Trends: Hospital pricing and the uninsured: Do the uninsured pay higher prices?

Health Affairs

Volumn 27, Issue 2, 2008, Pages

  Melnick, Glenn A ^a   Fonkych, Katya ^a  

^a UNIVERSITY OF SOUTHERN CALIFORNIA   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

ARTICLE; CONTROLLED STUDY; FINANCIAL MANAGEMENT; HEALTH INSURANCE; HOSPITAL CHARGE; HUMAN; MAJOR CLINICAL STUDY; MEDICAID; MEDICARE; PROSPECTIVE PRICING; COMMUNITY CARE; COMPARATIVE STUDY; ECONOMICS; FEE; HEALTH ECONOMICS; PATIENT; STATISTICS; UNITED STATES; UTILIZATION REVIEW;

ECONOMICS, HOSPITAL; HOSPITAL CHARGES; HUMANS; MEDICALLY UNINSURED; MEDICARE; RATE SETTING AND REVIEW; UNCOMPENSATED CARE; UNITED STATES;

EID: 41749086036     PISSN: 02782715     EISSN: 02782715     Source Type: Journal    
DOI: 10.1377/hlthaff.27.2.w116     Document Type: Article

References (29)

1. Medicare Payment Advisory Commission, A Data Book: Healthcare Spending and the Medicare Program (Washington: MedPAC, June 2006).
2. L. Lagnado, "Hospitals Try Extreme Measures to Collect Their Overdue Debts," Wall Street Journal, 30 October 2003;
3. R.L. Rundle and P. Davies, "Hospitals Start to Seek Payments Upfront: HCA, Tenet, Others Ask Patients to Pay Portion of Bill before Elective Treatments,"Wall Street Journal, 2 June 2004;
4. R.L. Clarke, "Healthcare Complexities Work against All of Us" (Letter to the Editor), Wall Street Journal, 28 November 2003;
5. J. Dorschner, "Hospitals Accused of Gouging Uninsured," Miami Herald, 13 December 2003;
6. S. Neal, "Price-Gouging Hospitals Sticking It to Uninsured, Immigrants," Chicago Sun-Times, 4 June 2003;
7. and "Hospital Billing Practices for Uninsured Patients," Medical News Today, 9 November 2004.
8. Dick Davidson, president, American Hospital Association, "Statement on the House Subcommittee on Oversight and Investigation's Look at Hospital Billing and Collection Practices" (Washington: AHA, 17 July 2003).
9. C. Ornstein and V. Kemper, "Hospital Billing Practices Examined: A Congressional Panel Seeks to Determine If the Uninsured Are Being Overbilled," Los Angeles Times, 18 July 2003;
10. L. Lagnado, "House Panel Begins Inquiry into Hospital Billing Practices," Wall Street Journal, 17 July 2003;
11. L. Lagnado, "Hospital Industry Is Urged to Avoid Harsh Tactics for Billing Uninsured," Wall Street Journal, 7 July 2003;
12. R. Pear, "Hospitals Can Provide Discounts to Uninsured and Needy Patients, Bush Administration Says," New York Times, 20 February 2004;
13. and L. Lagnado, "Hospitals Will Give Price Breaks to Uninsured, If Medicare Agrees,"Wall Street Journal, 17 December 2003.
14. G. Anderson, "From 'Soak the Rich' to 'Soak the Poor': Recent Trends in Hospital Pricing," Health Affairs 26, no. 3 (2007): 780-789;
15. Glenn Melnick, University of Southern California, testimony before the House Ways and Means Subcommittee on Health, "Hospital Pricing and the Uninsured," 9 March 2004;
16. U.E. Reinhardt, "The Pricing Of U.S. Hospital Services: Chaos behind a Veil of Secrecy," Health Affairs 25, no. 1 (2006): 57-69;
17. and C.P. Tompkins, S.H. Altman, and E. Eilat, "The Precarious Pricing System for Hospital Services," Health Affairs 25, no. 1 (2006): 45-56.
18. California Office of Statewide Health Planning and Development, Hospital Annual Financial Data, http://www.oshpd.ca.gov/HID/Products/Hospitals/ AnnFinanData/CmplteDataSet/index.html (accessed 9 January 2008).
19. Interviewing hospital market experts, we have discovered that extremely high levels of collection ratios from uninsured patients are implausible and could be the result of data errors or the fact that collection agencies often deliver payments from uninsured patients in bulk-possibly covering previous time periods.
20. Adjusted days are calculated as the sum of inpatient days and outpatient visits converted to inpatient days based on outpatient charges.
21. Ornstein and Kemper, "Hospital Billing Practices Examined";
22. Lagnado, "House Panel Begins Inquiry;"
23. Lagnado, "Hospital Industry Is Urged to Avoid Harsh Tactics";
24. Pear, "Hospitals Can Provide Discounts";
25. Lagnado, "Hospitals Will Give Price Breaks";
26. and California Healthcare Association, "Key Steps Checklist for Developing or Revising a Hospital Charity Care Policy" (Sacramento: CHA, 2004).
27. M. The mathematical shorthand for the equations described above can be viewed in Appendix Exhibit 1, online at http://content.healthaffairs.org/cgi/ content/full/hlthaff.27.2.w116/DC2. Therefore, we show that the average of relative (uninsured to Medicare) differences in prices is equal to the relative difference between average price for uninsured and average price for Medicare patients. The proof can be easily extrapolated to N number of hospitals, and a different mix of services provided (to do that, one should convert price to price per unit of service, and total charge to units of service, multiplied by hospital charge per unit of service). And since our measure is weighted by the number of uninsured patients in each hospital it adjusts for how patients are distributed across hospitals with higher or lower prices relative to an absolute Medicare price.
28. R.Y. Hsia, D. MacIsaac, and L.C. Baker, "Decreasing Reimbursements for Outpatient Emergency Department Visits across Payer Groups from 1996 to 2004," Annals of Emergency Medicine (9 November 2007).
29. "Fresh Pain for the Uninsured," Business Week, 3 December 2007.