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Santa Maria Sun / News

The following article was posted on May 22nd, 2013, in the Santa Maria Sun - Volume 14, Issue 11 [ Submit a Story ]
The following articles were printed from Santa Maria Sun [] - Volume 14, Issue 11

Troublesome numbers

With reform legislation stalling, a state nurses union releases local hospitals' billing figures


Templeton’s Twin Cities Community Hospital landed in the Sacramento spotlight May 14 with the release of a report by a nurses union pushing health-care reform. The California Nurses Association (CNA) published the report just as Assembly Bill 975—a proposed law to ratchet up state regulation of nonprofit hospitals—seemed to stall in committee.

According to the CNA, the for-profit Twin Cities ranked among the highest in the state with a charge-to-cost ratio of 813 percent. In other words, the union asserts that for every dollar of care provided by Twin Cities, the hospital bills its patients or their health-care provider $8.13.

“They’re one of the big ones,” union spokesman Chuck Idelson said of Twin Cities. “That rate is very high.”

Twin Cities and other local hospitals differ with the union’s characterization of the data. CNA compiled the numbers from the 2010 and 2011 entries in a Medicare cost report database made public May 8 by the federal agency that administers Medicare and Medicaid.

Twin Cities’ parent corporation, Tenet Healthcare, responded that the numbers don’t actually reflect what Medicare or anyone else pays for health-care services.

“The charge-to-cost ratio does not provide a complete picture of providing care to our patients,” Tenet said in a statement released by Twin Cities staff. “The amount patients pay for health care is primarily determined by their insurance coverage and, for those that are uninsured or direct pay, we offer discounts comparable to those negotiated by insurance plans.”

The Medicare cost reports originated from standardized price lists called chargemasters. The health-care industry calls the chargemaster prices meaningless, stating that the cost reports merely provide a starting point for negotiating health-care charges. However, the cost report data shows a wide disparity in these starting points between individual hospitals.

Several other local hospitals also appeared in the union figures. CNA said Tenet’s Sierra Vista Regional Medical Center registered a charge-to-cost ratio of 661 percent, followed by the nonprofits French Hospital (577) and Marian Regional Hospital in Santa Maria (487).

Nonprofit health-care corporation Dignity Health owns both French and Marian hospitals. When asked to comment on the CNA report, Dignity Health Marketing Coordinator Megan Maloney sent this statement via e-mail: “Arroyo Grande Community Hospital, French Hospital Medical Center, and Marian Regional Medical Center are dedicated to delivering high-quality care to all who come to us. Our pricing is set to ensure that the needs of our hospital and community are met and represents the cost of doing business (labor, equipment, seismic improvements, pharmaceutical costs, etc.) in the Central Coast.

“Over the last four years we have adjusted our pricing so that they are more aligned across the hospitals; the data in the CMS file does not yet reflect these changes. While we are better aligned today, some gaps may still be expected given that no two patients are the same, and therefore doctors’ orders for treatments, tests, and medications will vary, even with patients being treated for the same or similar conditions,” Maloney continued. “For those patients who come to us without the means to pay for their care, we offer one of the most generous financial assistance policies in the nation. We are hopeful that the full implementation of health reform will help bring stability to the payment of health-care services.”

Sierra Vista, Marian, and French also came in above the purported state averages of 452 percent for nonprofits and 542 for for-profits. California public hospitals averaged a charge-to-cost ratio of 307 percent, by comparison.

 “That’s because the public hospitals are the ones accountable to the public,” Idelson said.

The CNA report marked the latest volley in a back-and-forth between the nurses union and the hospital lobbies over A.B. 975. The bill introduced by Assemblyman Bob Wieckowski (D-Fremont) would require nonprofit hospitals to develop a public management plan to serve the local community’s health-care needs. The plans would bind the hospital to meet the stated goals and become part of the public record.

Wieckowski’s bill takes a step beyond the new federal mandates adopted by Congress through the 2010 Affordable Care Act. That law changed the Internal Revenue Code to require nonprofit hospitals to provide increased access to care in order to keep tax-exempt status.

The California Hospital Association, CNA’s lobbying adversary in Sacramento, called the union’s release of Medicare cost data a stunt to drum up fresh support for A.B. 975. The bill passed the Assembly health committee 12-7 on April 4 and then got stuck in the appropriations committee. It landed in suspend status May 8, and theoretically awaits a public hearing that may never come.

“CNA is trying to capitalize on an announcement last week by the federal government about hospital charges, and trying to tie it to their failed agenda to advocate for a piece of legislation that is not going to succeed,” hospital association spokeswoman Jan Emerson-Shea said. “The two issues have nothing to do with each other.”

Emerson-Shea further suggested that the union repackaged the Medicare data specifically to call out for-profit and private nonprofit hospitals that resisted attempts to unionize the workforce. Both Twin Cities and Sierra Vista operate under collective bargaining contracts with the nurses union.

Wieckowski spoke at a press conference held by CNA on May 14 shortly after the union released the report. The event was sparsely attended, due in part to the hum of Capitol activity surrounding Gov. Jerry Brown’s proposed budget.

“It was completely a non-event in Sacramento,” Emerson-Shea remarked. “CNA is trying to revive a piece of legislation that is on life support.”

CNA responded that it began tracking Medicare cost reports more than 10 years ago. The union sees a direct correlation between the charge-to-cost ratios and the legislative goal of holding nonprofit hospitals accountable for providing charity care. As public benefit corporations, California nonprofit hospitals receive state and federal tax-exemptions worth $1.8 billion per year, by union estimates.

“This illustrates part of the reason why A.B. 975 is so important,” Idelson said. “They are conducting a full court press to defeat it.”

In August 2012, State Auditor Elaine Howle said hospitals across the state do a solid job complying with the current regulatory framework, including the new Affordable Care Act provisions. However, the report also calls on the Legislature to establish standards to make sure hospitals comply with their charity obligations. m


Patrick M. Klemz is a staff writer for New Times, the Sun’s sister paper to the north. He can be reached at Sun Managing Editor Amy Asman contributed to this story.

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