Lambert here: The numbers are an outrage, but you’ll never guess the weak-tea bottom line…. That’s right! Be a smart shopper. I expect more from KHN, although not NPR. Nevertheless, a useful cautionary tale. But it’s not really the scanners that are rich, or poor, is it?
By Alison Kodjak, NPR News. Originally published at Kaiser Health News.
Benjamin Hynden, a financial adviser in Fort Myers, Fla., hadn’t been feeling well for a few weeks last fall. He’d had pain and discomfort in his abdomen.
In October, he finally made an appointment to see his doctor about it. “It wasn’t severe,” he said. “It was just kind of bothersome. It just kind of annoyed me during the day.”
The internist, Dr. John Ardesia, checked him out and referred him for a CT scan at a nearby imaging center. The radiologist didn’t see anything wrong on the images, and Ardesia didn’t recommend any treatment.
A few weeks later, Hynden, who has a high-deductible health insurance policy with Cigna, got a bill for $268. He paid it and moved on.
But three months later, in mid-January, Hynden was still feeling lousy. He called up Ardesia’s office again. This time, the doctor wasn’t available. A nurse practitioner, concerned that Hynden might be suffering from appendicitis, advised him to go to the hospital right away.
“I was a little worried,” Hynden recalled. “When he told me to go to the ER, I felt compelled to take his advice.”
Hynden arrived later that morning at Gulf Coast Medical Center, one of several hospitals owned by Lee Health in the Fort Myers area. The triage nurse told him the problem wasn’t his appendix, but she suggested he stick around for some additional tests — including another CT scan — just to be safe.
“It was the exact same machine. It was the exact same test,” Hynden said.
The results were also the same as the October scan: Hynden was sent home without a definitive diagnosis.
And then the bill came.
Patient: Benjamin Hynden, 29, a financial adviser in Fort Myers, Fla.
Total Bill: $10,174.75, including $8,897 for a CT scan of the abdomen
Service Provider: Gulf Coast Medical Center, owned by Lee Health, the dominant health care system in southwest Florida.
(Story continues below.)
Medical Procedure: A computed tomography scan, commonly known as a CT or CAT scan, uses X-rays to create cross-sectional images of the body. Hynden got his October scan at Summerlin Imaging Center, a standalone facility in Fort Myers that offers a range of diagnostic tests, including X-rays, MRI and CT scans.
Rick Davis, co-owner of Summerlin, said his center is small and independent, so he doesn’t have much bargaining power. That means insurance companies pretty much dictate what he can charge for a scan. In Hynden’s case that was $268, including the cost of a radiologist to read the images.
Ultimately, what Medicare decides to pay for a scan sets the standard. “The Medicare fee schedule is what all the other companies use as their guideline,” Davis said. “It’s basically the bible. It’s what everyone goes by.”
Summerlin’s office manager, Kimberly Papiska, said that the maximum the center ever bills for a CT scan is $1,200, but that the rates insurance companies pay are usually less than $300.
Hynden was shocked when he got the second CT scan in January, and the listed price was $8,897 — 33 times what he paid for the first test.
Gulf Coast Medical Center is part of his Cigna insurance plan’s approved network of providers. But even with Cigna’s negotiated discount, Hynden was on the hook for $3,394.49 for the scan. The additional ER costs added another $261.76 to that bill.
What Gives: We called Gulf Coast Medical Center and its parent company, Lee Health, to understand why they billed nearly $9,000 for a single test. No one at the health center or hospital would agree to an interview.
Lee Health spokeswoman Mary Briggs responded with an emailed statement: “Generally that it is not unusual for the cost of providing a CT scan in an emergency department to be higher than in an imaging center. Emergency department charges reflect the high cost of maintaining the staffing, medical expertise, equipment, and infrastructure, on a 24/7-basis, necessary for any possible health care need — from a minor injury to a gunshot wound or heart attack to a mass casualty event.”
Do the hospital’s costs and preparations justify a list price that’s so much higher than the nearby imaging center’s tab? We asked some experts in medical billing and management for their thoughts.
Emergency rooms often charge people with insurance a lot of money to make up for the free care they provide to uninsured patients, said Bunny Ellerin, director of the Healthcare and Pharmaceutical Management program at Columbia Business School in New York. “Often those people are what they call in the lingo ‘frequent flyers,’” Ellerin said. “They come back over and over again.”
She said hospitals also try to get as much money as they can out of private insurance companies to offset lower reimbursements from Medicare and Medicaid.
Even in that context, the price of Hynden’s CT scan was off the charts.
Healthcare Bluebook, a health care pricing tool, says the range for an abdominal CT scan with contrast, like Hynden had, in Fort Myers is between $477 and about $3,700. It pegs a fair price at $595.
The higher price from Gulf Coast Medical Center and its parent company could be a result of their enormous pricing power in Fort Myers, said Gerard Anderson, a professor of health policy and management at Johns Hopkins University.
Lee Health owns the four major hospitals in the Fort Myers area, as well as a children’s hospital and a rehabilitation hospital, according to its website. It also owns several physician practices in the area. When you drive around Fort Myers, the blue-green Lee Health logo appears on buildings everywhere.
“Anybody who’s in Fort Myers is going to want to get care at these hospitals. So by having a dominant position, they have great bargaining power,” Anderson said. “So they can raise their rates, and they still do OK.”
Anderson said his research shows hospital consolidation has been driving prices higher and higher in recent years. And because more and more people, like Hynden, have high-deductible insurance plans, they’re more likely to be on the hook for huge bills.
So Lee Health and other dominant hospital systems mark up most of their services on their master price lists — the list that prices a CT scan at Lee Health at $8,897. Anderson calls those lists “fairy-tale prices” because almost no one actually pays them.
“Everybody who’s taken a look at it agrees — including the CFO of the organization — that it’s a fairy-tale thing, but it does have relevance,” Anderson said.
The relevance is that insurance companies typically negotiate what they’ll pay at discounted rates from list prices.
So from the master price of $8,897, Cigna negotiated Hynden’s bill down to $5,516.14 — a discount of almost 40 percent. Then Cigna paid $2,864.08, leaving Hynden to pay the rest.
“If it wasn’t for that CT scan, I don’t think this whole thing would have been so difficult and so blatantly obvious that they’re extremely overcharging for that service,” Hynden said.
Resolution: Hynden never got a definitive diagnosis from the CT scans. Several weeks after his second test, however, he went to a nearby urgent care center, also run by Lee Health, and underwent an ultrasound on his abdomen. That test, which cost about $175, revealed some benign cysts that he said his doctor said are likely to go away on their own.
The Takeaway: Tests and services are almost always going to be more expensive in an emergency room or hospital setting. If your doctor suggests you go to an ER, it might be worth asking whether an urgent care or walk-in clinic would suffice.
Sources: Explanations of Benefits provided by Benjamin Hynden and interviews.
Kaiser Health News is a nonprofit news service covering health issues. It is an editorially independent program of the Kaiser Family Foundation, which is not affiliated with Kaiser Permanente.