Crain's: DOH Lists Hospital Prices, to Hospitals' Dismay

DOH Lists Hospital Prices, to Hospitals' Dismay

Crain’s Health Pulse, 12/9/2013


New York state has made transparency of health care costs a priority, which is why the state Department of Health uploaded hospital cost and charge data on Dec. 5 for about 1,400 conditions, online here. The new DOH data has hospital-specific average costs and charges for more than 300 diagnosis-related groups, with each DRG further divided into four severity levels.

Little wonder, then, that the state’s hospital trade groups, GNYHA and HANYS, are bracing for bad press, in light of recent high-profile articles in Time and The New York Times about illogically high hospital charges.

In a memo to members last week obtained by Pulse, GNYHA wrote it had “personally conveyed to DOH Commissioner [Nirav] Shah our concerns about the public release of these data, including their lack of utility for consumers and the confusion they will create. Notwithstanding these concerns, the Commissioner has expressed his desire for transparency, and the release of the data was one of his top priorities. … GNYHA shares our members’ concerns that unsophisticated users of the data will misrepresent its meaning and utility.”

GNYHA further argues that charge data are what hospitals reported to DOH, but the agency derived the cost data by multiplying the reported charges by the hospital’s ratio of cost-to-charges. “The data are non-comparable across hospitals because DOH did not edit the data 1) to eliminate non-routine discharges such as transfers or deaths, 2) for aberrant information, and 3) for small case counts within an APR-DRG,” wrote GNYHA.

HANYS’ memo, also obtained by Pulse, said that while it “supports efforts to provide consumers with meaningful information that can help them make informed choices,” the state’s data “do not provide useful information for consumers and are more likely to confuse than inform.” Going deeper, HANYS writes that the data “provide a distorted picture of hospital financial conditions. By releasing average costs and charges, there is a danger that consumers will look at the difference between the two and mistakenly infer that hospitals are making a substantial profit on every DRG.”

The state’s hospitals have good reason to spin the data. As HANYS told its members, the recent Times article “As Hospital Prices Soar, a Stitch Tops $500” illustrates “the type of media coverage we can expect from the release of these data.”

To put the best spin on DOH’s data drop, the trade groups prepared statements for reporters. “Hospital charges are a management tool and rarely reflect what is actually paid,” suggested HANYS. And from GNYHA, “Hospital charges do not reflect the far lower payments hospitals actually receive for the services they provide. … Both Medicare and Medicaid pay hospitals set rates that are well below charges and often under costs.”

A DOH spokesman did not immediately comment.