Wide gap found in UPMC costs, charges

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UPMC Shadyside-Presbyterian is among the U.S. hospitals with the highest charges compared to actual cost of providing care, according to a new study by a national nurse organization.

The National Nurses United report out this week ranked the combined UPMC facilities in Oakland and Shadyside 40th among American hospitals, saying rates listed by UPMC Shadyside-Presbyterian are more than eight times higher than the hospital's costs.

That does not mean the charges are necessarily out of line for a major urban teaching center such as UPMC Shadyside-Presbyterian, said Harold Miller, president of Pittsburgh-based Future Strategies LLC and adjunct professor of public policy and management at Carnegie Mellon University.

"Teaching hospitals are generally more expensive, and Medicare recognizes that," Mr. Miller said. But the wide gap between charges and costs makes it hard for consumers to figure out what their cost will be, he said.

UPMC spokeswoman Wendy Zellner on Wednesday said in an email that the study "is not reflective of the actual patient experience at UPMC. Charges generally do NOT determine what hospitals are paid."

Government programs such as Medicare determine what they will pay hospitals, she said, "and most insurance companies individually contract on pricing. The vast majority of people without insurance are covered by some form of financial assistance."

The study based its findings on Medicare cost reports from the federal fiscal year that ended Sept. 30.

The study says UPMC Shadyside-Presbyterian charges averaged $869 for every $100 of total cost, compared with $403 at Allegheny General Hospital on the North Side and $358 at St. Clair Hospital in Mt. Lebanon.

December's hospital performance report from the Pennsylvania Health Care Cost Containment Council provided comparisons for some specific procedures. For congestive heart failure, for example, UPMC Shadyside-Presbyterian's average charge is $41,424 -- the highest in the region -- compared with $26,755 at AGH and $18,075 at St. Clair. A laparoscopic gallbladder removal carries an average $58,550 charge at UPMC Shadyside-Presbyterian, $36,780 at AGH and $29,264 at St. Clair.

Regardless of the charge, patients' out-of-pocket expense "is going to depend on what kind of insurance they have," said Mr. Miller, who writes a column for the Post-Gazette.

Patients with health insurance are typically insulated from paying hospital charges because their insurer has pre-negotiated discounted rates. But the charge amounts can be devastating financially for those without insurance.

Consumers are growing more sensitive to costs as more people choose lower premium plans that come with higher deductibles and co-payments. Depending on each particular plan, charges may factor into the formula that determines what the patient will pay.

The same may hold true if, as it currently appears, UPMC does not extend or renew its contract with Pittsburgh insurer Highmark and its 3.6 million subscribers when the current contract expires Dec. 31.

The difficulty, said Mr. Miller, is that a wide disparity in charges vs. costs makes it difficult for consumers to know how much they will pay and how that compares with other hospitals.

"People are going to be paying a significant portion of the health care costs, and to be able to figure out what it's going to cost them is very important and it's very difficult to figure that out," he said.

"The bigger the gap between the charges and the actual number, the less useful the information is to the consumer."


Steve Twedt: stwedt@post-gazette.com or 412-263-1963.

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