Insider Reveals Secrets Of Hospital Billing
DENVER (CBS4) – Major hospitals hardly ever collect the full amount they bill patients and don’t expect to, according to a sworn statement from a top administrator at a suburban Denver hospital.
“I mean we don’t expect to be paid full charges,” said Craig Sammons, the Chief Financial Officer at Sky Ridge medical center in Lone Tree, a HealthOne hospital.
The admissions came in a 2007 deposition of Sammons conducted in a lawsuit over medical charges. CBS4 obtained a copy of the 56 page deposition.
The hospital CFO provided unvarnished answers to questions about hospital billing practices and charges in what he said was the first time he had ever been deposed.
The attorney who conducted the deposition of Sammons, Stuart Morse, told CBS4 he believes the deposition should serve as a lesson to consumers about how to view their hospital bills.
”It’s an incredibly important thing for the public to know,” said Morse, who says after he conducted the deposition an attorney from HealthOne approached him about sealing the deposition.
“I couldn’t in good conscience say I won’t use this because it helps people to have this information,” he said.
Morse said he believes the deposition shows “their prices are so incredibly inflated such that they don’t expect anyone to pay them.”
During the deposition, Sammons was asked why the hospital is willing to accept only a fraction of what it bills.
“Well we sign agreements with various providers or insurance companies and each agreement is based on what that company has in terms of membership and volume they can bring to their facility,” explained Sammons. “It’s (the amount the hospital agrees to accept) based on pretty much what … that insurance company has enrolled in terms of membership and that’s why we would accept less charges.”
Sammons said only about 3 percent to 4 percent of the hospital’s patients pay the full amount that is shown on their final bills. He said the “target reimbursement rate” from one major insurance carrier is 25 percent.
The hospital administrator acknowledged that even when accepting far less than full price, the hospital is still profitable.
“We look at what we need to be paid to be profitable as opposed to what do we get to charge to be profitable,” he said.
As for patients who do not have medical insurance and are considered “self pay,” Sammons said the hospital never expects full payment.
“We offer immediately a 50 percent discount to our self pay patients … patients without insurance we offer 50 percent as a discount off of charges.”
Asked why the hospital offers such a discount for its services, Sammons responded, “to put them on a fairly even playing field with what we expect from various payers. Again, based on trying to put the uninsured on an even playing field with the insured population.”
Sammons was asked if the hospital would take even less than 50 percent from an uninsured patient.
“It does happen at times, yes,” he said.
Attorney Morse said of the testimony: “They’re so unabashed about the fact that their prices are incredibly inflated such that they don’t expect anyone to pay them. These bills are not sacrosanct, they’re not something they have to pay, but it’s a bill that is absolutely negotiable.”
“The numbers charged in the health industry are completely fictional,” Morse said. “And people need to pay attention to what they are being asked to pay and negotiate.”
During the deposition, Sammons said his hospital charged patients $69 per minute of emergency room time and marked up prices for some medical supplies at a rate of 3 1/2 times what they cost the hospital. He was asked how the hospital decided on its pricing.
“It’s based on historical pricing,” he responded. “When Sky Ridge Medical Center was opened in August of 2003, we took the pricing of one of our existing facilities — and that facility was Aurora Medical Center — and so we copied their entire charge master.”
Linda Watson, a spokesperson for Sky Ridge Medical Center, said the hospital would not provide further comment on the insider information revealed by Sammons.
“Since Craig was deposed and his comments are public, we are not sure that there is much more to add,” said Watson.
Attorney Morse questions why consumers are given inflated bills and are not told the true cost of the medical services they receive.
“Why go out of your way to give a bill that gives a heart attack when you don’t expect to be paid that amount?” he asked.
You can read the entire deposition of the Craig Sammons, the Sky Ridge CFO here. The name of the patient and other identifying information was redacted by his attorney.
– Written by Brian Maass for CBSDenver.com