Hospital Cost Transparency Faces Legislature Tomorrow

Two bills, sponsored by SEIU Local 49 and the Oregon Association of Hospitals and Health Systems, could lead to a frank discussion of hospital costs for the very first time.

The Oregon Association of Hospitals and Health Systems and SEIU Local 49 go head to head tomorrow in a hearing before the Senate Health Committee on cost transparency.

At issue is what consumers deserve to know about hospital costs, and both sides are armed with strong lobbying power.

Two bills facing the Legislature – Senate Bill 900 authored by the hospital association – and Senate Bill 655 by SEIU – could bring into play the reality behind hospital pricing.

Currently the prices charged by hospitals vary depending on negotiations with health insurers, which is even further compounded when health systems such as Providence Health & Services not only runs its only insurance company but also owns eight hospitals throughout the state.

The mechanics behind negotiations are never disclosed publicly, leaving consumers in the dark about the true cost of a hospital procedure. The uninsured have long borne the burden, with unpaid medical bills considered the leading cause of bankruptcy in the United States.

As a good faith measure and perhaps to counter SEIU’s impact at the Legislature, the hospital association announced that its members have agreed to provide free care for all patients who earn up to 200 percent of the federal poverty level, or about $48,500 for a family of four and a sliding payment scale for higher income levels.

Felisa Hagins, political director of SEIU Local 49, commended that decision, but told The Lund Report that cost transparency is still necessary. The legislation proffered by her organization would create a cost review commission, an independent agency charged with regulating hospital rates for all payers in Oregon, and seek to constrain hospital costs by bringing equity to pricing.

A review process would require that all hospital rates above a reasonable benchmark be reviewed in a public process, similar to the Insurance Division’s rate review of individual and small group rates.

Hospitals that work collaboratively to take full responsibility for the health of their patient populations and achieve superior levels of quality service would be rewarded under SEIU’s legislation.

Collectively, SEIU represents more than 45,000 educators, 9,000 healthcare providers and 30,000 in-home care providers. “All of whom,” Hagins said, “see firsthand the impacts of unaffordable healthcare. By working together to make hospital care affordable, we will support care providers, educators and working families throughout Oregon.”

White paper unveils costs

Earlier this week, SEIU released a white paper comparing prices for common procedures at non-profit hospitals in Oregon. Based on Inpatient Discharge Data from the Oregon Health Authority, the report found that hospitals charge “wildly different prices” for the same diagnosis, with the most expensive hospitals in Oregon charging patients three times as much as the state’s least expensive hospitals.

“Can you imagine buying a car without knowing what it costs, or which dealer is cheapest, and just waiting for the bill to show up in the mail a few months later to find out how much you owe?” asked Meg Niemi, President of SEIU Local 49. “That’s basically the world of hospital pricing today, despite the fact that healthcare is one of the most expensive services we buy. Oregonians deserve to know which hospitals charge the most so they can make informed decisions about where they receive care.”

The report found that the top ten most expensive hospitals are located in both urban and rural areas across the state:

1 - Sky Lakes Medical Center, Klamath Falls

2 - Asante Rogue Regional Medical Center, Medford

3 - Legacy Emanuel Hospital & Health Center, Portland

4 - McKenzie-Willamette Medical Center, Springfield

5 - Legacy Good Samaritan Medical Center, Portland

6 - Mercy Medical Center, Roseburg

7 - Providence Medford Medical Center, Medford

8 - Bay Area Hospital, Coos Bay

9 - St. Charles Medical Center, Bend

10 - Asante Three Rivers Medical Center, Grants Pass

In one dramatic example cited in the report, a patient who receives and appendectomy and stays overnight in the hospital would be charged $30,117 at McKenzie-Willamette Medical Center in Springfield - versus only $9,055 at Wallowa Memorial Hospital in Enterprise.

The report also found that top price doesn’t mean top quality; in fact, high-price hospitals actually performed worse in 30-day readmissions and postsurgical deaths than low-price hospitals.

Hospitals respond

When asked for a response to SEIU’s legislation and the release of its white paper, the Oregon Association of Hospitals & Health Systems released the following statement to The Lund Report, requesting that it be published in its entirety.

“We agree that hospital costs can be confusing for patients; however, reports such as these often detract from the real work of health care transformation and only serve to further confuse the public about what they can reasonably expect to pay when seeking hospital care.

“Our initial review of this report surfaces several inaccuracies in the data and broad assumptions that do not consider the complexity and additional government regulation around hospital prices. The authors of SEIU’s report used charge information, which is misleading to a patient making health care decisions. Those charges are reduced downward based on rates negotiated between hospitals and insurance providers. In most cases, for those receiving Medicaid and Medicare for health coverage, those payments are predetermined, which are much lower than what it costs to provide the service.

“Oregon hospitals are in strong support of increased transparency in pricing through Senate Bill 900. This bill would ensure that Oregonians have access to a user-friendly website that displays average prices paid for the most common hospital procedures at each of Oregon’s hospitals, while using the state’s own all payer all claims database.

“It is important that reports like these are put into perspective and don’t further confuse the public conversation around health care costs. When comparing hospitals, many factors need to be considered, including overall patient volumes within a specific service, payer mix (what types of insurance the patients have), underpayment by both Medicaid and Medicare, agreements with health insurance providers, and community health needs. All of these factors impact a hospital’s cost structure.

“Furthermore, a majority of Oregon’s hospitals have committed to free care for all patients up to 200 percent of the federal poverty level, or about $48,500 annually for a family of four; and many provide a sliding payment scale for higher income levels. So what patients pay and what hospitals are reimbursed are both far less than their report alleges.

“Patients need timely and relevant information to help them plan for medical procedures. Rather than bringing more clarity to this debate, the SEIU report uses misleading information to generate more confusion.”

Diane can be reached at [email protected].

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