Philadelphia hospitals generally bill at higher rates than Pittsburgh’s when it comes to the most common Medicare inpatient procedures, according to a report from U.S. Centers for Medicare & Medicaid Services.
Hospitals in both cities bill Medicare above the national average, and more than their hospital counterparts in rural and suburban parts of the state, according to the data in the annual report, which was released June 1.
“Medicare Provider Utilization and Payment Data: Inpatient” details charges that over 3,000 U.S. hospitals submitted to Medicare in fiscal year 2012, for the top 100 most frequently billed categories of diagnoses for hospital patients admitted for multiple nights.
Because the data focus on inpatient admissions, it doesn‘t include regularly scheduled specialist appointments or outpatient procedures.
Analysis by the Post-Gazette of 10 common ailments in Pennsylvania listed in the report revealed that Philadelphia hospitals charge Medicare more than hospitals in Pittsburgh do, though certain ailments are exceptions.
Both Pittsburgh and Philadelphia hospitals charged more than the $38,236 state average for heart failure with major complications — Pittsburgh hospitals by an average of $33,000 and Philadelphia hospitals by $31,000.
But in other diagnosis categories — such as chest pain and respiratory issues with complications — Pittsburgh hospitals charged less than half of what Philadelphia hospitals did.
It is not unusual for urban hospitals to have higher billing rates. In cities such as New York, Los Angeles and Miami, hospitals bill Medicare as much as three times the national average. Urban centers are usually home to larger and more expensive teaching hospitals, as well as trauma centers that see more complicated cases.
In reality, the billing rates have little bearing on what Medicare actually pays for the procedures, because reimbursements to hospitals are a matter of federal policy, with fee schedules that set the maximum payment rates. Medicare is the federal health insurance program for senior citizens.
But while the rates don’t comport with actual reimbursement — or actual fees and co-pays paid by Medicare recipients — the reports are often used by researchers looking for treatment trends or seeking insight into how to control expenses.
“This information can be used to improve care coordination and health outcomes for Medicare beneficiaries nationwide,” said Bryan Sivak, chief technology officer in the U.S. Department of Health and Human Services. “We are looking forward to seeing what the community will do with” the data.
In Pennsylvania, hospitals statewide charged an average of $51,426 for another frequent diagnosis category, major colon surgeries. Pittsburgh hospitals charge on average $48,208, and Philadelphia hospitals $75,619.
In Pennsylvania in 2012, major joint replacement — knee replacements, hip replacement and major limb and foot surgery — was the most frequently billed discharge, followed by sepsis-related infections.
Neither of the two biggest medical systems in Pittsburgh — UPMC and Highmark’s Allegheny Health Network — displayed trends of extreme over- or under-charging, except in select instances. UPMC Presbyterian and UPMC Shadyside, which for billing purposes are considered one institution, consistently charged over the state average while St. Clair Memorial Hospital and UPMC Mercy charged under.
Susan Manko, director of media relations for UPMC, said the hospital system is “deeply engaged” in looking for new models of cost-effective care. “UPMC provides a robust financial assistance program for patients,” she added.
While hospitals say the billed rates don’t matter since Medicare beneficiaries and under-65 patients with commercial insurance don’t pay the full rates, some health policy experts say there are instances in which a hospital’s rates do affect the patient.
Gerard Anderson, director at the Center for Hospital Finance and Management at Johns Hopkins University, said uninsured patients — as well as those from other countries — will feel the effect of these upward trends. Patients insured under worker’s compensation or who have insurance out of a hospital’s network may also have to pay at least a portion of the billed rate.
National average charges for all reported diagnosis groups increased from 2011 to 2012, CMS reported.
Max Radwin: email@example.com or 412-263-1280 or via Twitter @MaxRadwin.