The federal government released for the first time this month the prices hospitals charge for the 100 most common inpatient procedures and the amounts Medicare reimburses them.

Charges listed for the same treatments vary widely, sometimes within the same market, but local hospital officials say the numbers don't accurately reflect what they are paid and are not useful for patients trying to price medical care. Also, uninsured patients have the right to negotiate much lower rates than the prices they see on their bills.

Contents of the report

Treatment charges -- listed under "average covered charges" in the report -- from more than 3,000 hospitals that receive Medicare were gathered from fiscal year 2011 by CMS.gov, a federal government website managed by the Centers for Medicare & Medicaid Services. Average Medicare payments -- noted as "average total payments" -- for each procedure were based on a rate calculated after discharge using the Medicare Severity Diagnosis Related Group, codes for major procedures and related charges. The payment rate also includes various additional costs, such as per diem, coinsurance and deductible amounts.

Hospital officials and administrators have said it's not easy to provide patients with a cost before treatment for complex procedures. The CMS.gov publication uses data gathered after treatment, about seven to 10 days after discharge. To quote a similar cost in advance of treatment, the hospital would need to make an estimate gathered from information on current health conditions and possible related complications, through extensive pre-screening measures, said Hubert King, chief financial officer for Southeast Hospital.

What patients actually pay

No patient really pays the amounts listed as "average covered charges" for the procedures in the report, King said.

"That is what they would be charged, but that is not what we would expect to collect from them."

Either insurance companies pay contracted rates that are much less or individuals can negotiate a comparable discounted rate, he said.

Kathleen D. Stoll, director of health policy for Families USA, a not-for-profit organization that she said "brings the voice of consumers to the health-care debate," said "in some ways," King is correct.

"Not many people [pay] the fully-loaded charge. Sometimes, unfortunately ... those who are most vulnerable, the uninsured and often very-low-income families do get initially charged at that high rate. And then what happens varies," Stoll said.

The next step depends on the initiative of the individual and the financial counseling and payment practices of the hospital, Stoll said. Sometimes people try to pay down the full rate, but many negotiate and pay a lesser amount. It is hard to say how many patients see the full rate and believe that is what they must pay or how often hospitals actually try to recoup the whole charge amount, she said.

A 2009 study titled "Hidden Health Tax: Americans Pay a Premium" Stoll wrote showed that, of the $116 billion worth of care from hospitals, doctors and other providers the uninsured received in 2008, they paid for an average of 37 percent of the total costs of the care -- based on the average reimbursement rate provided by insurers -- out of their own pockets, "at tremendous sacrifice, in many cases." Third-party sources, such as government programs and charities, paid for another 26 percent of that care and the unpaid balance became designated as "uncompensated care."

"To make up for this uncompensated care, the costs were shifted to insurers in the form of higher charges for health services," the study said.

Discount guidelines

"Uninsured patients at or below 600 percent of the national poverty guidelines according to family size [as published by the U.S. Department of Health & Human Services], with assets totaling no more than $75,000, excluding permanent residence, may qualify for 50 percent off billed inpatient charges," said Tony Balsano, Saint Francis Medical Center vice president of finance.

The 2013 Health & Human Services poverty guideline for a family of four is $23,550; six times that amount, or 600 percent, is $141,300.

King said an Internal Revenue Service regulation in connection with the Affordable Care Act requires not-for-profit hospitals charge uninsured patients a rate comparable to the amounts that insurance companies pay.

"In the not-for-profit world, we have IRS regulations that say that we can't proceed to collect from patients a rate that is greatly in excess of the rate that we negotiate with the insurance companies," King said. "If you're an uninsured patient and you come in, typically in our hospital, we will negotiate a rate with you that is roughly equivalent to the rate that we would get through an insured patient."

Specific rates paid by private insurance companies to hospitals are proprietary information. Stoll said the Medicare reimbursement rates reflected in the cms.gov report are less than private insurers would pay the hospital, but more than Medicaid pays.

Local charges and reimbursements

Despite officials saying patients generally pay much less than they are charged, for "Major Joint replacement or reattachment of lower extremity without major complications or comorbidity," Southeast Hospital prints $61,592 and Saint Francis Medical Center puts $65,168 on patient's bills, the report said. Medicare pays $11,780 to Southeast and $13,418 to Saint Francis for that procedure. Those charges rank Southeast as 11th most expensive and Saint Francis as 7th most expensive for that procedure compared to the 63 Missouri facilities in the report.

Of the inpatient procedures for which both facilities were listed in the report, Saint Francis's charges were shown as higher for 61 of the 76.

When facilities discharged fewer than 11 patients per year, per procedure, procedure data was not included in the report.

Saint Francis officials declined to comment on the price comparison. Southeast officials said they have been working to reduce overall charges.

"We haven't raised rates in three years. If you look at just the charges, we did a $54 million rate reduction," King said. That rate reduction resulted in the hospital being paid $10 million less, he said. When costs to the hospital have increased, such as in some newer cancer drugs, the cost is passed along to the patient, but the hospital is not receiving the increase.

Neither administration could provide a specific rationale to explain the variation in charges. Southeast Hospital officials said hospitals don't consult with each other when charges are established.

"It's illegal to collude in the same market, so we are very cognizant of that, and we don't," said Jim Limbaugh, executive vice president of SoutheastHEALTH.

A confusing system

King said hospital charges are confusing overall and Southeast is working to change the system.

"Hospital rates, over the years, have been adjusted, based on a variety of factors. We think there's a better way to do it and we are trying to work with our insurance carriers and others to restructure the whole way we do rates, but we're not there yet. It's kind of a number that is not useful in terms of what people pay for health care," King said.

The more relevant number, King said, are the amounts listed in "average total payments," which show what Medicare pays facilities.

Balsano said the report doesn't provide clear information on charges or on payments to hospitals.

"The charges for common hospital services published by the Centers for Medicare & Medicaid services do not reflect the prices generally paid by individuals, insurance companies, Medicare or Medicaid. In fact, they have little bearing on what hospitals are paid for services," Balsano said. "Medicare and Medicaid often pay less than the cost of providing care. As a result, Medicare rates are a poor benchmark for determining charges or pricing in health care."

The reimbursement rates listed vary also, but by much less. King said factors such as regional wage adjustments based on where a facility is located, and "disproportionate care," the amount of care the facility provides to uninsured patients and those insured by Medicare, accounts for the variations in payments. Through the Affordable Care Act, facilities are paid more if performance is higher than average, compared to other hospitals, King said. Academic teaching hospitals receive an additional amount, too, Balsano said.

"Health-care pricing is complex, involving multiple payers -- both private and government -- that all set and negotiate rates. Without the appropriate context, publishing lists of hospital charges does little to educate consumers about the price of a service," Balsano said.

Steven C. Bjelich, president and chief executive officer of Saint Francis Medical Center, said what hospitals charge isn't the reason patients choose a certain provider.

"Consumers are primarily interested in what out-of-pocket expenses they will be responsible for on their bills. Duke University Physician and Behavioral Scientist, Peter Ubel, recently wrote that patients do not shop for health care like they do electronics. Most patients have little inclination or motivation to shop for health care because insurers will pay for the overall cost and leave patients with a fixed co-pay. They are selecting health care based on quality outcomes the health care facilities and their physician," Bjelich said.

Both hospitals said the situation was complicated and the federal report did little to clear things up.

"It's not a clear picture to people and we're trying to get to a clear picture," King said. "I wish the hospital industry had moved away from this years ago."

"The bottom line is that, the way the hospitals are paid for care is, indeed, a complicated process. It is veiled in some secrecy and proprietary issues and, as a consumer, one of the things we would like to see is much more transparency," Stoll said. "There's not much transparency in any of this flow of money, from a consumer standpoint."

salderman@semissourian.com

388-3646

Pertinent address:

211 Saint Francis Drive, Cape Girardeau, Mo.

1701 Lacey St., Cape Girardeau, Mo.

SIDEBAR:

Procedure

Provider Location Avg. Covered Charges Avg. Total Payments Discharges per year.

190 Chronic Obstructive Pulmonary Disease with MCC

Southeast Hospital Cape Girardeau $30,983 $6,944 75

Saint Francis Medical Center Cape Girardeau $34,610 $8,301 54

Missouri Delta Medical Center Sikeston, Mo. $26,317 $7,786 77

Missouri Southern Healthcare Dexter, Mo. $16,258 $7,088 30

Pemiscot Memorial Hospital Hayti, Mo. $13,660 $6,628 11

Poplar Bluff Medical Center Poplar Bluff, Mo. $39,239 $7,598 113

Lourdes Hospital* Paducah, Ky. $16,481 $6,042 64

Christian Hospital* St. Louis, Mo. $28,112 $7,078 81

238 Major Cardiovascular procedures without MCC

Southeast Hospital Cape Girardeau $128,520 $20,881 30

Saint Francis Medical Center Cape Girardeau $95,715 $19,185 42

Poplar Bluff Medical Center Poplar Bluff, Mo. $129,553 $22,568 15

Lourdes Hospital* Paducah, Ky. $60,072 $17,524 28

243 Permanent cardiac pacemaker implant with CC

Southeast Hospital Cape Girardeau $71,849 $15,254 20

Saint Francis Medical Center Cape Girardeau $106,095 $18,032 23

Lourdes Hospital* Paducah, Ky. $78,136 $14,359 29

Christian Hospital* St. Louis, Mo. $65,914 $15,732 22

470 Major Joint replacement or reattachment of lower extremity without MCC

Southeast Hospital Cape Girardeau $61,592 $11,780 132

Saint Francis Medical Center Cape Girardeau $65,168 $13,418 347

Poplar Bluff Medical Center Poplar Bluff, Mo. $ 64,421 $13,647 103

Lourdes Hospital* Paducah, Ky. $50,682 $11,697 309

Christian Hospital* St. Louis, Mo. $44,668 $12,162 24

603 Cellulitis without MCC

Southeast Hospital Cape Girardeau $16,213 $4,758 55

Saint Francis Medical Center Cape Girardeau $20,704 $5,079 63

Missouri Delta Medical Center Sikeston, Mo. $16,630 $5,601 22

Pemiscot Memorial Hospital Hayti, Mo. $9,878 $4,756 28

Poplar Bluff Medical Center Poplar Bluff, Mo. $ 28,820 $5,267 44

Lourdes Hospital* Paducah, Ky. $9,130 $4,291 49

Christian Hospital* St. Louis, Mo. $17,941 $4,802 51

* Not-for-profit hospitals with a similar number of beds as Southeast Hospital and Saint Francis Medical Center.

CC = Complications or comorbidities

MCC = Major complications or comorbidities

Complications are medical issues that arise connected to treatment.

Comorbidities are existing conditions that increase the chances of complications.

Treatments included in the graphic were selected to offer a sampling of common treatments offered. The original selections were amended to more accurately reflect the overall pricing discrepancy ratio between Southeast Hospital and Saint Francis Medical Center. Of the inpatient procedures for which both facilities were listed in the report, Saint Francis was shown as charging more for 61 of the 76. The complete report is available at cms.gov and at www.semissourian.com. When facilities discharged fewer than 11 patients per year, per procedure, procedure data was not included in the report.