If every patient furnished a particular service is supposed to be charged the same price for it, a hospital cannot charge any patient a different price for that service for any reason. Theoretically, if a patient can demonstrate that a price for a particular service is outrageously high, two things should happen. First, the hospital should discount that patient's bill by an amount equivalent to the difference between what the price for the service is and what it should be, which is a way of reducing the patient's bill without charging her a different price for the service. Second, the hospital should lower the price for the service in its chargemaster so that patients are not charged the old, outrageously high price in the future.
"Usual and customary." The price that a hospital charges for a particular service is considered to be "usual and customary" if it falls within the range of prices charged for the same service by other hospitals in the same geographical area. To determine whether the price that a hospital charges for a particular service is "usual and customary," you have to know what other hospitals in the area charge for the same service.
There are companies that collect hospital pricing data, compile huge hospital pricing databases and sell the information to the public. The comparative pricing information for a single hospital can cost tens of thousands of dollars, because every hospital provides thousands of different services to its patients, and there may be dozens of other hospitals located in the same area. Hospitals, in fact, are the primary buyers of such data, because there is really no other way for a hospital to find out how its prices compare to those charged by the hospitals with which it competes for patients.
Hospital bill auditing firms that audit bills from hospitals located all over the country, like we do, cannot afford to buy hospital pricing data for the entire country. We do maintain a database of the pricing information contained in the hospital bills that we audit, but our database does not come close to covering every service provided by every hospital in the country. So we are rarely able to address the question of whether a hospital's charge for a particular service is "usual and customary."
"Reasonable." The price that a hospital charges for a particular service is considered to be "reasonable" if it is justifiable considering the hospital's cost of providing the service. To determine whether the price that a hospital charges for a particular service is "reasonable," you have to know the hospital's cost of providing the service.
The services that hospitals provide their patients can be divided into three categories -- room and board, ancillary items and routine items. The room and board charge includes much more than the cost of providing room and board. The cost of many other items is supposed to be bundled into the room and board charge. Ancillary items are all items other than room and board, except for routine items. Routine items are "cost" items -- items that are considered part of a hospital's overhead or cost of doing business. The cost of such items is supposed to be bundled into the charge for other items, primarily, but by no means exclusively, the room and board charge. Routine items are not separately billable to a patient; that is, they should not appear as separate items in a patient's bill.
Room and board. Room and board charges can vary widely from hospital to hospital even within a relatively small geographical area, such as a metropolitan area. The room and board charge at a large teaching hospital with aging facilities located in a central city where large numbers of indigent people live can be expected to be considerably higher than the charge at a small suburban hospital located only fifteen or twenty miles away. The large teaching hospital has to cover expenses that the small suburban hospital does not face. Hospitals located outside a metropolitan area usually have even fewer expenses that have to be covered, so their room and board charges tend to be fairly low.
Is it reasonable for some hospitals in northern New Jersey to charge $4,000 to $6,000 or more per day for a semi-private room and $8,000 to $12,000 or more per day for a room in an Intensive Care Unit? The hospitals that charge those kinds of prices say that their prices are reasonable. Making a case that such charges are unreasonably high is nearly impossible, because a hospital's cost information is proprietary.
Ancillary items. As mentioned above, ancillary items are all items other than room and board, except for routine items. Ancillary items can be divided into two categories -- services and other items. Ancillary services are provided by such hospital departments as Laboratory and Pathology; Radiology, Nuclear Medicine, and Other Imaging; Operating Room; Anesthesia; Respiratory Services; Physical Therapy and Occupational Therapy; Emergency Room; Cardiology; Recovery Room; and Labor/Delivery Room. Again, because a hospital's cost information is proprietary, making a case that such charges are unreasonably high is nearly impossible.
The other ancillary items provided by hospitals are medications and intravenous solutions, medical/surgical supplies and devices, and blood and blood products. It is relatively easy to find the wholesale prices of the medications and intravenous solutions that hospitals purchase. The typical markup on such items ranges from 100 percent to 600 percent or more, depending on the type of medication or solution. Finding the wholesale prices of medical/surgical supplies and devices is considerably more difficult, but it can be done. Typical markups are, again, anywhere from 100 percent to 600 percent or more. Finding the wholesale prices of blood and blood products is something that we have never tried to do.
Disputing outrageous charges. A charge of $5.00 for an aspirin is usual, customary and reasonable; a charge of $50.00 for an aspirin is outrageously high. A charge of $50.00 for a Basic Metabolic Panel -- eight laboratory blood tests done simultaneously on an automated, multichannel machine -- is usual, customary and reasonable; a charge of $450.00 for a Basic Metabolic Panel is outrageously high. A charge of $6,000 to $8,000 for Cardiac Angioplasty -- a procedure in which a catheter with a balloon tip is inserted into an artery and threaded into the heart -- is usual, customary and reasonable; a charge of $47,000 to $52,000 for a Cardiac Angioplasty is outrageously high.
We have never seen a $50.00 charge for an aspirin, but we have seen a $450.00 charge for a Basic Metabolic Panel and a $52,000 charge for Cardiac Angioplasty. In one sense, disputing such outrageously high charges is futile. As mentioned above, a hospital has to charge everyone the same price for the same item, and that price has to be the price listed in the hospital's chargemaster. Disputing the price that a hospital charges for an item, even if that price is clearly outrageously high, cannot, therefore, result in the hospital reducing the charge for that item in a patient's bill. Furthermore, if the patient unquestionably received the item, the hospital has no reason to remove the charge from the bill.
Nevertheless, we generally dispute outrageously high charges. When we vigorously dispute such a charge in the course of auditing a patient's bill, we sometimes find that the hospital will be more inclined than it otherwise might be to remove from the bill other charges that we've disputed for other reasons. Also, we sometimes find that the hospital will offer to discount the entire bill by a larger amount than it otherwise might be willing to consider. Finally, there's always the possibility that the hospital will revisit the price that it's charging for an item and decide to reduce it, so that patients in the future won't have to deal with such an outrageously high charge. We must admit, however, that we don't know of a case where a hospital has actually revised its chargemaster after we demonstrated that a charge was outrageously high.
The price of care and treatment. The care and treatment that a patient receives in a hospital are not supposed to be affected by questions of cost or pricing (or by the patient's ability to pay for them). A hospital is supposed to provide a patient with whatever items the patient's physician orders, which is why there has to be a physician's order for nearly every item that appears on the patient's itemized bill. A patient is not supposed to be given anything other than routine items unless a physician specifically orders it. A patient who feels that the hospital has given her something unnecessary or something that she didn't request or something that is very expensive has more of a quarrel with her physician than with the hospital.
Physicians rarely ask patients whether or not they want to be given a particular item, nor do they generally like to be questioned about the items that they order for their patients. A physician may discuss alternative courses of treatment with a patient, but once a course of treatment has been selected, how that course of treatment is carried out is rarely open for discussion. If a physician orders that a patient be given a particular item, it is presumed that he has good reasons for doing so. The physician has the responsibility for determining whether or not the item is needed; how much the patient is going to be charged for the item is not supposed to enter into that determination. If the item is needed, it's needed, regardless of how much the hospital charges for it, which the physician may not even know. Most physicians are not hospital employees -- they are private practitioners with hospital privileges. |
