.....Advertisement.....
.....Advertisement.....

Hospital bills a big problem as deductibles, out-of-pocket costs grow

-A A +A

By Laura Ungar
The Courier-Journal
Kentucky Press News Service
Amos McGrew suffered from frequent ear infections, requiring ear tubes inserted two years in a row at two different hospitals.
His mother, Crystal McGrew figured bills for the common procedure would be about the same — she had the same insurance coverage, the same doctor, and there were no complications either time.
But she was wrong. The 2012 charges from Kosair Children’s Hospital totaled $1,560, while the 2013 charges from Jewish Hospital Medical Center East totaled $5,260. Officials with both hospital systems said they could not say why the bills were so different.
“It just doesn’t seem fair. It doesn’t seem logical,” said McGrew, 32, of Taylorsville. “I honestly think it’s out of control. ... You’re talking about an 8-minute procedure.”
McGrew’s bills reflect the wildly varying charges for medical care from one hospital to another, which no one, even healthcare experts, can fully explain.
It’s an issue getting more attention now, as many consumers are being exposed to the true costs of health care for the first time, with higher insurance deductibles and policies requiring more out-of-pockets costs.
“Consumers are shouldering more of the bill than ever before,” said Tony Felt, a spokesman for Anthem Blue Cross and Blue Shield. “For many, it’s such a mystery what things are going to cost. They have no idea.”
But they’re learning.
The Kaiser Family Foundation’s 2013 Employer Health Benefits Survey found that 78 percent of covered workers had deductibles, which averaged $1,135 for single coverage. And one in five American workers had high-deductible plans, up from one in 25 in 2006. Workers also face growing out-of-pocket co-payments and co-insurance.
Hospital officials, insurers and health care experts say some of the factors that determine bills are a hospital’s expenses, what Medicare and other insurers will pay for a certain item or service, and what the market will bear.
But the bottom line is, there’s no good explanation of why bills can differ so widely.
That question was not answered when the U.S. Centers for Medicare & Medicaid Services last year released data listing the average charges in 2011 at 3,300 hospitals for each of the 100 most common Medicare inpatient services.
Locally, the data showed that a major joint replacement, for example, cost $89,208 at University of Louisville Hospital, $63,371 at Norton Hospitals, $42,937 at Jewish Hospital & St. Mary’s Healthcare and $29,393 at Baptist Health Louisville.
Patients generally don’t pay full cost. Insurers pay negotiated fees, and hospitals usually reduce prices for the uninsured or refer their bills to charity care.
In McGrew’s case, she paid $239 out-of-pocket to Norton and $1,275 to Jewish — partly because she had paid out less of her deductible in 2013, but largely because that bill was so much higher.
McGrew advises consumers to figure out costs before a procedure when possible, instead of just going where the doctor says, as she did.
“That’s my mistake,” she said. “I was naive about it.”

Tale of two bills
Amos, who is 2 years old now, was 5 months old when he underwent the first procedure at Kosair Children’s in June 2012.
The tubes last about a year, and in June 2013, he had the second procedure at Jewish East. McGrew said both outpatient surgeries were successful, the family was treated well in both hospitals, and Amos is no longer having problems with his ears.
Her only complaint is the vast difference in price.
The bill at Kosair Children’s — which, like the bill at Jewish, doesn’t include the doctor’s fee — was lower than Jewish, but $400 higher than the $1,161 listed for the procedure by Healthcare Bluebook, a website that calculates its own “fair price,” using information gathered from employers, payers and providers.
Mike Gough, chief financial officer for Norton Healthcare, which owns Kosair Children’s, said his company charges all patients the same price for the procedure — although it could rise if there are complications.
Included are items such as operating-room time, medical supplies and lab charges, which Gough said are priced based on what the federal Medicare program will pay.
“We send insurance the whole bill,” said Gough, adding that it is then adjusted down, depending on negotiated agreements.
McGrew’s hospital bill at Kosair Children’s was adjusted down by $364 for her insurer, Anthem, which she has through her husband’s information-technology job. Anthem paid $957.
Gough said he also can’t explain why his company’s charge was so much lower than the charge at Jewish East. He acknowledged, though, that a hospital’s overall expenses come into play, saying “all of our charges are going to reflect a certain portion of the total costs within the institution.”
McGrew said she suspects financial problems within Jewish Hospital and its owner, KentuckyOne Health, may have driven up her bill. Ruth Brinkley, chief executive officer of KentuckyOne, recently said the company is facing a $218 million deficit and likely layoffs.
But when asked about that, Brinkley said while she couldn’t comment on a patient’s specific bill, the deficit “is not something passed on to consumers.”
Lynn Tanner, vice president of payer strategy and operations for KentuckyOne, agreed, and said McGrew’s charges predated KentuckyOne’s financial problems.
She said there are four major factors going into charges: the cost to provide services; the cost to operate a facility; insurance reimbursement levels, payer mix and charity care; and national and regional pricing comparisons.
“There’s not a national policy or formula for setting hospital prices, so hospital pricing usually varies by facility or procedure at a facility,” said Tanner, adding she could not discuss McGrew’s bill because of patient privacy.
Complicating matters further, Tanner said the 15 hospitals within KentuckyOne may set prices in different ways.
For example, some charge for the operating room by the minute, while others charge in 30-minute increments. She said the new hospital system, launched in 2012, is now trying to standardize those charges.

Getting savvy
As with the earlier surgery, Anthem paid much of the Jewish East bill. The $5,260 charge was adjusted down by $2,216 for the insurer, which paid $1,769, substantially more than it paid a year earlier.
Felt said he couldn’t talk about McGrew’s bill specifically. In general, however, he said his company tries “to set our reimbursement at as close to a market rate as possible,” but sometimes must agree to higher rates to include hospitals in its network to meet community expectations.
“Often, it’s because they can’t do without that hospital,” said Gary Claxton, vice president of the Kaiser Family Foundation.
Gough said such intricacies reflect a complex cost and payment system that “is one of the reasons I have gray hair.”
Nationally, Claxton said, some hospitals feel empowered to charge more because of their reputations or because they can negotiate higher reimbursements from insurers. But the market provides a natural limit to how high prices can go, he said: “You can only charge what you can get.”
Tanner said the same hospital may have higher-than-average charges for certain procedures, but lower-than-average charges for others. She noted that the CMS data released last year showed lower charges at Jewish than other local hospitals for many of the procedures examined.
None of the officials interviewed could say how the federal Affordable Care Act will affect the wide variability in hospital pricing.
“There’s nothing in the law that speaks to this,” Tanner said. But she added that the fact that people are paying more medical costs out-of-pocket is sure to have an impact.
“There is going to be more of a retail environment in health care,” Tanner said.
In the meantime, experts agree with McGrew that consumers should do their homework before getting care.
Both Gough and Tanner said their hospitals have financial counselors who can estimate what consumers would owe for various procedures, including how much major insurers would pay.
Claxton said patients can also ask doctors about where they plan to perform a procedure, and whether another location might be cheaper. Insurers also can help consumers calculate costs.
Anthem has a service called “Care Comparison” which estimates costs, and what consumers would owe, for more than 100 common medical procedures at various hospitals, based on a policyholder’s particular plan.
“As consumers, we’re not accustomed to being savvy shoppers when it comes to health care,” Felt said. “We don’t shop for health care like we do for a car. But the price for health care is going to be higher over your life than the price of a car.”

Crystal McGrew, interviewed in this Courier-Journal article printed Feb. 17, is an Anderson County High School graduate, Class of 2000.