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Administration Offers Consumers a Look at Hospital Charges

Rates for inpatient services vary widely across the country (May 8)

Health and Human Services (HHS) Secretary Kathleen Sebelius has announced a three-part initiative that gives consumers information on what hospitals charge. The new data show significant variation across the country and within communities in what hospitals charge for common inpatient services. In addition, the HHS has made approximately $87 million available to states to enhance their rate-review programs and to further health care pricing transparency.

“Currently, consumers don’t know what a hospital is charging them or their insurance company for a given procedure, such as a knee replacement, or how much of a price difference there is at different hospitals, even within the same city,” Sebelius said. “These data and new data centers will help fill that gap.”

The data, posted on the Centers for Medicare and Medicaid Services (CMS) website, include information comparing the charges for services that may be provided during the 100 most common Medicare inpatient stays. Hospitals determine what they will charge for items and services provided to patients, and these charges are the amount the hospital generally bills for an item or service.

“Transformation of the health care delivery system cannot occur without greater price transparency,” said Risa Lavizzo-Mourey, MD, President and CEO of the Robert Wood Johnson Foundation. “While more work lies ahead, the release of these hospital price data will allow us to shine a light on the often vast variations in hospital charges.”

These amounts can vary widely. For example, average inpatient charges for services a hospital may provide in connection with a joint replacement range from a low of $5,300 at a hospital in Ada, Okla., to a high of $223,000 at a hospital in Monterey Park, Calif.

Even within the same geographic area, hospital charges for similar services can vary significantly. For example, average inpatient hospital charges for services that may be provided to treat heart failure range from a low of $21,000 to a high of $46,000 in Denver, Colo., and from a low of $9,000 to a high of $51,000 in Jackson, Miss.

To make these data useful to consumers, HHS is also providing funding to data centers to collect, analyze, and publish health pricing and medical-claims reimbursement information. The data centers’ work is intended to help consumers better understand the comparative prices of procedures in a given region or for a specific health insurer or service setting. Businesses and consumers alike can use these data to drive decision-making and to reward cost-effective provision of care, the HHS says.

Medicare is beginning to pay providers based on the quality they provide rather than just the quantity of services they furnish by implementing new programs, such as value-based purchasing and reductions in readmissions. The HHS provided $170 million to states to enhance their rate-review programs, and since the passage of the Patient Protection and Affordable Care Act, the proportion of insurance company requests for double-digit rate increases fell from 75% in 2010 to 14% so far in 2013.

Source: HHS; May 8, 2013.

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