It’s common to use the term “cost of health care” to mean the price of health care.  But there is a difference—often a huge difference.

The Connecticut Supreme Court wrestled with this difference in a decision issued March 17.  The case arose when three companies balked at the bills they received from hospitals for treating their injured employees.  Those bills reflected the hospitals’ published charges—their “chargemaster” or “pricemaster” rates. And, of course, those prices are much higher than the prices negotiated by large payers and, naturally, much higher than the hospitals’ costs.

The employers had a creditable argument.  The workers’ compensation statute provides that an employer’s liability should be what the commissioner’s determines it “actually costs” a hospital to render the services.  But the hospitals also had a good argument: another statute requires every hospital to file rates and to charge the filed rates unless a payer has negotiated different rates, as evidenced by a written contract on file in the hospital’s business office.

The court liked the hospitals’ argument better.  It ruled that the latter statute implicitly overruled the “actually costs” language of the workers’ compensation statute.  The court was especially impressed by the impracticality of requiring the commissioner to determine the actual cost of hospital care every time an employee was injured.

The case is Caraballo v. Electric Boat Corp., 2015 BL 65697, No. SC 19182 (Conn. Mar. 17).