News Column

Short on Cash? Don't Get Sick in Jersey

May 9, 2013

Lindy Washburn, Dave Sheingold

New Jersey's hospitals are among the highest priced in the nation, ranking second only to California's, and they charge tens of thousands of dollars more for some of the same procedures than the top academic medical centers in New York City, according to data released Wednesday by the federal government.

Charges varied widely across the state -- from $203,000 for a knee or hip replacement at a Camden hospital to $41,800 for the same procedure at Chilton Hospital in Pompton Plains, for example.

And two privately owned for-profit hospitals, Meadowlands Hospital Medical Center in Secaucus and Bayonne Medical Center, consistently charged prices that were among the highest in the state. In fact, Bayonne's charges for treating heart failure, kidney and urinary tract infections, pneumonia and chronic obstructive pulmonary disease were the highest or second-highest of 3,000 hospitals nationwide, according to an analysis by The Record of the data released by Medicare.

Complex formula

Charges are a hospital's "sticker price," the starting point for negotiations with insurers and a factor in the complex formula by which Medicare determines its payments. Hospital executives are quick to point out that almost no one -- just 4.5 percent of patients, according to the state hospital association -- pays these charges. To protect low-income uninsured patients, who were billed the sticker price, the New Jersey Legislature passed a law in 2009 that caps their bills at 115 percent of Medicare's rate.

But when patients seek care at out-of-network hospitals, their insurer will be billed -- and the patients will pay a portion of -- the full charges. Bayonne and Meadowlands became out-of-network hospitals for most insurance plans when they were acquired by their for-profit owners in 2008 and 2010, respectively.

Bayonne charged $177,200 in 2011 for treating septicemia, or an infection of the blood, for example, one of the most common causes of hospitalization. That was three times the $58,500 charged by The Valley Hospital in Ridgewood. Medicare, whose prices are set by a federal formula, paid Bayonne $12,900 and Valley $13,064 that year to treat septicemia.

The data about hospital charges, previously available from the government for a fee, was released to the public for the first time as part of the push for pricing transparency under the Affordable Care Act. It is based on millions of bills submitted to Medicare in 2011 for the 100 most common categories of hospital care.

"What is striking in the data, which surprised us ... is the vast variation in charges," said Jonathan Blum, Medicare deputy administrator. "You'll see it in charges within a hospital compared to Medicare, charges across hospitals and charges within a given marketplace." For some treatments, there is a 10-fold variation.

It's not simply explained by differences in regional economies or whether a facility is a teaching hospital.

"Currently, consumers don't know what a hospital is charging them or their insurance company for a given procedure, like a knee replacement, or how much of a price difference there is at different hospitals, even within the same city," Kathleen Sebelius, the secretary of Health and Human Services, said in a statement. The data "will help fill the gap."

For patients, the data offer a glimmer of information about how much hospital care will cost them. But insurance companies are not required to disclose the discount rates they negotiate with hospitals for care, so the actual amount consumers will pay as their portion of the hospital bill is still nearly impossible to determine.

Nevertheless, proponents of a strengthened role for patients in health-care decisions were encouraged.

"This is going to start a ball rolling down the hill that nobody's going to be able to stop," said David Knowlton, chief executive officer of the New Jersey Health Care Quality Institute. Price comparisons will become easier as more and more data is released, he said, including charges billed by individual doctors.

The new information from the Centers for Medicare and Medicaid Services, combined with Wednesday's unveiling of new hospital safety scores by The Leapfrog Group, "gets us to the mother lode -- value in health care, which is cost plus quality," Knowlton said. As consumers shoulder an ever-larger share of their health care costs through high-deductible health plans, patients are expected to become more sensitive to price differences among hospitals.

Cheaper and better?

It's also important to note that the highest-priced care is not necessarily the best, Knowlton said. Higher prices can reflect a longer stay, with more complications and longer waits to get the right tests and treatments.

But the state hospital association questioned the significance of the data. More than 60 percent of hospital revenues come from government programs, which pay less than hospital costs, said spokeswoman Kerry McKean Kelly. That leads to cost-shifting to privately insured patients.

"It's very difficult to make sense of the wide range of price information" in the database, she said. "This information, while helpful as a starting point, is not very relevant for the vast majority of health care consumers."

The data showed that New Jersey hospitals actually charged more than some elite New York hospitals for common procedures. Hip- and knee-replacement charges at Hackensack University Medical Center were $69,000, for example, compared with $53,100 at New York's Hospital for Special Surgery, where orthopedic surgery is a high- volume specialty.

For heart failure and shock, the charges at New Jersey hospitals ranged from a high of $121,100 at Bayonne and $87,100 at Meadowlands to $55,700 at Hackensack and $33,900 at Holy Name Medical Center in Teaneck. In New York, the charges were $43,800 at New York- Presbyterian, $40,000 at New York University Medical Center and $32,000 at Mount Sinai Medical Center.

A spokesman for Meadowlands said the many factors that go into hospital billing make it too complex to compare meaningfully. "We can practically see Bayonne Hospital from our building in the Meadowlands," said Ben Martin, of Winning Strategies Public Relations, which represents Meadowlands, "and they billed $155,000 for a procedure that we billed tens of thousands of dollars less. Yet, we were both reimbursed almost the same amount in the end."

A spokesman for Bayonne Medical Center declined to comment on the charge comparison.

Most expensive states

California : $66,542

New Jersey : $60,900

Nevada : $58,253

Arkansas : $42,952

Florida : $42,744

(14th) New York : $33,319

Least expensive states

Maryland : $12,527

West Virginia : $19,344

Massachusetts : $20,602

Vermont : $20,667

Maine : $21,413

U.S. : $35,264

Source: Centers for Medicare & Medicaid Services, Dave Sheingold/ staff analysis

Disparity in costs

Charges for common conditions vary widely among local hospitals, with some charging more than three times as much as others.

Hospital : Septicemia : Major joint replacement or reattachment : Heart Failure or shock, with major complications : Simple pneumonia destructive or pleurisy, with complications : Chronic plumonary disease, with complications : Renal failure with complications

Bayonne Hospital Center : $177,206 : $155,769 : $173,250 : $123,689 : $111,733 : $108,077

Bergen Regional Medical Center : $67,347 : no cases : $52,303 : $46,915 : no cases : $42,803

Englewood Hospital and Medical Center : $82,609 : $51,294 : $82,123 : $55,950 : $51,842 : $58,074

Hackensack University Medical Center : $106,158 : $68,997 : $83,700 : $59,585 : $60,441 : $61,503

Holy Name Medical Center : $64,920 : $50,224 : $50,030 : $39,893 : $34,184 : $37,956

Meadowlands Hospital Medical Center : $157,168 : $107,748 : $95,582 : $93,277 : $70,578 : $109,334

Palisades Medical Center : $85,162 : $77,277 : $81,748 : $54,054 : $47,437 : $58,740

St. Joseph's Regional Medical Center : $90,229 : $49,182 : $94,848 : $62,004 : $65,395 : $56,525

St. Mary's Hospital : $73,444 : $51,842 : $77,972 : $44,149 : $47,164 : $45,560

The Valley Hospital : $58,513 : $51,385 : $54,778 : $38,066 : $39,148 : $39,474

Source: Centers for Medicare & Medicaid Services, Dave Sheingold/ staff analysis

(c) 2013 Record, The; Bergen County, N.J.. Provided by ProQuest LLC. All rights Reserved.

Source: Copyright Record, The; Bergen County, N.J. 2013

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