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Analysis Targets U.S. Hospitals With Highest Markups

In the 50 hospitals with highest charge-to-cost ratio, charges 10-fold above Medicare-allowable costs

TUESDAY, June 9, 2015 (HealthDay News) — The 50 U.S. hospitals with the highest charge-to-cost ratio have markups approximately 10 times the Medicare-allowable costs, and most of these hospitals are for profit, according to a study published in the June issue of Health Affairs.

Ge Bai, Ph.D., from Lee University in Lexington, Va., and Gerard F. Anderson, Ph.D., from the Johns Hopkins Bloomberg School of Public Health in Baltimore, used Medicare reports to examine the 50 U.S. hospitals with the highest charge-to-cost ratios in 2012.

The researchers found that the markups in these hospitals were about 10 times their Medicare-allowable costs, compared with a national average and mode of 3.4 and 2.4, respectively. Forty-nine of the hospitals were for profit, 46 were owned by for-profit hospital systems, and 20 operated in Florida. Half of the 50 hospitals were owned by one for-profit hospital system.

“While most public and private health insurers do not use hospital charges to set their payment rates, uninsured patients are commonly asked to pay the full charges, and out-of-network patients and casualty and workers’ compensation insurers are often expected to pay a large portion of the full charges,” the authors write. “Federal and state governments may want to consider limitations on the charge-to-cost ratio, some form of all-payer rate setting, or mandated price disclosure to regulate hospital markups.”

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