Payson Regional Medical Center has among the highest charges in the state, according to data released by federal health officials last month detailing what hospitals charged Medicare for the most common inpatient procedures in 2011.
However, the figures show that most of those hospitals — including Payson Regional — actually got paid only a fraction of the sticker price.
The data showed while the average hospital in Arizona charged $52,400 for the reattachment of a lower limb, Payson Regional Medical Center (PRMC) charged, on average, $108,000, the highest in the state.
And the hospital billed $82,300 for hip and femur procedures, while most hospitals charged $56,000. In fact, for all 25 of the common inpatient procedures listed, PRMC charged more than the average hospital in the state and country.
The U.S. Department of Health and Human Services lauded the release of the data, saying it shines a light on the “vast variations in hospital charges.”
“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,” said Kathleen Sebelius, HHS secretary.
But hospital officials say the charges often bear little relationship to what a hospital actually receives. “It is important to note that what hospitals charge is not the same as what hospitals are paid for the care they provide,” said Chris Wolf, chief executive officer at PRMC.
The data does show that while PRMC charged among the highest rates, the average payment from Medicare was a whole lot less. For that $108,200 charge for lower limb reattachment, Medicare actually paid the hospital only $15,200.
“That’s very comparable to what other hospitals in the region are paid for the same service and far less than what any hospital charges,” Wolf said. “Medicare unilaterally determines what it will pay hospitals and in most cases Medicare payments do not cover the actual cost of providing care.”
This is the first time consumers have seen a comprehensive list of hospital charges, according to the HHS. The release comes as the Obama administration pushes to extend insurance to nearly all Americans through the Affordable Care Act, changing the way health care is provided.
“Transformation of the health care delivery system cannot occur without greater price transparency,” said Risa Lavizzo-Mourey, Robert Wood Johnson Foundation president.
While PRMC believes cost transparency is good, patients should also consider the quality, service and accessibility when deciding where they go for care, Wolf said.
PRMC has received awards for patient safety and care. This year, Truven Health Analytics named it one of the nation’s 100 Top Hospitals, with only one other Arizona hospital making the list.
Wolf said the Medicare data does not capture that the hospital often negotiates lower prices with uninsured patients and commercial insurers. Still, Wolf did not explain why PRMC charges so much more than other hospitals.
He did say, though, that the hospital provides financial counselors to help patients with eligibility services for Medicaid and questions about billing and insurance.
And the hospital offers charity care for those who qualify.
Community Health Systems (CHS) out of Franklin, Tenn. owns PRMC. CHS also owns Western Arizona Regional Medical Center in Bullhead City, which charged on average the most among hospitals in the state. PRMC was third.
In April, CHS announced its net operating revenues totaled $3.312 billion for three months ending in March.
A new state law could provide patients with even more information about hospital charges. If Gov. Jan Brewer signs it, HB 2045 would require doctors to make available the direct-pay price for at least the top 25 services. A hospital with more than 50 beds would also have to post the prices for 50 of the most used diagnosis. Department of Veterans Affairs facilities, military base hospitals, tribal facilities and the state hospital would be exempt from the law.