In response to mention of the University Medical Center of Princeton at Plainsboro (UMCPP) in the December 16 issue of The New York Times, Town Topics contacted president and CEO of Princeton HealthCare System Barry Rabner for comment on the newspaper article’s unfavorable comparison between UMCPP and other hospitals regarding the cost of an echocardiogram test.

The article by Elisabeth Rosenthal compared the $5,435 bill for the procedure at UMCPP to that at Beth Deaconness Medical Center in Boston ($1,714) and St. Alexius Medical Center in Bismarck, North Dakota ($403). An even higher bill of $11,579 was cited for the Crozier-Chester Medical Center Upland, Penn. Elsewhere in the article, seven teaching hospitals in Boston, affiliated with Harvard, Tufts, and Boston University, were said to charge an average of about $1,300 for the same test and the cost in Philadelphia ranged from $700 to $12,000.

Yesterday, Mr. Rabner sent this statement in response: “Medicare was established in 1965 and at that time it paid hospitals what they charged. Today, 50 years later, Medicare and other government payors pay all hospitals a fixed amount based upon the patient’s medical problem. However, hospitals are required by Medicare to state their charges on all bills sent to all patients even though “no one” pays the charges on the bill. In fact, all payments for care are significantly less. Insurance companies pay rates they negotiate with the hospital and people paying themselves pay a percentage of what Medicare pays. People unable to pay receive the care they need. According to the New Jersey Hospital Association, University Medical Center of Princeton’s average income from serving patients (operating revenue per adjusted admission) is below the average for similar hospitals in New Jersey.”

Subsequently contacted by phone, Mr. Rabner explained further. “The charges that people see on their bills have no bearing on what individuals or insurance companies pay. If you look again at the graph in Ms. Rosenthal’s article you will see the figures that were paid to the various hospitals for the procedure.”

The graph citing the bills for the various hospitals mentioned above also shows figures paid to hospitals for the test echocardiogram as follows: $419 for the procedure at UMCPP; $474 at Beth Deaconness Medical Center; $393 at St. Alexius Medical Center. and $407 at Crozier-Chester Medical Center.

As Mr. Rabner explained, the higher figures “are an artifact from a system that was set up 50 years ago. This information is being presented in a way that is not useful to most people. My mother is 93 and when she sees these figures, which are required to be there by Medicare and other insurers, her heart starts pounding. There is no relationship between the bill and the amount that we get paid. As people read the bill, they will see that they are responsible for a fraction of this amount.”

So why are these numbers required? Mr. Rabner couldn’t say, but he did report that UCMPP had tried from time to time to simplify its bills. “But we cannot change what is required by Medicare and other insurers,” he said. “What [payment] we receive is a result of contracts with insurance companies and Medicare. All hospitals have contracts with payers and that’s how much we get paid.”

Unlike cans of beans in the supermarket, medical procedures do not have an off-the-shelf purchase price. Their prices are set by negotiation with individual insurers and vary accordingly.

Asked whether he had explained this to the New York Times reporter, Mr. Rabner said that he had not been contacted by her.

The New York Times article was one of a series examining the costs of common medical procedures such as colonoscopy and joint replacement and their role in the high cost of health care in the United States. Last week the focus was on Princeton resident and retired math professor Len Charlap, 76, who had an echocardiogram prior to an elective cataract surgery at UMCPP in 2012 and then another echocardiogram at a different hospital in 2013.

As reported by Ms. Rosenthal, Mr. Charlap’s first test was performed by a technician, prior to Mr. Charlap’s elective cataract surgery, at UMCPP, described as a community health facility, and lasted less than 30 minutes; the second took place “at a premier academic medical center in Boston” and is described as taking three times as long and involving a cardiologist.

Mr. Charlap was bothered by the disparity in the bill for the two procedures: about $5,500 for the half hour visit with the technician and $1,400 for the Harvard teaching hospital for a much more elaborate test. “Why would that be?” he asked.

Ms. Rosenthal also compares the costs of the procedure in other countries such as Belgium ($80), Germany ($115) and Japan, where the price ranges from $50 to $88 depending upon the age of the machine. In Britain’s National Health Service, all echocardiograms are done in hospitals without charge. In 2012, New Jersey had the second-highest charges for echocardiograms in the nation, amounting to 8.4 times Medicare’s approved rate.

Ms. Rosenthal also notes that the higher figures are charged to insurance companies and patients usually pay much less depending upon their medical insurance. Because Mr. Charlap, 76, is on Medicare, which is aggressive in setting rates, he paid only about $80 toward the approximately $500 fee Medicare allows. But many private insurers continue to reimburse generously for echocardiograms billed at thousands of dollars, the article contests.

Local residents have criticized the new UMCPP facility for its apparent luxury. Built at a cost of more than $500 million, the facility boasts a curving atrium decorated with artwork from the hospital’s permanent collection.

For the full text of Ms. Rosenthal’s article, “The Odd Math of Medical Tests: One Scan, Two Prices, Both High,” visit: http://nyti.ms/1sz0UFe