Consumer Guide to the 20 Most Common Ways Hospitals Overcharge Patients

Consumer Guide to the 20 Most Common Ways Hospitals Overcharge Patients
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Last updated: June 2013

The Top 20 Ways Hospitals Overcharge Patients:

1. Billing for Services not Rendered

You can be billed for many procedures that you did not get. This is where it is important to have all the medical and pharmaceutical records and bills from the hospital. For example, the medical records may show results of six blood tests while you are being charged for nine.

You can challenge any billed procedure that is not in the medical records. Check the bill for charges that make no sense, such as a charge for circumcision of a newborn baby girl. Look over the procedures listed and make sure they were all actually performed. For example, if you are charged $300 for a blood transfusion, did you actually receive this treatment?  

2. Duplicate Billings

A common error is when you are billed twice for a service performed only once. A slip of a finger on the computer keyboard can cause this problem. 

3. Poor Testing

You shouldn't have to pay for an X-ray that was not done correctly. If two chest X-rays were done in two days, find out if the second X-ray was needed because the hospital messed up the first test.  

4. Phantom Charges

Some hospitals automatically bill items associated with particular services. Their computer program may automatically charge a wide variety of services for a certain procedure. So if you are charged for a childbirth, for example, there should be no charges for medicine unless you actually received the medicine. 

5. Quantity Errors

Have you been charged for 200 facemasks rather than two? Again, a slip of a finger on a keyboard could cause such an error. Hospitals commonly make errors with intravenous solutions (IVs) that are given on the day of admissions. The hospital computer will bill you for a full day’s worth of IV solutions. But if you are admitted late in the day, you may only receive four hours worth of solution and you should not have to pay for a full day’s rate. There may be several hundred dollars worth of IV solutions that the hospital did not actually provide.

Hospitals often charge patients for the use of operating rooms on an hourly basis. If there is a billing for eight hours in the operating room, verify this in the medical records.

6. "Unbundling" Related Charges

Proper billing procedures (and Medicare law) require the hospital to "bundle" related charges for medical procedures. For example, the charge for removing an appendix will include the operating room, the operating utensils, and all other goods and services normally related to this operation. "Unbundling" occurs where the hospital separates some of the charges that should be included in the "global" charge for the appendectomy, thus duplicating some of the charges. For example, a bill for an appendectomy may wrongly include separate charges for the pre-operative physical, such as drawing blood, cardiogram, and interpretation of the cardiogram.  

7. Excessive Mark-ups

When reviewing your bill, look for charges that seem odd or too high, such as $75 for a laxative, $30 for a "thermal therapy kit" (plastic bag of ice cubes), $10 for a "urinal" (plastic cup) or $8 for a Coca Cola. 

Drug charges, in particular, are the target of excessive mark-ups. One useful technique to determine whether the drugs charges by the hospital are reasonable is to compare their prices to those paid by Medicaid and Medicare. Medicaid and Medicare "reimbursement rates" (the amount of money that they pay back) for drugs are based on the "AWP" (average wholesale price). The AWP is the average price that wholesalers give to retailers for a given medication. Each year an "AWP Red Book" is published that lists AWP’s for thousands of drugs. If the AWP for a Tensilon tablet (10mg) is $1.09, the hospital shouldn’t be charging $56 for it. 

8. Exceeding “Comparable Charges”

Some hospitals charge much more for the same services than other hospitals in the same market. You can get a range of information on comparable hospital charges by filing a Freedom of Information Act request with the Illinois Department of Public Health.

9. Mis-coding the "DRG"

Mis-coding or incorrect coding occurs when a hospital uses the wrong DRG (diagnostic related grouping) code to label—and therefore bill—for a procedure. For example, a patient who is coded as having a urinary tract infection has a much shorter hospital stay than the patient whose illness is coded urinary sepsis. Coding these procedures differently could result in a higher bill. Some hospitals hire specialists who are "talented" in selecting codes that maximize hospital reimbursement. Many hospitals have faced criminal or civil penalties for wrongfully "upgrading" the coding of procedures and illnesses. You will need to ask about the DRG coding of your bill to determine whether this occurred. 

10. Unnecessary Staffing

Hospitals sometimes pad bills by unnecessarily overstaffing a surgical procedure. Find out if the surgical assistant was necessary in the particular surgery performed. Medicare regulations, for example, will not allow costs related to assistant surgeons in many procedures. 

11. Delays That Lead to Longer Stays

This is a delay that causes your hospital bill to increase as a result of some error or mistake of the hospital staff.

The most dramatic example of this is in the number of days you spent in the hospital—especially where some of these days resulted from a hospital mistake. 

12. Test Re-scheduling Delays

The main reason patients spent unnecessary days in the hospital is because the hospital erred in its test scheduling. Typically, a patient would be admitted on a Monday, for example, with a pre-surgery test scheduled for the afternoon and the surgery scheduled for Tuesday. But the hospital may have overbooked the particular test for Monday, resulting in re-scheduling the test for Tuesday. This means the surgery is pushed back to Wednesday—if possible—and you spent a needless and anxious extra day in the hospital. Then the hospital bills you for that day as if no mistake had been made.  

13. Test Result Delays

Test result delays are a similar problem. The hospital may have a typical eight-hour lag to get the results of a particular lab test from the pathology department. But if pathology is running late or if they lose the results of the test and it has to be done over, you are going to have to pay for the hospital’s mistakes that lengthen the hospital stay. They will even have the nerve to bill you for two tests when they lost the results of the first test.

14. Surgery Delays

Another common foul-up is surgery delay caused when the hospital sets too many potential surgeries for one day. You may be bumped to the next day and have to pay for this even though the hospital was negligent in its scheduling.

Surgery may be delayed because a scheduled consultation visit by a consulting doctor does not occur when the hospital forgets to notify the consulting doctor. You can often find these problems described in the medical charts; you should not have to pay for the extra day caused by the hospital’s mistake.

15. Teaching Hospital Delay

One of the worst abuses regarding delays in discharge is where you are a patient in a teaching hospital and happen to have a rare disease or an unusual condition. The medical staff of the teaching hospital may want a large number of the residents to have an opportunity to review your case; it may be their only chance to see this particular disease during their residency. The hospital stay may drag on needlessly long to give every resident an educational benefit. 

16. Late Checkout Effect

Some hospitals charge a late charge or even a whole day’s charge if the patient is discharged after noon. If you were discharged at 2 p.m. due to some hospital screw-up, you should not have to pay the extra charge. 

17. Paying for Wasteful Hospital Practices

Patients should not have to pay for expensive, disposable items when that is a result of wasteful hospital practices. These charges can be challenged.  

18. Hospital-caused Infections

Another type of overlooked hospital carelessness is hospital-caused infections. These are infections acquired during a hospitalization and produced by microorganisms that live in the hospital. It is not an infection that was present in the patient at the time of admission.

Between 5 and 10 percent of all hospital patients pick up an infection during their hospital stay. A recent Chicago Tribune investigation by reporter Michael Berens found that, nationwide, roughly 103,000 deaths in 2000 were linked to hospital-caused infections. While most patients survive these infections, they pay for this "gift" from the hospital.

The average hospital-caused infection adds four extra days to a hospital visit at an average cost of $800 a day. Hospital-caused infections account for 15 percent of all hospital charges and end up adding between $2.5 and $4 billion to the annual American health care bill. In the November 1986 issue of American Journal of Surgery, it was estimated that surgical wound infections alone add an average of seven days to some patients' hospital stays and $10 billion yearly in direct and indirect costs. Hospital-caused infection rates have been found to be higher in large teaching hospitals than in non-teaching institutions, because the teaching institutions have more people floating around the hospital thus increasing the chances for the spread of infection.

Pneumonia is the most common hospital-acquired infection. Sometimes pneumonia gets into the lungs by contaminated respiratory therapy equipment, or by medical personnel coughing in close quarters like intensive care units. Other hospital-caused infections can be spread by improper preparation of hospital equipment or the failure of hospital personnel to take simple sanitary precautions such as frequent washing of the hands.

Find out whether your hospital stay was extended because of a hospital-caused infection. If so, you should demand that you should not have to pay for costs that resulted from unsafe hospital sanitation procedures. Ask whether the hospital has an active Infection Control Committee. If it does not, you will be able to argue that the hospital has not taken all possible steps to prevent the infection you caught. 

19. Padding Hospital Surplus

If you are interested in going beyond your bill to take a more system-wide view of hospital charges, you may want to find out how much "surplus" (otherwise known as profit) your hospital makes. Get a copy of the hospital’s Statement of Patient Revenue and Operating Expenses or “revenue and expense statement.” Determine whether the hospital had "surplus revenue" for the fiscal year in which you were billed. This information could be used to argue for a percentage reduction of your bill. Non-profit hospitals are required by the Internal Revenue Service to file a Form 990 Report that lists sources of support, expenses, revenues and executive compensation. Federal law requires that the 990 be available for public inspection. You can probably access the hospital’s reported revenue statement at the American Hospital Directory under "free services". 

20. Discriminatory Billing

If you do not have health insurance, you could be a victim of discriminatory billing. This is also known as cost shifting or variable pricing. These terms refer to the policy of shifting hospital costs away from third-party payers (such as Blue Cross and Medicare/Medicaid) and onto the shoulders of self-payers. Whatever this policy is called, it amounts to this: different payers pay different prices for identical services. "So-called cost shifting then results in higher charges to individuals who personally pay for all or a portion of their hospital confinement," says a report of the Illinois Health Care Cost Containment Council. Thus the poor, who do not have insurance, pay more for the same medical treatment than more economically advantaged patients do.

Most patients paying the full fare have no idea that their bill may be many times that of the people next to them in the doctor's waiting room.

And don't let hospitals' messages misguide you: many hospitals try to claim that they charge every payer the same amount. While they may "charge" the same amounts to all payers, the hospitals will accept as full payment from third-party payers amounts less, often far less, than the full charges.

Demand Accountability

We in the United States spend more than enough on health care—10 percent of our gross national product, to be exact. This care costs plenty even without the little "extras," such as paying for services we haven’t received or paying for the hospitals' mistakes.

As consumers who depend on hospitals, and as community members who support them through sizable tax breaks, we have every right to demand a higher level of accountability from hospitals. Using the tips in this article to carefully review your hospital charges is one small way to demand such accountability.

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