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Study ranks South Texas Health System among hospitals with highest markups

South Texas Health System includes McAllen Medical Center, Edinburg Regional Medical Center and Cornerstone Regional Hospital.

A recent report ranked South Texas Health System among the nation TMs hospitals with the highest markups, prompting new scrutiny of the health care provider TMs billing practices.

Published in the peer-reviewed journal Health Affairs, the report ranked hospitals based on cost-to-charge ratios reported to the Centers for Medicare and Medicaid Services in 2012.

All hospitals on the list had markups for health services that were approximately 10 times the Medicare-allowable costs.

While most public and private health insurers do not use hospital charges to set their payment rates, uninsured patients are commonly asked to pay the full charges, and out-of-network patients and casualty and workers TM compensation insurers are often expected to pay a large portion of the full charges, according to the report abstract.

South Texas Health System ranked 48th among the 50 hospitals with the highest markups, according to the report by Gerard F. Anderson, a professor at the Johns Hopkins Bloomberg School of Public Health in Baltimore, and Ge Bai, an assistant professor of accounting at Washington and Lee University in Virginia.

South Texas Health System disputed the analysis.

The charge-to-cost ratios referenced in the article do not represent prices paid by patients for care provided, according to a statement provided by the health system. Our on-going assessments indicate that charges for South Texas Health System hospitals are very comparable with others in the market for like services.

Pennsylvania-based Universal Health Services owns South Texas Health System, which includes McAllen Medical Center, Edinburg Regional Medical Center and Cornerstone Regional Hospital.

The new report about markups at South Texas Health System follows numerous lawsuits against the hospital.

Majed Khuffash, a 55-year-old diabetic, spent 66 days at Edinburg Regional Medical Center during fall 2013 after he developed gangrene on his foot. He eventually lost a toe.

He didn TMt have health insurance.

I told them right up front, I do not have insurance and they said, ~Oh don TMt worry Mr. Khuffash, don TMt worry, Medicaid will take care of you, TM Khuffash said.

Medicaid, though, denied his request for help.

The hospital offered Khuffash a $12,000 settlement, but he didn TMt have the money.

I said, ~Look, if I had the $12,000, I would pay, but I don TMt, TM Khuffash said. She says, ~Oh, look at your company account, TM I said, ~Yeah, but that the company money is not mine. TM"

After the hospital discharged Khuffash, the hospital sent him a new bill: $330,000 for the two-month stay.

Khuffash TMs attorney, McAllen-based personal injury lawyer Michael Moore, said hospital markups over 1,000 percent aren TMt uncommon.

We are finding they typically charge between 1,000 percent to 1,600 percent more than what Medicaid, Medicare and private pay, i.e. Bluecross, would pay for the exact same services," Moore said.

While many other hospitals and health care providers have similar billing practices, Moore said he considers South Texas Health System among the biggest offenders.

When it comes down to overpricing there is no one that compares to (South Texas Health System), Moore said. They are the number one price gouging hospital in Hidalgo County.

With litigation pending, South Texas Health System declined to comment.

Many patients don TMt understand why the hospital charges so much money for services or how the hospital calculated the charges, Moore said.

There is no detailed bill how or why it became $330,000, Khuffash said.

Moore said he filed more than 100 lawsuits against South Texas Health System for price gouging.

Texas law says the medical treatment must be at a reasonable and regular rate, Moore said.

Although the Patient Protection and Affordable Care Act of 2010 " commonly called Obamacare " allowed thousands of Texans to afford health insurance, thousands of others don TMt qualify subsidies or Medicaid.

The most vulnerable in our society, the uninsured, are the ones being mistreated by these bad actors, Moore said.

Khuffash fears the big bill may cost him his 28-year-old business, Winter Texan Budget Tours.

Because of that $330,000 on my credit report, my bank with whom I TMve banked for the past 29 years refuses to give me a loan," Khuffash said.

Moore said many clients face similar problems when they can TMt pay medical bills.

If you don't have insurance, you don't have the protection and you will be forced with this unadjusted medical bill, Moore said. You either pay it or they destroy your credit, it TMs your choice."

Full Statement from South Texas Health System

Last year, the South Texas Health System provided $385 million in uncompensated and charity care. The charge-to-cost ratios referenced in the article do not represent prices paid by patients for care provided. Our on-going assessments indicate that charges for South Texas Health System hospitals are very comparable with others in the market for like services. The charge-to-cost ratio for South Texas referenced in the article appears to be higher due to lower expenses or better cost control as opposed to higher prices. Notwithstanding, hospital charges do not equate to the actual amounts paid by patients. Patients who have insurance or are covered by a government healthcare program already have established pricing unrelated to any hospital charges. For those that are uninsured or underinsured, South Texas Health System provides substantial discounts to such patients through financial assistance policies and programs. This study omitted the discounts provided by South Texas, as well as the other hospitals listed, which would have a significant effect on the charge-to-cost ratio reported.

South Texas Health System has served the Rio Grande Valley for 30 years and is recognized for its reputation in excellence for providing quality healthcare to people in the Rio Grande Valley. As a leading hospital system in the region, STHS offers specialized services in behavioral health, cardiovascular care, emergency medicine, neuroscience, oncology, pediatric care, women's services and rehabilitation.

50 Hospitals with the highest charge-to-cost ratio in 2012

1. North Okaloosa Medical Center (FL)2. Carepoint Health-Bayonne Hospital (NJ)3. Bayfront Health Brooksville (FL)4. Paul B Hall Regional Medical Center (KY)5. Chestnut Hill Hospital (PA)6. Gadsden Regional Medical Center (AL)7. Heart of Florida Regional Medical Center (FL)8. Orange Park Medical Center (FL)9. Western Arizona Regional Medical Center (AZ)10. Oak Hill Hospital (FL)11. Texas General Hospital (TX)12. Fort Walton Beach Medical Center (FL)13. Easton Hospital (PA)14. Brookwood Medical Center (AL)15. National Park Medical Center (AR)16. St. Petersburg General Hospital (FL)17. Crozer Chester Medical Center (PA)18. Riverview Regional Medical Center (AL)19. Regional Hospital of Jackson (TN)20. Sebastian River Medical Center (FL)21. Brandywine Hospital (PA)22. Osceola Regional Medical Center (FL)23. Decatur Morgan Hospital - Parkway Campus (AL)24. Medical Center of Southeastern Oklahoma (OK)25. Gulf Coast Medical Center (FL)26. South Bay Hospital (FL)27. Fawcett Memorial Hospital (FL)28. North Florida Regional Medical Center (FL)29. Doctors Hospital of Manteca (CA)30. Doctors Medical Center (CA)31. Lawnwood Regional Medical Center & Heart Institute (FL)32. Lakeway Regional Hospital (TN)33. Brandon Regional Hospital (FL)34. Hahnemann University Hospital (PA)35. Phoenixville Hospital (PA)36. Stringfellow Memorial Hospital (AL)37. Lehigh Regional Medical Center (FL)38. Southside Regional Medical Center (VA)39. Twin Cities Hospital (FL)40. Olympia Medical Center (CA)41. Springs Memorial Hospital (SC)42. Regional Medical Center Bayonet Point (FL)43. Dallas Regional Medical Center (TX)44. Laredo Medical Center (TX)45. Bayfront Health Dade City (FL)46. Pottstown Memorial Medical Center (PA)47. Dyersburg Regional Medical Center (TN)48. South Texas Health System (TX)49. Kendall Regional Medical Center (FL)50. Lake Granbury Medical Center (TX) SOURCE: Authors' analysis of Healthcare Cost Report Information System (HCRIS) computer files obtained from the Centers for Medicare and Medicaid Services for 2012, published in the appendix of the June 2015 issue of Health Affairs.

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