hospital reimbursements

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Report: Cost Of Care Varies Widely, Depending On The Hospital

A new report says MGH was reimbursed about double the rate of Cambridge Health Alliance for C-section deliveries

Why, you may ask, is the price tag on a C-section $5,000 at one Boston-area hospital and $10,000 at another?

A new report from the state Division of Health Care Finance and Policy on medical cost trends doesn’t offer the answer, but it does document numerous cases in which certain hospitals are reimbursed by insurers at far higher rates than others despite comparable levels of care, The Boston Globe reports. For instance:

Cambridge Health Alliance was paid less than $5,000 each for 55 caesarean sections performed in 2009, while Massachusetts General Hospital was paid more than $10,000 each for 483 caesarean deliveries that year, state officials found.

They said it was unclear why insurers paid some hospitals dramatically more, since officials found no obvious differences in quality of care, and their analysis allowed for instances in which hospitals treat sicker patients.

Disparities in payments were first documented by Attorney General Martha Coakley’s staff last year, which concluded after an investigation that the highest paid hospitals had more market clout, some because of their brand names, but that they were not necessarily providing better care. The new report, which the governor’s office planned to release to the public today, mirrors Coakley’s initial findings.

How much hospitals and doctors are paid and whether those payments are justified are central issues as the state and private insurers search for ways to control soaring health care costs.

Among the other findings:

– Prices vary significantly state wide for inpatient and professional services as reported by the AG last year
–The differential in rates ranges from a 3 fold to a 6-7 fold variation depending on the service.
–Tertiary care hospitals account for the highest proportion of prices above the state median price
– Medicaid and Medicare pay less than private insurers
– Providers with the highest percent of Medicaid patients often receive the lowest commercial rates
–There is little measurable variation in quality

This cost variation report was released with a companion report on insurance premiums. (The analysis found that “private group health insurance premiums in Massachusetts increased roughly 5 to 10 percent annually over the two year period [2007-2009] when adjusted for benefits. However, the Consumer Price Index increased by only 1.7 percent nationally and 2.0 in the Northeast region over the same period, signaling that the rate of increase in the cost of health care far outpaces the rate of inflation.”)

The reports were released in advance of hearings on health care cost trends, which are scheduled to take place between June 27 and June 30 in conjunction with the attorney general’s office.