Probably a good program.
For federal programs here is more to think about
For Immediate Release June 26, 2003
Contact: Charles Idelson, 510-273-2246, 415-559-8991 (pg/cell)
CNA: High Hospital Charges Should be Part of Medicare Debate
Research Shows Higher Charges by Chains with Lower Costs
Updated research commissioned by the California Nurses Association reveals that corporate-owned hospital chains with lower costs are jacking up their prices more than other hospitals - an emphatic repudiation of the perception that hospital mergers provide savings for consumers and yet another signal that Congress needs to rein in the pricing practices of the biggest hospital chains, CNA said today.
"Any effort by Congress to expand health care services or control costs will be fundamentally compromised unless our lawmakers protect the public against excessive billing practices that are pricing more and more Americans out of health care coverage," said Kay McVay, RN, president of the 50,000-member CNA.
CNA recently released a comprehensive report by the Institute for Health and Socio-Economic Policy (IHSP) documenting huge markups on gross charges over costs by many U.S. hospitals and demonstrating that hospitals charging the most generally make the highest profits and are most commonly part of large corporate hospital systems.
In its latest findings, the IHSP reports:
o Corporate-owned hospitals which have the lowest average costs have among the highest markups on their bills. Among all hospital types, for-profit corporations had the second lowest average costs and the second highest gross markups producing the greatest overall disparity in pricing practices with charges of $17,555 over their costs.
o Hospitals with the highest average charge per individual patient discharge also had the highest average profits per individual patient discharge.
The latest data is part of ongoing research by the IHSP. The full report, "The IHSP Hospital 200: The Nation's Most - and Least - Expensive Hospitals," and charges and graphs, are available on the CNA website, www.calnurse.org
The report also includes:
o The top 10 most expensive hospitals for every U.S. state.
o The top 100 most expensive and 100 least expensive nationally.
All the findings are based on federal cost reports with aggregated data for millions of patient discharges in fiscal years 2000-2001 filed for nearly 4,300 U.S. hospitals. The data covers all charges, to Medicare, to HMOs or other health plans, and to individuals without health coverage, for all in-patient and out-patient services and other financial categories, such as medical supplies.
The high cost of hospital merger mania
During the merger mania of the 1990s in health care - during which $133 billion was expended from 1993-2002 - consumers were promised that "economies of scale" would lower costs.
The theory advanced by proponents of market-based medical care was that the larger chains could leverage lower costs through increased purchasing power - and the benefits would trickle down to the public. The latest IHSP findings suggest the exact opposite occurred, says CNA.
"Instead, it appears many of these chains used their market power to demand higher reimbursements from Medicare, HMOs, and individual payers, and pocketed the profits," said McVay. "The market in health care produced a financial boom for some executives, speculators and investors, but a disaster in costs for consumers."
Do Charges Matter?
Some hospital officials have responded to prior IHSP findings by stating that gross charges are irrelevant to actual payments made to hospitals.
But, as Modern Healthcare, an industry trade publication, reported June 16, "the contention of the hospital industry that gross charges, or list prices, don't mean much may be getting harder to defend."
In the updated version of its report, IHSP cites Medicare guidelines that Medicare's "flat" rates are impacted by a number of variables, including a relative weighting system for each Diagnostic Related Group (DRG), the particular service or procedure on which a hospital's charge is based. The DRG weights "are themselves heavily impacted by hospital pricing practices," notes the IHSP.
The IHSP quotes a report by the Medicare Payment Advisory Commission (MedPAC), an independent federal body established to advise Congress on issues affecting the Medicare program. MedPAC states that "the DRG weights may be biased because they are based on hospitals' service charges and thus reflect the systematic differences in mark-ups across services that are built into hospitals' charge structures."
Further, MedPAC reports that the "national average standardized charge per case in each DRG makes them vulnerable to distortion from systematic differences among hospitals in the mark-up of charges over costs and in the level of costs."
In other words, charges do substantially affect reimbursements, and high charges appear to be distorting the entire reimbursement system, says CNA.