Homeless in Arizona

That sounds insane, but from this article it seems that is how hospitals frequently operate.

I suspect a big part of the problem is because the government frequently pays for a persons medical services. And because of income tax laws companies frequently give their employees health insurance because it is not taxable.

And of course for those same reasons I suspect hospitals frequently charge outrageously high prices for procedures because they know the government or the insurance company will usually pay the bill without any questions.

I suspect if hospitals were required to operate in the free market that medical costs would drop significantly.

Source

Huge differences in Arizona hospital billing, data show

By Ken Alltucker and Ronald J. Hansen The Republic | azcentral.com Fri May 10, 2013 11:28 PM

The federal government this week shed some light on one of the health-care industry’s most closely held secrets: how much hospitals charge for the most common procedures.

Medicare released data for charges and payments for the 100 most common inpatient procedures in 2011, revealing a dramatic variance among hospitals in metro Phoenix and across Arizona.

The data also show that Arizona hospitals generally charge more than the U.S. average.

For the most common procedure in Arizona hospitals, joint or lower-limb replacement, the average charge was $108,200 at Payson Regional Medical Center compared with $30,259 at Tucson Medical Center or $15,527 at Tuba City Regional Health Care.

Western Arizona Regional Medical Center in Bullhead City was the most expensive place for digestive disorders with an average bill of $48,374, more than 10 times the average bill of $4,586 at Fort Defiance Indian Hospital.

Experts say the Medicare data are part of a trend toward greater transparency in pricing as pressure mounts to rein in rising medical costs. It comes as the Obama administration’s health-care law, the Affordable Care Act, aims to extend insurance and provide quality care at a lower cost to nearly all Americans.

Still, hospitals say the billing rates — a system they call the “chargemaster” — does not accurately reflect what government, employers and most consumers pay. Hospitals typically negotiate lower rates with government insurers such as Medicare and Medicaid and private health-insurance companies that offer plans through employers or directly to consumers.

For example, Arizona hospitals charged the federal government $4.1 billion for the top procedures in 2011, [Wow, $4.1 billion is $630 for each of Arizona 6.5 million residents, or $1,260 for every adult in Arizona] but Medicare paid a little more than $1 billion. [Wow, $1 billion is $150 for each of Arizona 6.5 million residents, or $300 for every adult in Arizona] In other words, for every $4 charged to Medicare, Arizona hospitals collected $1 from the federal health program for those 65 and older.

Arizona hospitals also charged Medicare an average of $39,462 for the most common procedures, or 11.9 percent more than the U.S. average of $35,264.

What’s more, the data do not capture all nuances of billing and medical care. Some patients may be sicker and require more intensive care, and some hospitals may get slightly more lucrative payments for teaching student doctors or caring for a larger share of low-income residents.

“Billing and charges are complicated because it’s such a fragmented system,” said Suzanne Pfister, vice president of external affairs for St. Joseph’s Hospital and Medical Center in Phoenix. “The (list prices) have no relation, in many cases, to what we have negotiated with private-insurance companies” or government insurers.

The list charges, however, may approximate a starting point for what hospitals charge people who have no health insurance. Uninsured patients may be able to negotiate lower prices or qualify for bill-payment assistance, but there are no guarantees hospitals will grant such assistance.

Consumers should be greatly concerned about the wide and seemingly random list prices spelled out in the Medicare data, experts say.

“Hospitals may say it doesn’t matter, but why is there such a vast difference among providers?” said Abhay Padgaonkar, a Phoenix consultant and former CEO for a hospital-based doctors group. “They may be charging the same thing to non-Medicare patients. And if you are without health insurance, that is why people end up declaring medical bankruptcy.”

The data show that the average “markup” (the amount that list prices surpass what Medicare pays the hospitals) ranges widely across the state.

Western Arizona Regional Medical Center had the state’s highest average markup, charging more than seven times what Medicare paid. Dignity Health’s Mercy Gilbert Medical Center and Payson Regional Medical Center ranked No. 2 and 3, respectively, based on price markup.

Both Western Arizona Regional and Payson Regional are owned by Franklin, Tenn.-based Community Health Systems, the nation’s second-largest for-profit hospital chain. Representatives for Western Arizona and Community Health Systems did not return calls about the company’s hospital-pricing policies.

Tribal hospitals in Phoenix and Chinle had the lowest markups, charging less than 10 percent above Medicare’s rates.

Although the data offer a large glimpse into hospital billing, they do not shed light on other aspects of health-care billing that are not included in a hospital bill. Lab tests and doctors fees, for example, may be mailed to a patient separately.

The Medicare data also exclude some smaller rural hospitals that typically transfer patients to larger hospitals if longer stays are required.

A bill making its way through the Arizona Legislature would require doctors and other health-care providers to make pricing available for 25 of their most common procedures. Hospitals would be required to provide prices for 50 of the most common inpatient and outpatient procedures.

In June, the Arizona Department of Health Services will launch a database that lists some hospital pricing, costs and quality data, according to ADHS Director Will Humble.

Humble said that he expects consumers will find the data useful when shopping for a hospital based on cost and quality factors and that hospital administrators could use the data to see how they compare with competing facilities.

“It will be a tremendous tool for consumers, but more importantly, transparency improves performance,” Humble said.

Metro Phoenix hospital systems such as Banner Health, Dignity Health and John C. Lincoln have launched initiatives that could change the way hospitals are paid and patients are treated, with programs that reimburse health-care providers for consumers who stay healthy and out of the hospital.

Dennis Dahlen, Banner Health’s vice president and chief financial officer, said these new payment models will likely render the Medicare-released list prices obsolete.

“The industry, with government assistance and prodding, is gravitating toward value-based models of care,” Dahlen said. “The little bit those charge prices matter today, they will mean even less tomorrow.” [That is rubbish!!! When the government blindly pays a patients bill the hospitals will gouge the government for the maximum amount of money they can get and prices will have no relationship whatsoever to the cost of providing the services.]

Health and Human Services Secretary Kathleen Sebelius said Medicare released the data to give consumers a better idea of the price variation that exists within their communities, and allow them to shop for a better price.

Private health-insurance companies, too, have opened up their databases to prod customers to be more price-conscious. Studies show that the push toward consumer-driven health care has had mixed results.

“This is a change in the ideology that things are free if insurance pays for it,” said Eugene Schneller, an Arizona State University professor.

Still, will consumers be comfortable evaluating cost and quality measures when choosing health care? Chandler Regional Medical Center billed an average of $40,814 to treat heart failure, but Mayo Clinic billed just $19,185 for the same type of care.

Price variation even exists within the same health-care system. Banner Estrella Medical Center in west Phoenix charged an average of $29,976 for treating heart failure while its sister hospital, Banner Desert Medical Center in Mesa, charged less than $24,000 on average.

Padgaonkar, the consultant, said that is why the combination of both price and quality measures will be important tools to help consumers get a complete picture. [Sounds like Padgaonkar is giving us a bunch of marketing BS. If hospital refuse to provide potential customers with prices lists they can't make purchasing decisions based on price. And I suspect if hospitals are secretive about their pricing they are also secretive about "quality measures"]

Reach the reporter at ken.alltucker@arizonarepublic.com or 602-444-8285.