Depending on where a patient goes for care in the Corridor, average charges billed by a hospital for the same procedure can vary significantly, according to data released earlier this month.
The average charge of a major joint replacement or reattachment of a lower limb at the University of Iowa Hospitals and Clinics without complications is $48,762, while the same procedure at Mercy Hospital of Iowa City would see a charge of $46,931.
At St. Luke’s Hospital in Cedar Rapids, the charge was $58,527 for the procedure with complications, while the charge at Mercy Medical Center in Cedar Rapids was $50,178.
Mercy Hospital charged $52,790 on average to implant a pacemaker, while University of Iowa Hospitals and Clinics charged $49,996. Mercy Medical Center charged $41,360, while St. Luke’s charged $51,863.
The figures were released along with average charges from more than 3,000 other hospitals nationwide in what was described as an “unprecedented” move by the federal Centers for Medicare and Medicaid Services. The charges, from fiscal year 2011, show the average bill charged to Medicare and Medicaid by the hospitals for 100 common inpatient procedures.
Hospitals determine what they will charge for items and services provided to patients and these charges are the amount the hospital bills for an item or service.
“I think the idea of greater transparency of pricing will be healthy for the industry and healthy for the consumers,” said Ted Townsend, president and CEO of St. Luke’s Hospital. “That being said, the historical way these prices have been built is so out of date that it has limited reality check value to the patient.
“Not only should the patient be looking at what is the price, but they should be looking at what (health care providers) are getting paid.”
Townsend said while there was tremendous range in the pricing, there was very little range in what (health care providers) are getting paid. This is true for Medicare and all payers, he said.
Townsend cautioned that consumers should not confuse cost with charges.
“What you saw was the tremendous variation in charges,” he said. “What you don’t know is how much variation there is in cost. As you saw, the cost to the consumer was actually very little variation.
In Iowa, hospitals are required to charge the uninsured no more than what the best contract pays, Townsend said.
Officials at UIHC noted that the hospital is an academic medical center, which means there are more standby costs.
For example, UIHC has neurosurgeons present all the time to take care of patients no matter when they come in, said Ken Fisher, associate vice president for finance and the CFO of UIHC.
“Of course, that drives our costs to a higher level, but when you compare our costs to other academic medical centers, we’re among the lowest in the country,” said Ken Kates, chief executive officer of UIHC.
Although it’s easy to compare the cost of a hip replacement across the board at each of the four area hospitals, individuals arrive under different circumstances, said Tim Charles, president and CEO of Mercy Medical Center in Cedar Rapids.
“(There can be) other complicating conditions that may create challenges or pose necessity to provide additional services,” he said. “There are so many different unique elements that could impact what the charge is.”
Most patients don’t actually pay the listed price or charge, said Timothy Ahlers, vice president of marketing and business development at Mercy Hospital in Iowa City.
“Patients with insurance pay according to their health plan specifics, which is why patients should consult with their insurance carrier to determine what costs they (the patient) will be responsible for,” Ahlers wrote in an email.
“Everyone is seen regardless of ability to pay.”
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