region would be lowered to compete with less expensive options nearby. The worst case scenario is that less expensive prices would be raised to the highest prices charged in an area, because it was clear consumers were willing to pay top dollar.

For the most part, Delbanco said hospitals aren’t aware of what their competitors are charging.

Van Pelt said Ellis will periodically review its charges to ensure they’re in line with competitors. He didn’t respond to how the hospital’s prices compared to other local hospitals.

The report on price transparency noted that “studies [show] us that the price for an identical procedure within a market can vary seven-fold with no demonstrable difference in quality.”

There is also a limit to what services people would comparison shop for, as Delbanco said most people aren’t concerned with saving when their life is on the line.

“Price transparency is most relevant for things you can research ahead of time,” she said, such as preventative care and surgical procedures.

Delbanco, who has children who were born in the emergency room, added that she would have shopped around for an emergency room in advance of giving birth if it had been an option.