The Chargemaster and the $100 Aspirin

By Abraham Aboraya,  the Orlando Business Journal. 

Osceola Regional Medical Center in Kissimmee is the 28th most expensive hospital in the U.S., according to new research.

The most expensive hospital in Central Florida isn’t just expensive by local standards — it’s one of the most expensive in the country. And that may drive up costs for local employers.

The research arm of the National Nurses United, the nation’s largest union representing registered nurses, released a report comparing the costs a hospital faces versus the charges. The report looked at Medicare data released in June 2013, which covers the 2012 fiscal year.

The Institute for Health & Socio-Economic Policy took the hospital costs as a ratio of the charges listed on the hospital’s chargemaster, a master list of prices that was the center of the 2013 Times article “Bitter Pill.” So if a hospital has $100 worth of costs and its charge-to-cost ratio is 922 percent, said hospital would charge $922 for every $100 in costs it incurred.

That ratio — 922 percent — is what Nashville, Tenn.-based HCA’s 321-bed Osceola Regional Medical Center in Kissimmee charges, ranking it the 28th most expensive hospital in the U.S. The costliest hospital in Florida is Orange Park Medical Center in Orange Park, another HCA hospital, with a charge-to-cost ratio of 1,139 percent, the third-highest rate in the country.

Critics of the analysis say the chargemaster is just a list of charges, and that few people actually pay those costs. To be clear, a hospital’s chargemaster list isn’t what the federal government or state governments pay for Medicare or Medicaid for patients’ care; those costs are set in law.

The chargemaster list at times is the starting point of negotiation. Smaller insurers likely will have to pay more — and charge employers more — to have access to local hospitals.

That, in turn, can make the insurance market less competitive and more costly for employers. And patients without insurance would see the full bill, although hospitals say most patients without insurance see a discounted bill from the chargemaster list.

The chargemaster list compared to actual costs is “one of the dirty little secrets with hospitals,” said Michael Carroll, a hospital analyst with St. Petersburg-based Tribrook Healthcare Consultants Inc. “It is a real issue and a real concern. When people talk about the $100 aspirin or gauze, that was at full charge.”

Nashville, Tenn.-based HCA owns and operates 163 for-profit hospitals in the U.S.  []

Jan. 17, 2014

Editor: Although the publication date of this article may not be current the information is still valid.