May 20, 2013

What Hospitals Charge and What Medicare Reimburses: HUGE Variations

On May 8, the Centers for Medicare and Medicaid Services released some eye-opening information: A) the amounts that hospitals across the country charge for medical procedures, and B) the amounts that Medicare reimburses to those hospitals. The big story here: the vast differences among the “A” figures, and the similar discrepancies among the “B” numbers.

It’s a broad study of 2011 data from 3,300 hospitals, and tracks the costs associated with the 100 most frequent procedures and treatments, including joint replacement, gall bladder removal, and coronary operations. To avoid odd “one-offs,” hospitals had to have performed a particular procedure at least 11 times for their prices to be included in the study.

As far as I know, it’s the first time that consumers who CAN plan ahead have the opportunity to “comparison shop.” For people on Medicare or covered by private policies, these numbers don’t affect us too much; we make hospital choices based on other factors, like reputation, convenience, or affiliation with our own doctors. But for people without insurance – millions of Americans who need to pay the bills themselves -- this new information can be very helpful.

What Hospitals Charge
Here’s just one example from an excellent New York Times article from May 8: “In one hospital in Dallas, the average bill for treating simple pneumonia was $14,610, while another there charged over $38,000.” That higher price is 2.6 times MORE than the other. Why?

Maybe facilities that charged so much more had patients who required longer hospital stays, or were older, or sicker. (Remember, at least 11 cases were required for inclusion in the database.) Some hospital reps said their prices were higher because their institutions were teaching facilities. But the NYT review showed that inexplicable differences existed even for procedures in which patient complications were minimal.

Other details were apparent. Government hospitals generally charged less than nonprofit hospitals, which in turn charged less than profit-making facilities for the same operations.

What Medicare Reimburses
Reimbursements from Medicare also vary greatly, even to hospitals only miles apart. The variations are especially odd, since Medicare uses a “system of standardized payments for treating specific conditions,” according to the NYT article.

Medicare reimburses teaching facilities at higher rates, and also pays more to hospitals where labor costs are high . . . even though similar hospitals in the same city receive different payments.

An Excellent Data-Map from the NYT
Want to see what the costs are for particular treatments at hospitals in your area? Just click on this fascinating resource. Enter a city or zipcode, and you’ll see colored dots representing facilities there. Hover your cursor over any dot, and you’ll see the name of the hospital. Click for information.

Of particular usefulness, you’ll see the amounts hospitals charged (compared with national averages), and the amounts those hospitals received back from Medicare (compared again with national averages).

Here’s a snapshot of what I see when I check the major hospitals in my area. Some of the variations are extreme.
George Washington Univ Hospital
Washington, D.C.
Five common types
of cases
NUMBER OF CASESAvg. amount hospital
billed Medicare
Avg. amount paid by Medicare
AMOUNTVS. U.S. AVG.AMOUNTVS. U.S. AVG.
Major joint replacement92$68,7261.4x$19,0711.3x
Drug-coated stent insertion35$62,1701.0x$17,3531.2x
Pulmonary embolism (clot)29$30,6571.2x$9,2161.3x
Permanent pacemaker insertionData not available for this hospital
Laproscopic gallbladder removalData not available for this hospital

Georgetown University Hospital
Washington, D.C.
Five common types
of cases
NUMBER OF CASESAvg. amount hospital
billed Medicare
Avg. amount paid by Medicare
AMOUNTVS. U.S. AVG.AMOUNTVS. U.S. AVG.
Major joint replacement147$61,7121.2x$18,7861.3x
Drug-coated stent insertionData not available for this hospital
Pulmonary embolism (clot)19$26,3971.0x$10,3431.4x
Permanent pacemaker insertionData not available for this hospital
Laproscopic gallbladder removalData not available for this hospital

Sibley Memorial Hospital
Washington, D.C.
Five common types
of cases
NUMBER OF CASESAvg. amount hospital
billed Medicare
Avg. amount paid by Medicare
AMOUNTVS. U.S. AVG.AMOUNTVS. U.S. AVG.
Major joint replacement464$29,7570.6x$12,8810.9x
Drug-coated stent insertionData not available for this hospital
Pulmonary embolism (clot)21$18,8360.7x$6,0700.8x
Permanent pacemaker insertion19$24,3680.5x$13,2520.9x
Laproscopic gallbladder removal25$20,5310.6x$7,5220.9x

Howard University Hospital
Washington, D.C.
Five common types
of cases
NUMBER OF CASESAvg. amount hospital
billed Medicare
Avg. amount paid by Medicare
AMOUNTVS. U.S. AVG.AMOUNTVS. U.S. AVG.
Major joint replacement14$51,2061.0x$25,5321.8x
Drug-coated stent insertionData not available for this hospital
Pulmonary embolism (clot)11$35,0871.3x$13,7131.9x
Permanent pacemaker insertionData not available for this hospital
Laproscopic gallbladder removalData not available for this hospital

Washington Hospital Center
Washington, D.C.
Five common types
of cases
NUMBER OF CASESAvg. amount hospital
billed Medicare
Avg. amount paid by Medicare
AMOUNTVS. U.S. AVG.AMOUNTVS. U.S. AVG.
Major joint replacement142$68,2281.4x$17,3101.2x
Drug-coated stent insertion272$64,3251.0x$16,1101.1x
Pulmonary embolism (clot)63$29,4781.1x$9,6401.3x
Permanent pacemaker insertion61$50,3111.0x$16,5891.2x
Laproscopic gallbladder removal12$43,2951.3x$10,0901.2x

Virginia Hospital Center - Arlington
Arlington, Virginia
Five common types
of cases
NUMBER OF CASESAvg. amount hospital
billed Medicare
Avg. amount paid by Medicare
AMOUNTVS. U.S. AVG.AMOUNTVS. U.S. AVG.
Major joint replacement450$36,5470.7x$13,3690.9x
Drug-coated stent insertion47$47,8910.8x$13,6131.0x
Pulmonary embolism (clot)32$13,8080.5x$6,8780.9x
Permanent pacemaker insertion23$34,4010.6x$13,1010.9x
Laproscopic gallbladder removal14$28,0420.8x$7,5730.9x

Inova Alexandria Hospital
Alexandria, Virginia
Five common types
of cases
NUMBER OF CASESAvg. amount hospital
billed Medicare
Avg. amount paid by Medicare
AMOUNTVS. U.S. AVG.AMOUNTVS. U.S. AVG.
Major joint replacement262$32,0510.6x$14,2471.0x
Drug-coated stent insertion33$43,0220.7x$14,2481.0x
Pulmonary embolism (clot)13$19,0760.7x$8,3991.1x
Permanent pacemaker insertion11$41,4120.8x$13,0430.9x
Laproscopic gallbladder removal14$17,5080.5x$7,4830.9x


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Yes, there is much cause for head-scratching here. These baffling variations are just another reason why our country’s healthcare system is such a mess.


2 comments:

gleeson1929 said...

Steven Brill who wrote the March 4 Time magazine cover story on health care pricing that is credited with prompting this report has said that CMS should next focus on outpatient services. He wrote in his blog: "The Feds need to publish the most frequent outpatient procedures and diagnostic tests at clinics -- two huge profit venues in the medical world. This will be harder -- the government doesn't collect that data as comprehensively -- but those outpatient centers and clinics provide a huge portion of American medical care."

gleeson1929 said...

A May 16 editorial in the New York Times concluded: "The huge differences in list prices have been posted on a government Web site. But for consumers to compare one hospital with another in a meaningful way, they need to know a lot more -- including the rates that have been negotiated between hospitals and insurers, the listed prices for outpatient treatments, and the quality of care provided, a difficult measurement that is in its infancy."

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