Creighton University Medical Center consistently charged the most among Nebraska and Iowa hospitals for common procedures listed in a federal database that's aimed at encouraging consumers to comparison shop.
Newly released Medicare data from 2011 shows that Creighton charged the most for 51 of the 54 procedures for which it treated enough patients to be included. Alegent acquired the Creighton hospital last fall, and Scott Wooten, the chief financial officer of Alegent Creighton Health, said Creighton's charge structure changed Jan. 1 to conform with its other hospitals.
Overall, the numbers show wide variations in hospital charges, not only from state to state or city to city, but also within the same city.
Creighton, for example, charged more than three times more for a major joint replacement than the lowest-charging Omaha hospital — $67,568, versus $22,334 at Nebraska Orthopaedic Hospital. Bergan Mercy Medical Center charged more than twice as much for treatment of a pulmonary embolism as North Platte's Great Plains Regional Medical Center — $33,263 versus $15,297.
The data also show that Medicare, the federal health insurance program for people 65 and older, pays hospitals a fraction of what they charge. But those payments, too, vary by hospital.
The data released this week by the Centers for Medicare & Medicaid Services listed the charges submitted by, and Medicare payments made to, more than 3,000 U.S. hospitals during 2011 for 100 common inpatient procedures. The database also reveals which hospitals perform the highest number of certain procedures.
The information is being released for the first time to “save consumers money by arming them with better information that can help them make better choices,” said Health and Human Services Secretary Kathleen Sebelius. “When consumers can easily compare the prices of goods and services, producers have strong incentives to keep those prices low.
“Hospitals that charge two or three times the going rate will rightfully face greater scrutiny. And those that charge lower rates may gain new customers.”
An official with Blue Cross Blue Shield of Nebraska said the insurer sees great variation in hospital charges.
“There's some rationale for why that may be,” said Lee Handke, senior vice president of health network services. “Some are educational institutions. Some provide special services, such as trauma centers. They spread a lot of those costs over all of their services.”
Creighton and the Nebraska Medical Center are teaching hospitals, treat a disproportionate share of indigent patients and serve as the city's two trauma centers.
|What Eastern Nebraska hospitals charged in 2011|
|Hospital||COPD||Pneumonia||Chest pain||Major joint replacement|
|Neb. Med Center||$14,129||$14,192||$13,610||$40,858|
“With our education mission, there are embedded higher costs,” said Bill Dinsmoor, the Nebraska Medical Center's chief financial officer. He also noted that his hospital provides care to “more Medicaid patients than anybody in the state of Nebraska.”
The charges — from hospitals' internal “chargemaster,” what some officials called the “sticker price” — are not what most people pay, hospital officials say. Rates paid by private insurers and public health plans like Medicare and Medicaid typically are much lower.
But Brian Cook, a Centers for Medicare & Medicaid Services spokesman, said the charges do illustrate “what a lot of people, uninsured or underinsured, are paying. For those uninsured or those underinsured, they may be responsible for charges that are five, six times what Medicare pays — even more than that.
“The starting point is much, much higher than what Medicare considers an appropriate charge,” Cook said.
Hospital price lists are part of the health care system that needs updating, said Rich Umbdenstock, president and CEO of the American Hospital Association. “The complex and bewildering interplay among 'charges,' 'rates,' 'bills' and 'payments' across dozens of payers, public and private, does not serve any stakeholder well, including hospitals.”
Handke said Blue Cross doesn't look at hospitals' charges, instead using its own fee schedule of what it pays for various services. To help patients, the insurer offers a cost estimator on its website.
Linda Burt, chief financial officer at Omaha's Methodist Hospital, said Methodist reduces the bills for uninsured patients. “We'll basically discount them to bring them down to what a commercial insurance company would pay,” she said. Tax-exempt hospitals are required by federal law to have financial assistance policies.
Even if everyone ends up with a large reduction from the listed charges, there still were wide variations among hospitals.
Wooten, of Alegent Creighton Health, said charges are only one factor patients should consider. He noted that the Alegent Creighton system last month was named one of the nation's top 15 health systems by Truven Health Analytics, which analyzed the clinical quality and efficiency of 328 health systems.
“The key thing for the consumer is not charges,” Wooten said. “It gets down to the cost, the quality they receive and the safety they experience.”
Added Methodist's Burt: “We try to treat the patient in a manner that they're going to come away from the hospital feeling that they received a valuable service while they were here.”
The average amounts that Medicare paid the hospitals for procedures weren't as far apart as the charges were. With joint replacement, for example, the total payments included $18,244 to Creighton, $16,050 to the Nebraska Medical Center and $11,622 to Nebraska Orthopaedic. Still, Creighton was 57 percent higher than Nebraska Orthopaedic.
Officials at the Nebraska Orthopaedic Hospital worked with physicians to reduce the number of suppliers of knee or hip implants used there so they could negotiate substantially better prices, said Tom Macy, chief executive officer.
“The two biggest expenses or costs related to health care are labor — nurses, staff — and supplies,” Macy said. “Our major focus has been on how do we keep our costs as low as we can, to be as efficient as we can and set prices accordingly,” he said.
“A lot of where consumers go is where their doctor recommends,” said Handke of Blue Cross. “We know also that physicians don't have a good understanding of the potential variation” of costs among hospitals.
“It kind of goes back to them to advise their patient not only on quality and care coordination but also total cost,” he said. “Physicians can add more value for their patients.”
World-Herald staff writer Paul Goodsell contributed to this report, which includes material from McClatchy News Service.
Contact the writer: