Maine hospitals charge widely differing amounts for the same procedures, in some cases three times more than their counterparts, according to new data released Wednesday by the federal government.
The price variations were detailed in a slew of data released by the Centers for Medicare and Medicaid Services that for the first time made public the amounts that 3,300 U.S. hospitals charged for the 100 most common inpatient procedures. The 2011 figures disclosed the average prices that hospitals charged Medicare, the government health insurance program for seniors, as well as the much lower amounts that Medicare actually paid.
In Maine, common treatments, including care for sepsis (a severe blood infection) and respiratory infections showed wide variations. Parkview Adventist Medical Center in Brunswick charged the government an average of $56,028 to treat a patient with severe sepsis. That’s double what Parkview’s competitor just a few miles away, Mid Coast Hospital, charged Medicare and nearly triple the lowest price of $20,130 at Cary Medical Center in Caribou.
For respiratory infections involving major complications, prices ranged from $28,443 at Eastern Maine Medical Center in Bangor to $62,029 at The Aroostook Medical Center in Presque Isle.
Overall, however, Maine hospitals billed Medicare less than the average reported by other hospitals throughout the country. A look at Maine’s 10 most common diagnoses by the number of admissions — which range from pneumonia to psychoses — also showed that while some hospitals charged a hefty three times more than others within the state, Maine’s price swings fell short of wild variations seen in other states.
The release fell on the same day as debate by Maine lawmakers about a bill that would make an independent state agency publicly accountable for analyzing hospital financial data. Sponsored by Sen. Geoffrey Gratwick, D-Bangor, LD 1453 directs the Maine Health Data Organization to publish an annual study of hospital finances and price discrepancies.
The organization, which is partially funded by hospitals, has been publicly reporting some hospital pricing and quality information for several years.
Wednesday’s data deluge was hailed by some as a major step toward greater transparency in hospital pricing that could help to lower skyrocketing costs and equip consumers to better shop for health care. Others criticized the data as irrelevant and confusing to patients, since they included no information about hospital quality and few consumers actually pay the hospital “sticker price.”
Medicare, Medicaid and private health insurers pay only a fraction of the prices that hospitals charge.
“This is the kind of information that consumers need, but with the caution that it won’t solve all the problems that we have with high health care costs,” said Joe Ditre, executive director of Consumers for Affordable Health Care in Augusta. “A lot of consumers don’t know how to use this information and, in fact, even though it’s out there, it will not help them to negotiate very much.”
For example, while Central Maine Medical Center in Lewiston charges about $53,000 to implant a pacemaker, significantly more than the $30,000 price at Portland’s Mercy Hospital, a patient could still pay less in Lewiston if their insurer has negotiated a lower rate.
But a patient without health insurance is much more likely to feel the sting of higher prices, especially in an emergency when there’s no time to comparison shop.
“If large insurance companies can’t negotiate better rates, than how can Mrs. Jones?” Ditre said.
The Maine Hospital Association estimates that about 5 percent of Maine patients are subject to hospital sticker prices. Most are covered by private or government insurance and hospitals provide free care to many others. Even individuals faced with the full price often receive discounts to help them pay their bills, according to the association.
Much of the variation in pricing results from the number of procedures a hospital performs, said Steve Michaud, president of the Maine Hospital Association. Hospitals that perform dozens of knee replacements, for example, can spread the cost over more patients and ultimately decrease prices.
The other major factor is a hospital’s “payer mix,” or the ratio of privately insured patients versus those with government coverage or no insurance, Michaud said. Medicare and Medicaid reimburse less than it costs hospitals to provide services, which forces hospitals to make up the difference by charging patients with private insurance more, hospitals point out.
Hospitals in prosperous areas of the state tend to have more privately insured patients, while hospitals in poor areas typically serve more patients with government-sponsored or no insurance, contributing to wide variations in prices.
“If anybody thought we should charge the same, they’d be screaming price-fixing,” Michaud said.
Jeff Austin, a lobbyist for the hospital association, criticized Medicare for contributing to wide variations in pricing from state to state. The government program reimburses hospitals largely based on labor costs in their regions, and the process has been so “politically manipulated and distorted” that some states, including Maine, are forced to accept unfairly low reimbursement rates, he said.
“It’s their fault,” Austin said. “We complain about this all the time.”
The bills that hospitals send to Medicare have little relationship to how much money the government pays. In many cases, hospitals that submitted higher bills ultimately received lower payments than their competitors, according to a Washington Post analysis of the data.
Michaud acknowledged that other factors also play into hospital pricing, such as individual doctors’ treatment choices. Ditre was skeptical about hospitals’ explanations for wide price variations, saying previous studies in Maine have shown that payer mix had no effect on the amount hospitals charged. In some cases, hospitals with no local competitors raised prices knowing that patients wouldn’t travel for treatment, he said.
For joint replacements, the most common hospital procedure for Medicare patients, prices in Maine ranged from $55,425 at The Aroostook Medical Center in Presque Isle to a much lower $22,870 at Caribou’s Cary Medical Center. Those hospitals serve similar patient populations in northern Maine.
TAMC actually was paid about a third of that price, or $16,342, from Medicare, while Cary netted $14,037 from the federal entity.
Nationally, charges for a joint replacement ranged from a low of $5,300 at an Oklahoma hospital to a high of $223,000 at a hospital in California.
“You can make the argument that there’s all these different factors that require you to charge more, but not that much more,” Ditre said.