Hospital rates vary greatly in Maryland

The difference in prices from one Maryland hospital to another can be thousands of dollars.

When Max Miller needed hip surgery, he made sure to ask what it would cost.

Like most Americans, he had seen the co-pays and deductibles required by his health insurance double in recent years, greatly increasing his out-of-pocket expenses.

And like many, he had experienced difficulty getting straight answers on the prices of procedures.

"People say that consumers don't understand their bills," he said. "But I find it hard to find someone in the doctors' offices who always understands."

Even in Maryland, where the state uniquely controls how much hospitals may charge, patients struggle to get information about the costs of their treatment. That makes it more difficult to comparison shop at a time when rising deductibles mean that patients are paying a larger share of their health care bills.

And that is a real problem, because prices can vary widely from hospital to hospital, a Baltimore Sun analysis of state data shows.

Having a baby at Johns Hopkins Hospital in 2014, for example, cost on average $11,752 — more than double the $4,895 average at the University of Maryland St. Joseph Medical Center in Towson.

The difference was greater for other common procedures. Knee joint replacement cost an average of $56,116 at Bon Secours Hospital and $16,163 at St. Joseph. Treatment for heart failure cost $18,059 at Hopkins and $7,265 at Edward W. McCready Memorial Hospital in Crisfield.

Those numbers are averages — actual bills varied widely from case to case, depending on the complications each patient experienced and the treatment that was rendered. The numbers, made public by the state's Health Services Cost Review Commission, do not include doctors' fees and some lab tests, which add costs that make comparisons even more complicated.

"It's like it's in Greek sometimes," said Dr. Walter H. Ettinger Jr., senior vice president and chief medical officer at the University of Maryland Medical System.

The prices, which are proposed by the hospitals and approved by the state's cost review commission, are driven at each institution largely by the volume of complex cases and the percentage of patients who are unable to pay their full bills. The commission allows hospitals to raise their rates to spread those costs.

Generally speaking, prices would be lowest at a hospital in a wealthy community that sees patients with less complex problems. They would be highest at a hospital in a poor community with harder issues to resolve.

Hopkins fits the latter profile. The hospital attracts patients from around the world with rare disorders or in need of transplants, for example. It also serves an impoverished city population.

The cost of a hospital's technology, fluctuations in the volume of patients and the amount of medical education provided to residents are also factors.

Officials at the cost review commission say the difference in prices is not based on the quality of services — which can also be difficult to discern from the limited publicly available information.

There might not be much relief in sight from high costs, as hospitals work to control spending but do not directly pass savings on to consumers.

Employers are not giving workers much of a break either. Average deductibles — the amount consumers pay before insurance kicks in — rose 9 percent this year to more than $1,000, according to a recent study by the nonprofit Kaiser Family Foundation and the Health Research & Educational Trust. Some plans require consumers to pay several thousand dollars before any insurance kicks in.

Jonathan Weiner, professor of health policy and management in the Johns Hopkins Bloomberg School of Public Health, warns that high and unknown costs could discourage people from seeking care, potentially compounding their illnesses and long-term costs.

The Commonwealth Fund has found that this might already be happening. It found that 23 percent of people with high deductibles did not get a preventive test, which is now covered under the federal health care overhaul, because they believed — incorrectly — that they would have to pay.

"We're definitely seeing people avoiding needed care, even free care, because they don't understand their costs," said Sara Collins, the group's vice president for health care coverage and access.

Maryland law requires hospitals to give cost estimates upon request, but regulators aren't sure how many people know that. Even then, consumers face separate bills from hospitals, doctors and labs for the same procedure, and only hospital bills are regulated.

Doctors' rates are negotiated with individual insurance companies, the way hospital bills are in other states.

Studies suggest that consumers seek out or receive little information about their bills before they get them. A recent Kaiser survey found that fewer than one in five people had seen information comparing prices or quality of doctors, hospitals or insurance plans in the past year, and even fewer used the data to make decisions.

About two-thirds of respondents said it was difficult to find out how much treatments would cost.

Ettinger said patients are more apt to choose hospitals based on recommendations from neighbors or family doctors rather than research alternatives. Many others are taken by ambulance and have no say.

Ettinger said hospitals are working to reduce the cost of care, but they should also work at providing better cost and quality information to the public.

"I do think more and more people will look at price because it's becoming a real issue," he said.

Collins and others say choosing the best insurance might be a better method of controlling costs than shopping around for services. Others say regulators, providers and employers will have more impact on consumers' costs.

Maryland is not alone in working toward more efficient care, but the state's efforts are largely rooted in its hospital regulation.

The state has long had an agreement with federal authorities that gives its hospitals millions of dollars in higher Medicare reimbursements in exchange for keeping growth in health care spending below the national average.

The agreement was rewritten two years ago to move hospitals away from fee-for-service payments that promoted more, but not necessarily better, care. The hospitals now each get a budget they cannot exceed, giving them incentive to keep patients well and out of their beds.

In a recent commentary in the New England Journal of Medicine, the state officials who crafted the program and the federal officials who oversee it said it seems to be achieving its goals: Not only was cost growth restrained in Maryland when compared with historic levels, but quality at hospitals improved. Complications and readmissions declined.

If the results continue, the model could serve as a template for other states, officials said.

Every Maryland hospital kept within its budget last year, said Steve Ports, principal deputy director of the cost review commission.

Budgets — which ranged last year from $103.9 million at University of Maryland Harford Memorial Hospital to $1.6 billion at Johns Hopkins Hospital — reflect not only the number of patients expected each year but the operating costs each is allowed to include in its rates.

Hopkins, in Baltimore, is one of the world's premier research and treatment institutions, routinely ranked at the top of best hospitals lists, such as the annual assessment by U.S. News and World Report. But that does not directly factor into its rates.

Officials at Hopkins say their often higher rates reflect the high number of difficult cases and the cost of medical education at a leading academic hospital.

Officials at Washington Adventist Hospital in Takoma Park say their rates are sometimes higher than those of their peers because they see a large percentage of uninsured patients, who tend to need more care. The state allows the hospital to fold unpaid bills into rates for everyone else.

The Sun's analysis of several common procedures in 2014, the most recent full year for which data is available, showed that Hopkins and the University of Maryland Medical Center, another premier research and teaching hospital, were not always the most expensive.

Suburban community hospitals and rural hospitals also had some of the highest rates for procedures last year, The Sun found.

And even when hospitals reduced the number of procedures and saved the system money, they did not cut consumer bills. Sometimes they raised them.

At Union Hospital of Cecil County, when a surgeon reduced his hours and volume of knee-joint replacements in 2014, the commission temporarily allowed the hospital to charge higher rates to others for the procedure.

Union was the third-most-expensive hospital in Maryland for the surgery that year, charging an average of $41,565. When the surgeon returned to full time in the first half of 2015, the average dropped below $36,000.

That experience could foreshadow what will happen as all hospitals work toward the goal of keeping people well and reducing the need for medical procedures, said Laurie Beyer, Union's chief financial officer.

She contends that that is good for the health care system overall. Hospitals can reinvest revenue into keeping patients healthy, which means fewer and lower bills for other consumers.

Bon Secours Hospital in West Baltimore charges more because it treats a greater-than-average percentage of patients with chronic conditions. But its reinvestment in wellness programs has meant a drop in the number of patient readmissions within 30 days.

That is a quality measure that is watched closely by state and federal regulators, who assess financial penalties for high readmission rates.

"We are deeply committed to serving the community and addressing the social determinants of health, which includes services offered through our community health and outreach programs," hospital officials said in a statement. "Any 'profits' we make are reinvested in programs and services that address health inequities in West Baltimore."

Understanding hospital services can help consumers save money, said Katherine Hempstead, director of the coverage team at the Robert Wood Johnson Foundation. But as a practical matter, she says, they might be better off focusing on insurance costs rather than hospital rates.

As out-of-pocket costs rise, those who have chronic conditions or need more care might need to choose plans with higher premiums for more coverage or agree to use specific providers outside of hospitals, such as free-standing imaging centers, labs or clinics.

"It's becoming more confusing to be a health care consumer," Hempstead said. "Where consumers need to be savvy is when they are choosing a plan."

One insurance leader said consumers need to be savvy about choosing a doctor.

Good physicians will focus on preventive care — such as controlling blood pressure and blood sugar, for example — says Chester "Chet" Burrell, president and CEO of CareFirst BlueCross BlueShield, the state's dominant insurer.

"Most consumers don't ask for price lists from hospitals, and we'd say they shouldn't — they could be misleading," Burrell said. "You want the best medical outcome, pick a good primary care doctor and have them a make a good decision."

meredith.cohn@baltsun.com

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