Issue link: https://nnumagazine.uberflip.com/i/447728
News Briefs 4 J A N U A R Y / F E B R U A R Y 2 0 0 6 C A L I F O R N I A N U R S E H ospitals continue to levy huge markups in charges to patients even after federal changes in Medicare reimbursement policies that were supposed to help contain sky- rocketing costs, according to the third annual report on charges issued in De- cember by the Institute for Health and Socio-Economic Policy (IHSP), the re- search arm of CNA. For the third consecutive year, the report documents a strong correlation between huge hospital markups on their sticker prices over their costs, high profits and the growth of large cor- porate hospital chains. What may be most striking in the new report is that charges continue to be scandalously high even after Medi- care changed its reimbursement policy following the huge public outcry over outlier payments, made for especially complicated medical procedures. But, the new report shows, the na- tion's 100 most expensive hospitals set their gross charges at an average of 680 percent (up from 673 percent in 2002- 2003) of their costs—meaning the av- erage top 100 hospitals would bill $680 for a patient's case where the actual costs were $100, or a 680 percent charge to cost ratio. The national av- erage for all 4,184 hospitals surveyed was 244 percent of costs, an increase from 232 percent the prior year. Notably, 77 percent of the hospi- tals—and 95 of those in the 100 most expensive—had at least one fiscal quar- ter included in their cost reports after the Medicare changes were announced. The research is based on federal cost reports with aggregated data for over 30.5 million patient discharges in fiscal years 2003-2004 filed for all pa- tient services and other financial cate- gories for 4,222 U.S. hospitals. Here are some other key findings: Higher charges correlate to higher profits. Higher charges are also associated with hospital chains, and large hospitals. Eighty-nine of the top 100 hospitals were system affiliated, compared to only 30 of the 100 least expensive. For-profit hospitals had the high- est average charges, 366 percent of cost, government hospitals the lowest, 181 percent. Hospital markups are much higher for drugs, medical supplies, and operating rooms, which are now pri- mary profit centers for hospitals. For drugs, medical supplies, and operating rooms, the top 40 hospitals had re- spective average charges of 2,319 per- cent, 5,090 percent, and 1,073 percent of costs. IHSP Study Shows U.S. Hospital Charges Continue to Rise U.S. Hospital Aggregate Profits $280.8 Billion (1986–2004) Top 20 HMO Profits, Most Recent Year Unitedhealth Group Inc Aetna Inc Kaiser Aflac Inc Wellpoint Inc Medco Health Solutions Inc Pacificare Health Systems Inc Humana Inc Wellchoice Inc Unitrin Inc Sierra Health Services Inc Amerigroup Corp Lifepoint Hospitals Inc Proassurance Corp Molina Healthcare Inc Wellcare Health Plans Inc Health Net Inc IDX Systems Ceres Group Inc Healthextras Inc Source: IHSP calculations of SEC data and company reports. Source: HSP calculations of American Hospital Association data.