|By Patrick Malone, The Santa Fe New Mexican|
|McClatchy-Tribune Information Services|
Presbyterian Española Hospital had charged the sum for a colonoscopy and hernia repair in 2005. Both procedures took about an hour. Rigsby, a 66-year-old former volunteer emergency medical technician, didn't even spend the night in the hospital.
Still, the cost seemed awfully high to Rigsby, so he began researching how hospitals set prices and whether the bill that haunted him was correct. Rigsby's quest led him to an assortment of advocacy groups that steered him to a secret buried deep in patients' billing records -- the cost basis for his bill.
What Rigsby discovered was that the cost the hospital charges the federal government for the same procedures under
In Rigsby's case, the total cost was
"It really is insane," said Rigsby, who ultimately paid
Rigsby caught on early to a trend that, thanks to provisions in the Affordable Care Act, has become abundantly apparent: Hospitals everywhere set medical prices that far exceed what
"You're shining a light on something that has been in a black box for decades," said Dr.
Wildly varying costs
According to an analysis by The New Mexican of hospital pricing data from 2012, released by the federal
Hospital costs for inpatient services averaged a 223 percent rate of inflation over the
Hip replacement surgery at
An outpatient who undergoes cardiac imaging, such as an echocardiogram, at
The data show the differences be-tween the rate
For-profit prices highest
The data used in The New Mexican's cost analysis marks only the second time that bulk hospital pricing data has been publicly released by the federal agency, the first being 2011 data released last year. Before that, only the most diligent consumers, Rigsby among them, bothered to mine deep enough into their medical invoices to know how starkly their bills differed from the federal designation for the cost of care.
Using the latest data, The New Mexican's analysis measured how much hospitals charged relative to what they collect for services to
The analysis found that for-profit hospitals tend to charge more than nonprofit hospitals. And government-run facilities tend to charge less than the nonprofits.
For instance, at
Investor-owned, for-profit companies own nine of
A spokeswoman for
Not every hospital in the state is faring as well, according to
"We're not the highest in the market, we're not the lowest," said
The hospital employs a third-party contractor to develop its "chargemaster," the list of sticker prices for services.
"They help us basically look at the
When hospitals -- including St. Vincent -- are asked how they establish pricing, the simple answer is, "It's complicated."
Pricing is affected by variables such as the mix of commercially insured, government-subsidized and uninsured patients, the types of services a hospital provides and associated infrastructure, such as trauma care centers and helipads for medical evacuation flights.
"You really start with the infrastructure of the entity and the type of services that are provided," said
"The local cost of infrastructure, the local cost of staffing, the staffing mix -- all of those things go into what the local cost of operating a facility is," Dye said. "And of course, that translates into what the hospital would charge for individual services they deliver. What goes in determines what comes out."
'Going overboard' to offset losses?
Hospitals contacted by The New Mexican emphasized that few of their patients actually pay the sticker price for their services.
Patients with commercial insurance pay the rates the hospitals have negotiated with their insurers, generally at much lower costs than the top-end prices reflected in the
"The prices are set to accommodate that some patients --
But cost control advocates such as
"That's exactly where their argument breaks down," Shah said. "Even if
"On average, the
The reasons hospitals might set their chargemaster rates much higher than the government-prescribed rates are numerous, and not the least among them being profit margin, Richards said.
"There may be lots of reasons why an organization may do this," he said. "In our case, we haven't artificially inflated our prices."
In The New Mexican's analysis,
Those who do pay the sticker price most often are uninsured, like Rigsby, Shah said.
"That's the tragedy of all this," Shah said. "The people that pay the sticker price are the people least able to afford it, without insurance."
Insurance no shield from rate hikes
Even patients with commercial insurance aren't shielded from the affects of hospitals' sticker prices, Richards said. Hospitals generally approach the rates they negotiate with insurance companies, either as a percentage of the top-end prices reflected on their chargemaster cost list, or as a multiplier of what
Those negotiations set rates for the costs insurers will pay to hospitals, and the costs that insurers won't cover, which generally become out-of-pocket expenses that insured patients must pay toward a deductible.
"A couple thousand dollars is a lot to take on the chin, no matter who you are," Shah said.
Dye acknowledged that hospitals' negotiated rates with insurers historically have represented a percentage of the chargemaster rate, but he said that practice is becoming less common. Instead, he said, hospitals are increasingly agreeing to bundled pay packages from insurers that carry some financial risk for hospitals because reimbursements are tied to successful outcomes and not the volume of services a hospital provides.
Patients who go outside their insurance networks for care also could find themselves paying the full rate.
More than 24 percent of
The release of hospital pricing data was mandated by the Affordable Care Act, ostensibly to help consumers comparison-shop for health care. But the data are difficult to analyze, and for most -- especially those with commercial insurance -- not useful for comparisons.
"When charges have little correlation with what price will actually be paid, it's difficult to do any comparison," UNM's Richards said.
But undeniably, consumers have an appetite for menu-style price comparisons for health care services, Shah said. He pointed to the
"When people are dumping all this
But he is adamant that no amount of pricing transparency can fix price inflation in the American health care system. That, he said, is a problem that doctors and hospitals must fix.
"We want to get to a place where it's considered unethical to inflate patients' bills," Shah said. "If you walked outside in
Still haggling over bills
Since Rigsby's first run-in with an eye-popping invoice, another
With both of the five-figure bills he has received during the past nine years, Rigsby has mounted scrappy objections on the basis that, as someone without insurance, he was subjected to much higher medical costs than someone with a commercial or government-sponsored health care plan would pay. When he confronted bill collectors seeking payment for his wife's treatment, he again asked them for a cost basis to determine the gap between the prices set by
"They walked away," he said.
Today, Rigsby finds himself haggling over yet another medical bill for an emergency room visit for an irregular heartbeat earlier this year at
Rigsby, who lives along the Rio Grande in
"Why am I interested? It's because I've been personally affected, and it got my goat," Rigsby said. "It touched me emotionally."
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