Report puts spotlight on hospital charges vs. costs

March 4, 2010 1:45:41 PM PST
A report from Bloomberg News says a man given an anti-cancer drug during treatment at the Hospital of the University of Pennsylvania was charged 4 times what the drug makers says it cost.

The report shows the patient, who died in 2007 of kidney cancer, was given four doses of the drug Avastin.

The hospital bill shows the patient and his insurance were charged more than 27-thousand dollars.

Genentech, the maker of Avastin, says the cost should have been 66-hundred dollars.

Some doctors say this shows the magnitude of the problem of medical centers marking up prices.

Hospitals routine mark charges up, although they realize they won't be able to collect anywhere close to the entire price.

The institutions say they do hope to get something above cost, to help offset what they spend on giving care they are never reimbursed for.

A spokesperson for the hospital tells us the charges presented do not represent the amount collected.

And they are comparable to what similar hospitals charge.

Susan Philips, the senior vice-president for public affairs of the University of Pennsylvania Health system, issued the following statement :

"The story by Bloomberg related to the costs of treatment at the University of Pennsylvania Health System was misleading. The premise of Bloomberg's allegations that the Health System overcharged is based on a comparison of Medicare payments for a specific service to charges billed to an insurer. Charges do not reflect the amount collected by any health care facility, either from insurers or patients. Charges continue to be reported because they are considered by a small percentage of insurance companies in determining what hospitals are paid, which in Philadelphia is approximately 25 percent of charges."

She continues, "Further, Medicare payment rates rarely even cover the costs of health care services provided to patients. It is therefore simply not appropriate to use the Medicare payment rate to support an allegation that UPHS overcharged a private insurer. UPHS charges are in line with peer hospitals. Payments rather than charges are the appropriate basis for comparison.