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Digging Deeper on "As Hospital Prices Soar, a Single Stitch Tops $500" from the NY Times

Posted on December 3, 2013 by Randy Cox   (all articles)

I appreciate the article by Elisabeth Rosenthal at the NY Times yesterday entitled As Hospital Prices Soar, a Single Stitch Tops $500, both because of its potential to increase common-man awareness of price transparency issues in healthcare, and because of its intrinsic plea for solutions to a lack of transparency generally. It comes at a time when the nation seems to have forgotten momentarily about the issue of high and opaque prices, in favor of issues with federal exchanges and the ACA.

As Pricing Healthcare has recently added fully-searchable pricing data for most California hospitals, there is now a fairly easy way to go deeper than the list prices that Rosenthal uses as examples.

List prices, or the full charge amounts in hospital chargemasters, are almost always high. However concerned one might be about this fact, it doesn't come as a surprise to those in the healthcare space. Statistics generally point to higher revenues for hospitals that have higher charge rates, even though almost no one pays the full charge amount.

Americans generally know that insured patients get discounted rates, often significantly discounted. But relatively few understand that most hospitals also offer discounts, sometimes even lower than insured rates, for uninsured, self-pay, and prompt pay patients.

California Pacific Medical Center is a hospital under the umbrella of Summit Health. Summit hospitals have a well-publicized discount rate for uninsured cash payers that is usually around 40% in Northern California. For Cal Pacific, this means the non-charity care rate for an outpatient abdominal CT scan with contrast (CPT code 74160), which Rosenthal currently lists as $4,495 in 2012, would be $2,697 if you can pay upfront. That's significant, and it matters both for those without insurance as well those with insurance who find themselves paying out-of-network rates.

For those with a serious interest in finding lower rates, getting to a single facility's cash rate is just the beginning. Seton Hospital, less than 10 miles away from Cal Pacific, has a list price for the same CT scan almost identical to Cal Pacific's. But the cash price you would pay at Seton is almost $1000 less, at $1,752.

Let's not stop there. Alta Bates Summit Medical Center and San Mateo Medical Center, both in the greater San Francisco metro area, offer list prices for this procedure at less than $1300, significantly lower than all other hospitals' cash rates in the area. Better still, both offer a cash rate of under $600.

Let's talk now about insured rates. Aetna unfortunately does not display negotiated rates for Alta Bates or San Mateo Medical Centers with their online cost estimator. But they do list a few Bay area hospitals' negotiated-rates. Alameda Hospital, whose self-published list price for code 74160 is $6,500, the highest of any hospital in the area, has negotiated a rate for Aetna planholders of $2,541 (Aetna claims their cost is $3,660, but it is not understood how they came to that figure). So clearly paying an insured rate at one facility doesn't mean you're getting the lowest possible rate.

Aetna estimates that Seton Medical Center and Sequoia Hospital have negotiated a rate with Aetna of around $910 for this CT scan, also higher than the lowest cash rates. This is the lowest rate Aetna negotiates with any Bay area hospital.

These Aetna-reported rates might have some thinking there is kind of mistake. If there is, it is systematic and between multiple systems. I think the numbers are largely accurate, as disparate as they are. I looked at Aetna's published negotiated rates with some non-hospitals in the area, confirming what others have written regarding the high overhead of many hospital procedures. SimonMed Imaging: $363 (cost of $2,337), Valley Radiology: $442 (cost of $1,229), Health Diagnostics of California: $444 (cost of $3,100). Cash rates for these centers are unknown.

So with the knowledge we have today, Aetna planholders can pay as low as $363 for a single CT scan on the abdomen, and much higher at other facilities. Cash payers can get down to $466 at Alta Bates, or go as high as $6,500 if paying the full list price. A lot more questions need to be asked, and a lot more pricing data published, but this gets us much further down the road than only list prices - prices that are easier to get but less useful to most of us.

Pricing Healthcare offers comparisons for many of the most common procedures for most California hospitals, as well as other medical facilities across the country.