Report reveals disparity in hospital procedure costs
FILE - In this April 12, 2013 file photo, Health and Human Services (HHS) Secretary Kathleen Sebelius testifies on Capitol Hill in Washington before the House Ways and Means Committee hearing on President Barack Obama's budget proposal for fiscal year 2014, and the HHS. Hospitals within the same city sometimes charge tens of thousands of dollars more for the same procedure, figures the government released for the first time Wednesday show. The list sheds light on the mystery of just how high a hospital bill might go and whether it's cheaper to get that care somewhere else. (AP Photo/J. Scott Applewhite)
For the first time, the government is publicly revealing how much hospitals charge, and the differences are astounding: Some bill tens of thousands of dollars more than others for the same treatment, even within the same city.
Why does a joint replacement cost 40 times as much at one hospital as at another across the country? It’s a mystery, federal health officials said.
“It doesn’t make sense,” Jonathan Blum, Medicare deputy administrator, said yesterday. The higher charges don’t reflect better care, he said.
And the amounts are too huge to be explained by obvious differences among hospitals, such as a more expensive regional economy, older or sicker patients or the extra costs of running a teaching hospital, he said.
The average charges for joint replacement range from about $5,300 at an Ada, Okla., hospital to $223,000 in Monterey Park, Calif., the Department of Health and Human Services said. That doesn’t include doctors’ fees.
Hospitals within the same city also vary greatly. At Beth Israel Medical Center in New York, the average charge to treat a blood clot in a lung is $51,580. Down the street at NYU Hospitals Center, the charge for the same care would be $29,869.
At the Mayo Clinic in Minnesota, the list price is $16,861.
That isn’t necessarily what you pay.
Medicare pays hospitals on its own fee schedule that isn’t based on the listed charges, Blum said, and insurance companies routinely negotiate discount rates with the hospitals.
But patients who are uninsured can be billed the full amount. And some with private insurance may find their share of the bill is inflated as a result of a hospital’s higher charges, officials said.
Blum said the Obama administration hopes that releasing the information, at the website cms.gov, will help lead to answers to the riddle of hospital pricing – and pressure some hospitals to lower their charges. The database also will help consumers shop around, he said.
The variations shouldn’t be a surprise, since hospitals might violate antitrust regulations if they shared “proposed or negotiated rates” with each other, said Rich Umbdenstock, president of the American Hospital Association. Forty states do require or encourage hospitals to make some payment information publicly available, he said.
“The complex and bewildering interplay among ‘charges,’ ‘rates,’ ‘bills’ and ‘payments’ across dozens of payers, public and private, does not serve any stakeholder well, including hospitals,” Umbdenstock said.
Consumer advocates said making the charges public is significant, even if most patients don’t pay those rates.
“I think the point is to shame hospitals,” said Chapin White of the nonprofit Center for Studying Health System Change.
Dr. David Goodman, co-author of the Dartmouth Atlas of Health Care, said “It does show how crazy the system really is, and it needs some reform.”