A study examining the Medicare cost reports of 50 hospitals across the country with the highest charge-to-cost ratios found that the hospitals charged patient fees that were 10 times more than the amount of their costs. Additionally, the study found that the uninsured individuals were most often charged the highest prices because public and private health insurers do not pay rates based on a hospital’s charges.
The study found that, out of the 50 hospitals with the highest markups, 49 were for-profit hospitals. The study also revealed that 46 of the hospitals were owned by for-profit hospital systems, including one system owning 25 hospitals on the list. Additionally, 20 of the hospitals were located in Florida.
The Washington Post is reporting that the co-author of the study, Gerard Anderson, a professor at Johns Hopkins Bloomberg School of Public Health, explained that the lack of regulation may explain the inflated prices. “They are marking up the prices because no one is telling them they can’t,” he said. Additionally, he reportedly stated, “These are the hospitals that have the highest markup of all 5,000 hospitals in the United States. This means, when it costs the hospital $100, they are going to charge you, on average, $1,000.”
Uninsured most affected
The study pointed out that market forces are not likely to control the hospital prices because it is difficult for consumers to compare prices. Additionally, public and private health insurers do not set their payment rates based on hospital charges. As a result, uninsured individuals are often billed for full price and out-of-network patients and workers’ compensation insurers are also frequently required to pay a large portion of the charges.
The study recommended that the states and the federal government limit charge-to-cost ratios, set an all-payer rate, or require full disclosure by hospitals in order to control markups.