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Report on hospital pricing says Calif. hospitals overcharging

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Modern Healthcare: A large number of California hospitals appear to be overcharging patients and are not being held accountable for it, according to a new report commissioned by the Pacific Business Group on Health and the California Public Employees’ Retirement System (CalPERS).

Based on 2005 hospital cost data reported to the state, the report found that private-pay patients insured through their workplace pay up to 40% more than they should for hospital care to make up for shortfalls in Medicare and Medicaid payments and for costs of uncompensated care.

Some hospitals in California charged five times higher than others, even after adjusting for wage differences between regions. Statewide, in 2005, private payers paid a total of $18 billion for services provided by the hospitals—even though it cost the hospitals about $13 billion to provide these services, according to the report, conducted by Milliman, a healthcare consulting and actuarial firm in Seattle.

The report attempted only to measure the relative costs of services among different hospitals. It did not evaluate the quality of care delivered.

CalPERS and Pacific Business Group, an association of 50 large purchasers of healthcare responsible for $10 billion in annual healthcare expenditures are pressing for greater transparency in hospital pricing.

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