Study: 50 U.S. hospitals mark up prices 1000% for some patients

WASHINGTON - Fifty hospitals in the United States are charging uninsured consumers more than 10 times the actual cost of patient care, according to research published Monday.

All but one of the these facilities is owned by for-profit entities, and the largest number of hospitals - 20 - are in Florida. For the most part, researchers said, the hospitals with the highest markups are not in pricey neighborhoods or big cities, where the market might explain the higher prices.

Topping the list is North Okaloosa Medical Center, a 110-bed facility in the Florida Panhandle about an hour outside of Pensacola. Uninsured patients are charged 12.6 times the actual cost of patient care.

Community Health Systems operates 25 of the hospitals on the list; Hospital Corp. of America operates another 14.

"They are price-gouging because they can," said Gerard Anderson, a professor at Johns Hopkins Bloomberg School of Public Health, co-author of the study in Health Affairs. "They are marking up the prices because no one is telling them they can't."

He added: "These are the hospitals that have the highest markup of all 5,000 hospitals in the United States. This means, when it costs the hospital $100, they are going to charge you, on average, $1,000."

The researchers said other consumers who could face those high charges are patients whose hospitals are not in their insurance company's preferred network of providers, patients using workers' compensation and those covered by automobile insurance policies.

Carepoint Health-Bayonne Medical Center in Bayonne, New Jersey, for example, also charges rates 12.6 times the actual cost of patient care. But state law limits the maximum that hospitals can charge uninsured patients to 115 percent, a spokesman said.

By comparison, the researchers said, a typical U.S. hospital charges 3.4 times the cost of patient care.

Officials representing the 50 hospitals disputed the findings, saying they provide significant discounts to uninsured and underinsured patients.

Understanding hospital pricing and charges is one of the most frustrating experiences for ordinary consumers and health care professionals alike. It's virtually impossible to find out ahead of time from the hospital how much a procedure or stay is going to cost. Once the bill arrives, many consumers have difficulty deciphering them.

Most hospital patients covered by private or government insurance don't pay full price because insurers and programs like Medicare negotiate lower rates for their patients.

But millions of Americans who don't have insurance don't have anyone to negotiate for them. They are most likely to be charged full price. As a result, uninsured patients, who are often the most vulnerable, face skyrocketing medical bills that can lead to personal bankruptcy, damaged credit scores or avoidance of needed medical care.

Researchers said the main factors leading to overcharging are the lack of market competition and the fact that the federal government does not regulate prices that health care providers can charge. Only two states, Maryland and West Virginia, set hospital rates.

In the United States, hospitals have something called the chargemaster, a lengthy list of the hospital's prices for every procedure performed and for every supply item used during those procedures, such as the cost of one Tylenol tablet, or a box of gauze.

To determine the size of markups, researchers used what Medicare allows for the costs of care. That includes direct patient costs, such as emergency room care, and indirect costs such as administration. It does not include private doctors' costs.

Using data for all Medicare-certified hospitals between May 2012 and April 30, 2013, researchers tallied up total charges, then divided by the patient care costs, which they defined as total costs Medicare agrees to pay.

"For-profit players appear to be better players in this price-gouging game," said Ge Bai, an assistant accounting professor at Washington and Lee University and a co-author.

Carepoint Health, which owns the Bayonne hospital and two others in Hudson County, New Jersey, said charge-pricing affects less than 7 percent of its total patient interactions. Without it or adequate reimbursements, "our safety-net hospitals risk closure," a spokesman said. Urban hospitals receive lower reimbursements than suburban ones, a spokesman said.

Officials at Community Health Systems of Franklin, Tennessee, and Hospital Corp. of America, based in Nashville, said hospital charges rarely reflect what consumers actually pay. They said their hospitals offer significant discounts to uninsured patients and charity care for those who qualify. Community Health Systems said in a statement that it provided $3.3 billion in charity care, discounts and other uncompensated care for consumers last year. It also noted that several of its hospitals were not owned by CHS at the time the data were reported.

HCA said in a statement that its uninsured patients are eligible for free care through its charity care program or they receive discounts that are similar to discounts a private insurance plan receives.

The Federation of American Hospitals, which represents for-profit hospitals, said the listed hospitals provided nearly $450 million in uncompensated care in 2012 alone. Including the discounts "would have had a significant effect on the charge-to-cost-ratio reported, and therefore the implications of the study's results," it said in a statement.

It makes little economic sense to "mark something up 10 times what it actually costs and then give a discount," Anderson said. "Clearly, they expect someone to pay these inflated prices."

He noted that the cost of workers' compensation and auto insurance polices are higher in the states where hospital charges are unregulated because companies have to pay the higher rates.