In an effort to improve transparency, the Obama Administration today released a report that for the first time gives consumers information about what hospitals are charging, the Centers for Medicare & Medicaid Services said in a statement on Wednesday.
Hospitals determine what they will charge for items and services, and these charges are what's seen on our medical bills.
"Currently, consumers don't know what a hospital is charging them or their insurance company for a given procedure, like a knee replacement, or how much of a price difference there is at different hospitals, even within the same city," Health and Human Services Secretary Kathleen Sebelius said in a statement. "This data and new data centers will help fill that gap."
The Administration also said today it made $87 million available to states to further transparency of health care pricing.
The new report looks at price information for 100 of the most frequently billed hospital discharges for Medicare patients at 3,000 health care facilities around the country. The costs in the report involve care for patients with common ailments like pneumonia, chest pain, diabetes or urinary tract infections.
Prices can vary within Springfield.
Here's a look at how Springfield compares to other cities for two common reasons for inpatient stays.
The report found was widespread variation in prices.
"We think that it is an indication of what the hospitals say is their opening price for providing a certain set of services for a given patient condition," says Patti Unruh with Health and Human Services.
For example, the average inpatient hospital charges for a patient getting a joint replacement may range from $5,300 at a hospital in Ada, Okla. to $223,000 at a hospital in Monterey Park, Calif.
Jonathan Blum, director of the government's Center for Medicare, told the Associated Press that making this information available to the public free of charge will put pressure on the more expensive hospitals.
"It doesn't make sense," Blum said the significant cost differences. Higher costs don't reflect better care, he said.
Geography alone does not account for the differences in treatment and care costs, the report showed. When comparing care costs for a Medicare patient with heart failure, the report showed treatment in Denver can cost anywhere from a low of $21,000 to a high of $46,000. Meanwhile, in Jackson, Miss., heart failure care may cost a low of $9,000 or a high of $51,000.
Consumers can take this data to drive their medical-decision making, health officials said.
The Washington Post points out that Medicare and private insurers typically negotiate lower charges with hospitals, so these costs may not tell the full story. However, if you don't have insurance, that's another story.
"It's true that Medicare and a lot of private insurers never pay the full charge," Renee Hsia, an assistant professor at the University of California at San Francisco Medical School, told the paper. "But you have a lot of private insurance companies where the consumer pays a portion of the charge. For uninsured patients, they face the full bill. In that sense, the price matters."
The new government data on hospital costs can be accessed on CMS.gov.
Statement from Steve Edwards, CoxHealth CEO:
"While the American health care system is the world's engine for innovation and advanced care, the financing system is absolutely broken. On the surface, it seems logical that transparency will fix the problem. It is unfortunately not that simple. The U.S. system is an enormously complex entanglement of competing and conflicting laws, rules, regulations and market forces that causes confusion and hardship for patients, doctors and hospitals. This is the system our nation has built, albeit inadvertently.
At CoxHealth, and I suspect nearly every other tertiary hospital, we could reduce our fees and still have the same bottom line. Only one thing would need to happen: everyone would need to pay their bills. The greatest source of disparity comes from Medicare, Medicaid, and uninsured shortfalls, in that order. We are required by law and conscience to see every patient who shows up in our ERs, regardless of their ability to pay. We have deployed charity care policies to protect the most vulnerable.
According to the Dartmouth atlas, which examines Medicare claims data, the cost of care in southwest Missouri is lower than national averages. In the end, CoxHealth maintains a bottom line which amounts to 1.8 pennies for every dollar we collect. This is enough to reinvest in the future, but certainly well below margins for most other industries."
Statement from Mercy:
"Mercy's hospital pricing structure is based on the actual costs of providing care. Hospital average charges for patients in the same Diagnosis-Related Group (DRG), as defined by the Centers for Medicare & Medicaid Services (CMS), may be different between providers due to the level of care provided; some facilities serve more acute or high-risk patients than other facilities, which will result in a higher cost of care. The cost of care represents the total cost of operating the hospital, not just the discrete services provided to individual patients. Charges must also cover a portion of the cost of uncompensated care provided to patients, and the costs of staff and technology required around-the-clock to meet the needs of patients and the community. It is important to note that the charges on hospital bills rarely reflect the amount collected for hospital services. For example, hospitals are reimbursed only a portion of their charges for patients covered by Medicare and Medicaid.
We hope a better payment system will start to take shape as more elements of health care reform are implemented. Mercy advocates for a sensible payment system in which charges reflect true costs and health care providers are compensated realistically. Making health care more affordable is the responsibility of everyone who has contributed to making the current system so complex: providers, government, insurers, medical and drug manufacturers, and patients. Mercy is a strong advocate for change and we are hopeful that this kind of dialogue will lead to real progress for health care reform."