Insurers Question Hospital Pricing

State Farm is suing Florida Hospital, the largest hospital system in the state. The suit includes a claim of inflated prices unrelated to actual costs for service provision.

In accordance with laws, hospitals have uniform rates to charge patients. They are required to have a master pricing list for every service or product billed. Hospitals purportedly increase prices annually, across the board, rather than examine each item and increasing in context of that service. Insurers also believe that master charge lists are overly inflated.

Variability comes into play due to ranges in reimbursement rates from health insurers. Both Medicare and Medicaid have standard rates, other health insurers individually negotiate reimbursement rates with providers. Larger health insurance companies have greater negotiating power. Among all these parties, reimbursement rates for the same procedure may be quite different.

Hospital officials remind insurers that the healthcare system must have means to recoup lost costs when hospitals treat individuals without health insurance. Pricing patterns vary between profit and non-profit hospitals; non-profits generally have lower prices and also serve a larger portion of uncompensated care.

Some call for the public release of master pricing, which some hospitals around the country have done; posting master price lists online. Some analysts believe that publication of pricing will increase transparency and help balance the system.

See local reporting in the Orlando Sentinel and congressional testimony from The Commonweath Fund.

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March 14, 2007 Related topics: Finance, Trends, Pricing

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