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May 8th, 2013 By German Lopez | News | Posted In: Health, Health care, News

Medicare Data Reveals Huge Price Variation at Local Hospitals

Charges and payments can differ by thousands of dollars

health transparency

The Centers for Medicare and Medicaid Services (CMS) unveiled price data today for more than 3,000 U.S. hospitals, revealing large price variations between hospitals around the nation, including in Cincinnati.

For treating chest pain, charges from three Cincinnati hospitals varied by thousands of dollars: Bethesda North charged on average $17,696, Christ Hospital charged $12,000 and University Hospital charged $10,130.

But the initial charge seems to have little relation to what Medicare ultimately paid out. In the three cases for chest pain, Medicare on average paid $3,242 to Bethesda North, $3,657 to Christ Hospital and $5,463 to University Hospital.

In other words, University Hospital charged about 57 percent of what Bethesda North charged, but University Hospital was ultimately paid 68 percent more.

The price variation wasn’t exclusive to chest pain, either. For major joint replacement or reattachment of a lower extremity without major complications, Bethesda North charged $61,947 and was paid $12,712 on average, Jewish Hospital charged $38,465 and was paid $14,069 on average and University Hospital charged $46,463 and was paid $20,116 on average.

In fact, all of the 100 metrics tracked by CMS had at least some degree of variation in charges and payments.

Whether it was chest pain, joint replacement, diabetes or cardiovascular complications, prices always varied between hospitals — sometimes greatly, other times by a little.

The data from fiscal year 2011 shows how much hospitals initially charged Medicare for the 100 most frequently billed discharges and how much Medicare ultimately paid out. The difference between charges and payments is usually large because Medicare negotiates prices down.

CMS says the price discrepancy is happening at hospitals all around the nation: “As part of the Obama administration’s work to make our health care system more affordable and accountable, data are being released that show significant variation across the country and within communities in what hospitals charge for common inpatient services.”

Still, some health care advocacy groups say Ohio is doing worse than other states. A study from Catalyst for Payment Reform and the Health Care Incentives Improvement Institute gave Ohio and six other states a “D” for health care price transparency, based on the states’ laws and regulations. That was actually better than 29 other states, which flat-out flunked with an “F.” Only New Hampshire and Massachusetts received an “A,” the highest grade possible.

Even then, the Catalyst for Payment Reform and the Health Care Incentives Improvement Institute cautioned in the study that their grades were given on a curve, which means all states would likely fare worse if the organizations measured them based on ideals instead of comparatively.

Many health care experts and advocacy groups claim the price variation is caused by a lack of transparency in the health care system, which gives hospitals free reign to charge without typical market checks (“Healthy Discussion,” issue of April 10).

 
 
 
 
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