Loyola Gottlieb charged more for Medicare procedures
BY ART GOLAB AND MONIFA THOMAS Staff Reporters July 5, 2013 9:41PM
The Sun-Times analyzed Medicare billing. | Getty Images
Updated: August 8, 2013 7:04AM
Loyola Gottlieb Memorial Hospital charged more for its Medicare procedures than any other hospital in the Chicago area that was included in recently released federal data, according to an analysis by the Chicago Sun-Times.
The Melrose Park hospital topped a list of 69 Chicago area hospitals in charges for 100 of the most common procedures, such as treatment of kidney failure and knee or hip replacement.
The Sun-Times looked at how much a hospital’s price varied from the average price charged by all Chicago-area hospitals. If a hospital ranked in the 95th percentile, that means it charged more than 95 percent of the other hospitals in the region at that time. The analysis was based on 2011 federal data released in May.
Because the data is from 2011, Jay Sial, chief financial officer of Loyola University Health System, said that it does not reflect a January 2013 internal review that resulted in an average 25 percent reduction in charges at Gottlieb Memorial Hospital.
“Loyola University Health System closely monitors charges and conducts reviews regularly to ensure that the health system is competitive in the Chicago market. Charges may be adjusted up or down based on this benchmarking,” Sial said.
But what a hospital charges and what it actually collects can vary wildly.
Even though, on average, Gottlieb charged more than other hospitals in 2011, Medicare reimbursed Gottlieb a lower percentage of what was billed than all but 33 percent of area hospitals.
Health care experts say consumers usually end up paying at least some of that difference between what Medicare actually paid and what the hospital charged.
In fact, only one hospital was in the top five for both charges for service and rate of payment.
That was the University of Chicago Medical Center, which scored at 98.5 percentile for how much it charged and 98.4 percent for how much it was paid.
Brian Crawford, a spokesman for the U of C Medical Center, noted that, “We’re an academic medical center, and we do provide care for the sickest of the sick. And our cases are typically very complex.
He added, “Other hospitals are sending more complex patients to us to care for. That’s going to lead to higher costs and higher charges.”
The other hospitals that had the highest reimbursement for the procedures it performed were University of Illinois Hospital, which topped the list; John H. Stroger, which had the same reimbursement rate as U of C Medical Center; Rush University Medical Center and Mount Sinai Hospital.
How much the Centers for Medicare and Medicaid reimburses for a procedure varies on such factors as whether the hospital is an academic medical center and whether the hospital serves a relatively high proportion of people who can’t pay or have Medicaid, CMS spokeswoman Kathryn S. Ceja said.
Some of those same factors were also cited as factors that affect a hospital’s pricing and could explain why there was such extreme variation in pricing among U.S. hospitals — even those operating in the same communities, said a spokesman for Illinois Hospital Association.
“Hospital charges vary due to sets of complex factors, such as the hospital’s local community, unique mission of care, different and unique services provided (e.g., trauma, neonatal intensive care, burn units, etc.), different populations served, and a range of different public and private payers,” said IHA spokesman Danny Chun. Similarly, hospitals that were among the top five percentiles of charges, such as Rush-Copley Medical Center and Swedish Covenant Hospital, pointed out that hospital charges can, among other things, vary based on the patient population served, the increasing cost of services provided and the amount of charity care and uncompensated care provided.
Central DuPage Hospital, meanwhile, said: “While in some instances our charges may be slightly higher, we believe our patients will benefit from the comprehensive care offered at our award-winning hospitals and advanced facilities.”
It is also important to note that Medicare and private insurance companies usually negotiate lower charges with hospitals, so the amount that hospitals charge typically isn’t the amount that patients actually pay if they have insurance.
However, the data sheds light on fees that the uninsured could pay, though they too, may not actually pay the full amount. Uninsured patients in Illinois are supposed to qualify for financial assistance and charity care.
Some health experts agreed to an extent with the hospitals’ take on why certain hospitals were higher than others for the same procedures, like that some hospitals have to charge more because they aren’t getting the payment services actually cost from Medicare and Medicaid. Other theories were that the differences in how much hospitals and private insurers agreed to for procedures impacted how much hospitals charged, as well as charging more in order to hire sought-after employees.
Some experts also suspected that greed played a role for some hospitals in terms of what they charged.
“If you and I think that hospital cost pricing structure is a science, we would be very wrong,” said Dr. Paul R. Berger, chief medical officer in Aon Hewitt’s Health & Benefits practice “It’s an art form.”
Dr. David Goodman agreed that there does not seem to be a particular rhyme or reason with the charges.
“No one has done a formal analysis yet, but if there is a relationship it’s a pretty weak one because there are so many obvious exceptions that come out that really just show the particular whims of the hospital in terms of how they like to set the highest price,” said Goodman, director of the Center for Health Policy Research for Dartmouth Institute
He added, though, that the real data they need is still a secret — not what hospitals charge but what patients actually end up paying.
“We’re arguing about the wrong things. It’s a distraction against what’s really much more hidden,” he said.