How Hospitals Mark Up the Cost of Over-the-Counter Supplies Like Aspirin and Q-tips as Much as 1000%

Chargemaster: Hospitals’ Killer App for Sucking Your Financial Blood Dry – Part 3

by John Lawrence / San Diego Free Press

Hospitals charge their customers … er, patients, through the nose for simple products which anyone can purchase at WalMart for a fraction of the amount. In Part 1 and Part 2 we detailed the ridiculous prices hospitals routinely charge their patients – like several thousand dollars a day – just for a room. In this installment we will go over the markups on products that are added on to patients’ bills.

Suffice it to say that for anything consumable, there will be a Chargemaster billing item. The Chargemaster is the giant computer file that lists the charge for every possible medical service and supply that a hospital provides. Nothing is “included.” Everything is billed out separately, ala carte. The following outlandish charges are referenced in a Time article, Bitter Pill: Why Medical Bills Are Killing Us, by Steven Brill.

Like, for example, gauze pads. Following a patient’s diagnosis of lung cancer, he was charged $308.00 for four boxes of sterile gauze pads each containing twenty-four 4 inch by 4 inch dressings, which can be bought over the counter at Walgreen’s for $3.99 a box. These were tacked onto his $348,000.00 bill.

Another patient was charged $18.00 each for Accu-Chek diabetes test strips. Amazon sells boxes of 50 for about $27.00 or 55 cents each. For the price of one Lipitor pill in the US you can buy three in Argentina. One hospital charged $1.50 for one 325-mg acetaminophen tablet. You can buy 100 tablets on Amazon for $1.49. That’s a 10,000% markup.

One Nexium pill in the US costs the same as eight of them in France. No wonder the pharmaceutical industry has millions of dollars to spend on TV advertising to try to convince you to talk your doctor into prescribing them for you. Then as soon as you see the ad to get you to buy Plavix, there follows an ad for some legal firm saying in effect “If you’ve ever been harmed by Plavix, call the Dewey, Cheatham and Howe law firm.”

For instance, the lawyers at Saiontz & Kirk, P.A. are trolling for Plavix users throughout the United States who have suffered serious and potentially fatal injuries as a result of the medication. Their website states: “Research has linked side effects of Plavix to an increased risk of certain health problems, which the manufacturer failed to adequately warn about.”

Steven H’s bill contained an item – MARKER SKIN REG TIP RULER – for $3.00. That’s the reusable marking pen that marked the place on Steven H’s back where the incision would go. Then there was the STRAP OR TABLE 8X27 IN for $31.00 That’s the strap used to hold Steven H onto the operating table. Hey, do you suppose they could use that again for some other patient?

Right after that charge was one for $32.00 for a BLNKT WARM UPPER BDY 42268. That’s a blanket whose purpose is to keep surgery patients warm. It is of course reusable and is available on eBay for $13.00 They even billed poor old Steven H for the gown the surgeon wore! That came to $39.00 You can buy thirty of them online for $180.00

On one patient’s bill was a charge of $108.00 for Bacitracin, a common antibiotic ointment, which can be purchased over the counter at Walgreen’s for $5.99. But a charge on Sean Recchi’s bill takes the cake. We detailed Sean Recchi’s case in Part 2. As part of his $83,900.00 bill (that he was ordered to pay in advance of any treatment and in cash) was a charge of $7.00 each for an ALCOHOL PREP PAD. This is a little square of cotton used to apply alcohol to an injection. A box of 200 can be bought online for $1.91.

These kinds of charges show just how picayune the charges dictated by the Chargemaster can be. And remember these are non-profit hospitals, non-profits that make huge profits, more than most for-profits because – guess why – they don’t pay any taxes.

Soon after his diagnosis of lung cancer, Steven D and his wife knew that they were just in the business of buying time. And because of that the Chargemaster money demanded by the health care system went into overdrive. It reached a whole different and exalted plateau. By the time Steven D died 11 months later in his Daly City, California home, his bills totaled $902,452.00.

It was left for his surviving wife, who made about $40K a year running a child-care center, to pay it off. The first bill from Seton Medical Center for $348,000.00 was full of Chargemaster profit grabs. For instance, there was a charge of $24.00 each for 19 niacin pills that are sold in drugstores for about a nickel apiece.

Steven D and his wife maxed out on a UnitedHealthcare policy for $50,000. that he had bought through a community college where Steven was briefly enrolled. We detailed the destructive effects of these mini-med, limited benefit policies in Part 2. That left them with over $850,000.00 for which they themselves were responsible.

Luckily, they found a billing advocate who negotiated their bill down to what amounted to an 85% discount. When Steven Brill contacted Seton Medical center to ask why there were all these ridiculous charges that they were subsequently willing to negotiate down if the patient’s family was lucky enough to find a billing advocate, there was no comment. There was no comment either to the question of why they sent patients’ families bills that they didn’t expect to collect at a particularly sensitive and upsetting time in their lives.

When all was said and done, Steven D’s wife said: “I’m never going to remarry. I can’t risk the liability.”

When Brill queried Texas Southwestern Medical Center about a patient’s charge of $132,303.00 for LABORATORY, which included hundreds of blood and urine tests that ranged from $30.00 to $333.00 each, he was told that no one was available to discuss billing practices. A hospital spokesman informed him, “The law does not allow us to talk about how we bill.”

Really? It’s against the law to discuss the bill? Who knew?

If, however, this unfortunate family had been on Medicare, Medicare would have paid Texas Southwestern either nothing or $7.00 to $30.00 for these tests because Medicare negotiates prices with hospitals based on the real cost of the service or item, not on some out-of-touch-with-reality fantasy cost like those dictated by Chargemaster.

Most hospitals overorder lab tests especially for those patients staying multiple days. Every day new tests are ordered even though they’re not necessary. They become a cash cow for the hospital. And it’s a cash cow for the many doctors who stroll around poking their heads into various patients’ rooms. It gives them something to talk about and an excuse for charging big sums for every poke.

One ingenuous doctor told Brill, “I bet 60% of the labs are unnecessary.” Doctors cruise the halls and pop in their heads wherever while collecting handsome fees.

How do hospitals get away with it? Lobbying is the answer, pure and simple. For every member of Congress, there are more than seven lobbyists working for various parts of the health care industry. The health care industry, what I call the medical-industrial complex, has spent $5.36 billion since 1998 lobbying in Washington.

That is even larger than the $1.53 billion spent by the defense and aerospace industries and the $1.3 billion spent by the oil and gas corporations over the same period. The medical-industrial complex spends three times more than the military-industrial complex lobbying Congress which consists of politicians who are supposed to be representing We the People but in fact are representing the health care industry.

Next time. Part 4. Why are the cost of prescription drugs so high?