Study: Reported Charges Vary Between California Hospitals

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Reported charges for appendicitis cases vary dramatically between California's acute care hospitals, according to a study involving UC-San Francisco researchers, the Ventura County Star reports.

For the study, researchers examined charges reported by hospitals for 19,368 cases of appendicitis in 2009.

Key Findings

According to the study, the lowest hospital charge for one appendicitis case was $1,529, while the highest charge was $182,955. The median charge for a case of appendicitis was $33,611, according to researchers.

The study also found that: Public hospitals charged about 36.6% less to treat appendicitis than not-for-profit hospitals; and Not-for-profit hospitals charged about 16.3% less than for-profit hospitals.

Reaction to Study

Hospital officials said the findings are of little value because the charges have little bearing on what insured or uninsured patients actually pay.

Dave Glyer -- CFO for Community Memorial Health System -- said that the study "assumed that hospital charges matter when they don't," making it "completely off base." He said that insured patients pay rates negotiated by health insurers and that certain uninsured patients are aided by assistance programs.

Maribeth Shannon -- director of the California HealthCare Foundation, which publishes California Healthline -- agreed that there is not much of a connection between reported charges and actual payments. However, she said that actual payments also vary significantly between hospitals and sometimes differ within the same facility.

Renee Hsia -- an emergency department physician -- said the reported charges are important because they represent an illogical pricing system that does not allow patients to know how much procedures really cost.

Although some say the pricing system will improve under the federal health reform law, Hsia said more regulation is needed, citing Maryland's creation of a commission that sets hospital rates (Kisken, Ventura County Star, 5/7).

Tom Johnson
Mr. Apgar (a great name if he were a neonatologist) does not fully understand the billing/payment system for hospitals. I've been a hospital CEO for 28 years and have worked in hospitals, all not-for-profit and public, for a total of 43 years; and I don't understand it! I can tell you that charges have little relationship to most payments because Medicare, as an example, pays a fixed rate for a diagnosis (DRG). It doesn't matter what the charges are; the hospital receives a fixed rate for the appendectomy. That said, transparency is important and a patient should have access to a charge data master or to a hospital representative who can give them information about prices. Ultimately, the only system that really makes sense, by aligning incentives between the insurance company, the provider (doctor and hospital) and the patient, is one like Kaiser. I don't have Kaiser and I've never worked for Kaiser but the disjointed and complex system we now have just doesn't make sense.
Frank Apgar
It would be helpful for hospitals to create a greater degree of transparency regarding their charges (and paymenst received). On the surface, it seems somewhat disingenuous to list charges and then say in reponse to the reserach findings that these do not have any bearing when looking at the actual payments they receive after the "discounts" given to commercial health plans, Medicare, MediCal and uninsured individuals. It is also unfortunate that hospitals have forced, through their contracts with health plans, to prevent the consumer from seeing what they are paid by the plans when the consumer (patient) gets a copy of what the "Evidence of benefit" following payment to the hospital by health plans. It smacks of "getting their cake and eating it too." What are they hiding????

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