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Wide Variation In Hospital Charges For Blood Tests Called ‘Irrational’

By Roni Caryn Rabin

August 15th, 2014, 5:00 AM

One California hospital charged $10 for a blood cholesterol test, while another hospital that ran the same test charged $10,169 — over 1,000 times more.

For another common blood test called a basic metabolic panel, the average hospital charge was $371, but prices ranged from a low of $35 to a high of $7,303, more than 200 times more.

The wide disparity in hospitals’ listed charges for routine blood tests at California hospitals was revealed in a study published in the August issue of BMJ Open. The study examined the listed charges for routine blood tests performed in 2011.

Researchers said their analysis found no rational explanation for the stark variation in listed prices, though teaching hospitals and government hospitals generally set lower charges than other facilities.

“People say our health care system needs to be more marketplace-driven, but the charging system and payment system are irrational,” said Dr. Renee Hsia, the paper’s lead author, an associate professor of emergency medicine at University of California, San Francisco. “When people try to understand why prices are the way they are, we have no ability to explain it. That is the take-home message. That is what is so disturbing.”

“If you ask an automotive maker, they will know how much it costs to make a Honda. If you ask a hospital CEO how much an appendicitis admission costs, they will not be able to tell you. They have never been asked to determine prices that way.”

Officials with the California Hospital Association dismissed the report as irrelevant, saying that the vast majority of patients pay discounted rates that have been negotiated by their insurance plans.

“Charges are meaningless data — virtually no one pays charges,” said Jan Emerson-Shea, the association’s vice president for external affairs.

“It is true that an uninsured person will receive a hospital bill based on charges,” she said, but California law requires the bill to “include text referencing the availability of free or discounted care to persons who meet income guidelines.” Those discounted fees must be based on what government programs pay for services, under California law, she said.

But researchers say the list prices are a starting point for negotiations with insurers and patients, so they play a role in driving up health-care costs.  Some uninsured patients, as well those with insurance who have gone out of network, may also be billed for the full charges.

Earlier studies by Hsia identified variations in listed charges for labor and deliveries and for appendectomies in California, with labor and delivery charges varying eight to 11-fold between hospitals, and charges for a routine appendectomy ranging from $1,500 to $182,955.

But, she said, she did not expect to see so much variation on a single line item like a blood test.

“This was even more surprising to me,” Hsia said. “There is always some variation in patients, even among young healthy adults, and there are variations in physician practice. But these are very basic, standard blood tests. It doesn’t matter if you’re sick or not, a complete blood count is a complete blood count. You draw the blood, send it to the lab and put it in a machine.”

In addition, she said, patients are increasingly being asked to play a role in keeping health care costs down by being smart shoppers, but it is almost impossible to get prices of health care services in advance and comparison shop. The study’s findings suggest that price setting for many services is arbitrary, since there is little difference between standard blood tests done at different institutions.

While the disparities in charges for cholesterol tests were the most extreme, they were not an aberration. Charges for a complete blood cell count and a thyroid stimulating hormone assay ranged from as low as $20 in some hospitals to as much as $7,439 and $8,392, respectively.

The smallest discrepancy in charges was for a creatine kinase assay, often used to diagnose a heart attack; the lowest listed charge was $10 but some hospitals charged as much as $628.

The researchers obtained the hospital charges for blood tests from reports that non-federal hospitals in California are required to submit each year to the Office of Statewide Health Planning and Development.

32 Responses to “Wide Variation In Hospital Charges For Blood Tests Called ‘Irrational’”

  1. Joe Dunn says:

    Janet – - Most of what Max wrote is very, very accurate. His political leanings are what they are. Go ahead and stay on the Obama bandwagon and if he gets his way this country will be a shell of what our forefathers created. A large percentage of the previously uninsured still are, by the way.

  2. Joe Dunn says:

    George – - Yep, Bush dodged the draft, most all rich and/or politically connected men did also. Wanna compare the personal lives of Bush and Mr & Mrs Clinton?? Not enough room here to discuss his wandering ways and her dirty little investment secrets.

  3. Greg says:

    If “Charges are meaningless data — virtually no one pays charges,” then why are they listed in a bill? If they are meaningless data, what are they? Try telling the collections agency the hospital has turned the bill over too, “virtually no one pays charges”. Use that argument in a bankruptcy court.

  4. Jackson says:

    “Wanna compare the personal lives of Bush and Mr & Mrs Clinton?? Not enough room here to discuss his wandering ways and her dirty little investment secrets.”

    Why would any rational person “wanna” compare George W. Bush to the Clintons? Only an uninformed idiot thinks Bush did anything during his entire two terms. Dick Cheney was running the entire show for the entire eight years. Bush had nothing to do with it. Bush made absolutely no decisions on his own. NONE!

  5. Jackson says:

    America? A shell of what our forefathers created? Don’t be ridiculous! If you really want to see how Presidential policies have reduced America to a shell of what our male chauvinistic, slave-owning forefathers created, you need only look at the policies of President Herbert Hoover and (de facto) President Dick Cheney. Under Hover’s leadership, the world was thrust into the greatest Depression known to mankind where billions of people suffered worldwide. Under (de facto) President Cheney, we got very close to another Great Worldwide Depression. I’ll bet Cheney was disappointed that he couldn’t break Hover’s record of causing the most human suffering in history. Although he was disappointed he could not achieve the human suffering record that Hover set, Cheney did his best to make up for it in Iraq and Afghanistan. Are you a total moron or what?

  6. Jackson says:

    Be honest. Nobody will know. You did vote for Bush/Cheney twice, didn’t you?

  7. charlotte says:

    Somebody needs to tell Mr. Dumb that his unusual affection for an “Us Against Them” societal approach, typically found in today’s Tea Party manifesto, went out with high button shoes and Genghis Kahn.

  8. Dick: You probably would have been a lot better off going to a lab and paying cash, you’d have probably wound up with something closer to the Medicare rate than the inflated $700 ‘chargemaster’ rate.

  9. Al Kislo says:

    Let’s get back to the issue. We know that in most cases health care insurance pays for these services, blood tests in this case. We also know how metuculous insurance companies are at scrutinizing all charges, line by line. Why aren’t the insurance companies pushing back on the billing institution if they pay $20 for blood test X and then, for another case, pay $1500 for the same blood test X? I don’t read about the insurance companies complaining. One can reasonably conclude that the insurance companies are complicit in the pricing “schemes” developed by hospitals/providers. Guess who pays in the end?

  10. Al Kislo says:

    What I’m saying is that in America’s health care (non) system, there is little daylight between price gouging and “what the market will bear”. The insurance company often cannot eliminate a hospital from their network without adversly affecting therir competitve position.. So, hospital pricing is tolerated and premiums go up based on irrational pricing (someone has to pay those constantly increasing, irrational chargemaster charges). This is not a market, it’s a racket.

  11. Dave says:

    Al,

    The insurance agencies don’t pay the charges either, they pay much lower negotiated rates. That’s part of the reason the charges are so high, otherwise the hospitals would be negotiating themselves into a hole.

    That said, the charges are still ridiculous and need to be controlled. Healthcare is not a free market, and should not be treated as such. It’s not a luxury like TVs, Computers, or even cars. People don’t and can’t choose not to get life saving medical treatments. Prices controls are necessary to keep health care costs reasonable.

  12. Kevin says:

    “What I’m saying is that in America’s health care (non) system, there is little daylight between price gouging and “what the market will bear”. The insurance company often cannot eliminate a hospital from their network without adversly affecting therir competitve position.. So, hospital pricing is tolerated and premiums go up based on irrational pricing (someone has to pay those constantly increasing, irrational chargemaster charges). This is not a market, it’s a racket.”

    It’s a racket alright! It’s a racket that Republicans in Congress want to continue at the expense of the healthcare consumer. There’s only one way to end the healthcare insurance racket. Enact laws that outlaw private healthcare insurance. Private insurers thrive on confusion. Confusion means profit. Consumers get so confused and frustrated that they give up and don’t file claims. That is exactly the way private health insurers like it. Private health insurance shysters love cashing premium checks and they hate writing checks to pay claims. Private health insurers are crooks. They commit theft by deception with every transaction. We will begin to heal America’s broken healthcare system when we begin to eliminate private health insurance. Every other industrialized nation on earth has outlawed private health insurance and have long since adopted a single-payer, government run, universal healthcare system. America is the only nation on earth that continues to operate in the healthcare dark ages and allow companies to profit on the sickness, injury and misfortune of average citizens. It is outrageous and disgusting! No private company should be allowed to get wealthy making life or death decisions about sick people. It’s barbaric!

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