Disparities among what hospitals charge the Medicare program are nothing new, but the gaps seem particularly large in San Antonio, Texas.
The San Antonio Express-News has reported that charges can vary by tens of thousands of dollars among hospitals within the city.
For example, for a laparoscopic gallbladder surgery with major complications, Baptist Health System--a for-profit facility owned by Tenet Healthcare--charged Medicare more than $97,000. By comparison, members of the non-profit Christus Santa Rosa Health System billed slightly more than $64,000. What Medicare pays tends to be more uniform, ranging from $13,500 to $15,600 in San Antonio, according to the Express-News.
Of course, there is little resemblance to what the hospitals bill Medicare and what they are actually paid. Methodist Hospital charges Medicare more than $663,000 to perform a heart transplant, but receives $130,710 for the procedure by the federal payer. Methodist Stone Oak Hospital charges more than $132,000 for a spinal procedure, but is paid less than $15,000 by Medicare.
Observers say the huge variation in healthcare prices is driven by two factors. One is that hospitals often raise their chargemaster prices to obtain higher levels of reimbursement from both commercial and public payers. The other is that there is a significant lack of price transparency in the healthcare sector, which creates a very high level of opacity in terms of what care costs and therefore a rational basis as to how it should be reimbursed.
“There aren’t many other industries where even the person selling the product has a hard time telling you how much it’s going to cost,” Ed Schumacher, chairman of the department of healthcare administration at Trinity University told the Express-News.