Hospital Pricing Part Two (9/27/2007)
A new study reveals that where you live is the most important factor that determines what you pay for a hospital stay. The Dartmouth Atlas of Health Care has determined that geography will determine what type of medical care you receive and what you pay for it. For instance you will likely pay twice as much for care in New Jersey than you will in Hawaii.
Why does this occur? Healthcare is local. Medical practice varies from place to place. There are twice as many knee replacements in Rhode Island than there are in Nebraska. Doctors practice medicine differently from place to place. The key factor apparently is the supply of medical specialties and hospital beds to practice those specialties. The more doctors for a particular specialty or the greater number of hospital beds create a pressure to both use the specialty and fill the beds.
Benefits are applying co-insurance (generally 10% to 20%) to more services. So the higher the hospital price, the more you are likely to pay. How do you determine what a hospital will charge or be paid for a service you need?
The obvious starting point is a call to you health insurer or HMO to inquire what they will be paying on your behalf at the hospitals you have an option to use. By applying your co-insurance to those payments, you will be able to accurately calculate what you will pay.
There are other resources. Examine the web site at www.cms.hhs.gov/healthcareconinit?01_overview.asp#topofpage. At that site you will find what Medicare pays for certain procedures at each hospital in the United States. The site is hard to use. The information is in a “zip” file so your computer will need to be able to “unzip” the data. From there find the hospitals and procedures you are interested in comparing. You will be able to compare what Medicare pays. How does that relate to what you might pay?
In most cases your insurer or HMO pays a percentage of Medicare. That percentage is generally around 150%. So multiply what Medicare pays by 150% and you will get a good idea what you might pay. If you do not have insurance you now have a baseline that you can use to negotiate a fair price with the hospital.
Do not pay what the hospital charges. Often the hospital charge is an inflated amount designed to allow the hospital to manage its reimbursement from various insurers, HMOs, or Medicare.
All hospitals will negotiate a lower price than their charges. If you are armed with the Medicare price you can probably get a deal with your hospital for that price if you are willing to pay the bill quickly. You can always get a hospital to negotiate a payment plan as well. So try that too. If you have a problem with the Medicare data base send us your questions at info@healthcaresoundoff.com and we will attempt to clarify the information for you.
Are you interested in how your local hospitals compare? If so look at www.hospitalvictims.org. This site will compare your hospital’s charges with Johns Hopkins, one of the best medical centers in the United States. Remember Johns Hopkins is in a state that sets hospital payments so their charges are considerably lower than hospitals in other states. But the site is valuable because it gives you information on the discounts hospitals generally offer to insured patients and that discount can be used by you when you negotiate a fair price for the service you need.
If all your research shows you that the cost of what you need is beyond your means you might look into whether going out of the country will work. Prices at hospitals outside the country are often 20% of the cost for domestic hospitals. All of the reputable hospitals outside the country have also been accredited by the Joint Commission International (see www.jointcommissioninternational.com). Use the keywords "medical tourism" on your search engine.
Lastly, there are a number of State data bases that list hospital prices. Check your State hospital association web site. See what we posted at Hospital Prices Part One.
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