More Hospital Cost Puzzles
In Los Angeles, for example, the average patient admitted to Los Angeles Community Hospital cost Medicare nearly $24,644 during the stay and in the month afterward, 37 percent above the national median. Across town, according to the data, an essentially similar patient admitted to Ronald Reagan UCLA Medical Center cost Medicare $17,628, or 2 percent below the median.
Entire article by Jordan Rau in Kaiser Health News.
It’s not just the inflated cost of living in LA and SF that has the effect of making Medicare more expensive in those places.
This is just crazy. Can you imagine buying a car, taking it home and finding out weeks later that you owe either $17,600 or $24,600?
What is needed here is true price transparency.
Hospital have crazy prices because they do not compete on price.
Hospitals have learned over the past 30 years to “work the fee schedule” so as to maximize reimbursements.
Another word is “upcoding.’ You register a patient as a severe case, and you get more money from Uncle Sam.
The numbers are stunning. I rely on the Statistical Abstract of the US.
It tells us that in 1990, Medicare had about 12 million admissions of seniors and paid out $60 billon. In 2010, Medicare had about 15 million admissions and paid out over $180 billion.
It is true that Medicare is paying more for rehab and after care, but basically it comes down to manipulating the fee schedule.
Although it is true in general that we need more price transparency, that alone will not help Medicare. We need to defeat upcoding instead. What hospitals call ‘intensity of care’ is just mumbo-jumbo to maximize reimbursements.
Bob:
Are you aware of any individuals and/or companies that deal with reimbursement after the fact?
Instead of paying for a network, for example, an individual or company would be paid to negotiate discounts, similar, say to that of Blue Cross.
Don Levit
So, how many people here have worked in hospitals in urban centers? The answer to this puzzle is obvious to me, and I doubt it’s fraud or upcoding.
In one hospital you’re likely treating insured, relatively healthy middle class folks. In the other you’re treating people living on the fringes, which costs a lot more. Drug addicts, the homeless, the poor, etc., are going to be more likely to be uninsured, they’re going to be sicker, they’re going to cost more to treat, they’re often noncompliant for social and financial reasons, and since they can’t pay for themselves, they’re going to raise the costs of treating everyone in the whole institution. Atul Gawande asked the same question about why the Mayo Clinic was able to treat people for less than UCLA medical center. I think it’s pretty simple, insured midwesterners with cars traveling to a private medical clinic are cheaper and easier to treat than a poverty-stricken uninsured inner-city population. Those costs that the hospital has to eat because of ETMALA go somewhere, and that is into higher costs for the insured patients and those with medicare. The money has to come from somewhere to pay for what hospitals are mandated to do.
This isn’t a puzzle to me at all.