Rx Borderland: Comparing hospital prices
It’s no secret health care is expensive, but you can reduce the costs if you know where to look.
Just like shopping at the mall or online, you’ll find that some hospitals offer cheaper prices for certain procedures. Before comparing prices, it is important to know just how hospital prices are set. Hospital pricing is complex and the terminology can be confusing.
Ever heard of a Chargemaster?
The Chargemaster is essentially the heart of a hospital’s pricing system. It’s a hospital’s list of all the costs that will be passed on to the patient or a health insurance provider. It includes the procedure, equipment and room fees.
ABC-7 spoke with Lance Lunsford, vice president and spokesman for the Texas Hospital Association. He explained the importance of the Chargemaster and how it’s used to ensure hospitals are complying with government pricing regulations.
“All they’re (federal government) really wanting hospitals to provide is basically that index of prices for their services from their most popular designated diagnosis related groups,” Lunsford said.
Diagnosis Related Groups, or DRGs are how Medicare and other health insurance companies categorize costs.
Rather than pay the hospital for a patient’s specific expenses, the insurance company pays the hospital a fixed amount based on the diagnosis.
Based on the DRG for a particular procedure, the less amount of time a patient stays in the hospital, the hospital could end up making a profit, but the longer a patient stays in the hospital, the hospital could end up losing money if it spends more treating that patient than what the DRG is set at.
Roxanna Irwin knows all too well about the challenge of finding and comparing hospital prices.
Irwin recently had a hip replacement, but before she went through with the surgery, she started comparing hospital prices using information that was gathered by her insurance provider.
“One hospital charged $19,000 and the other $65,000 for the same surgery, so I was confused why that is?,” Irwin said. “There’s got to be something in there why there’s a difference in price. I mean who can afford those kind of prices? It’s outrageous.”
Taking a look at data collected by the American Hospital Directory, ABC-7’s interactive tool reveals the pricing disparity.
For example, treatment for a kidney-urinary tract infection will cost you less at University Medical Center than at Providence Memorial Hospital, a savings of more than a thousand dollars. The price at UMC is $6,224 and at Providence Memorial it’s $7,796.
The cost to treat a kidney-urinary tract infection at Las Palmas Medical Center is also a little more expensive than UMC with a cost at $6,878.
Even though the prices at one hospital might be more expensive than prices at another, there’s a reason for the disparity and it comes down to services and also to the doctors themselves.
Lunsford says one doctor may be more experienced with a particular procedure than another doctor, and that could drive up the cost.
“He or she may cover a particular service line that’s much more difficult and complex to cover than another,” Lunsford said. “Therefore, that physician to be able to have them to service that particular service line requires a higher level of skill, education and fellowship training.”
One hospital may also be better equipped to treat a particular ailment than another hospital.
“Another hospital may not have the technology that another hospital has to be able to service that in terms of equipment, or staff, or training and therefore they can have an adjustment of what that price looks like.”
And starting in January, hospitals will be required to list their prices on their websites, thus creating better transparency between hospitals and patients.
“As consumers we need to be afforded the opportunity to make those decisions,” Irwin said. “I guess if somebody else is paying the bill then it doesn’t matter, but when you’re paying the bill and you’re paying a percentage of the care, I think you’re entitled to know.”
