Medical bills are a mystery to most people. You often don’t find out how much a medical procedure will cost you until you get the bill (here is an explainer of how medical billing generally works). There is no way to easily compare how much the procedure will cost at another facility. But that veil of secrecy is starting to be lifted.
Earlier this year, the U.S. Centers for Medicare & Medicaid Services (CMS) released for the first time how much most U.S. hospitals charge for the 100 most common inpatient procedures billed to Medicare in fiscal year 2011. The data was released two months after a Time magazine investigation critical of the disparities in the way nonprofit hospitals charge patients and how much more uninsured patients are often charged. Most Americans do not pay these so-called Chargemaster rates developed by hospitals. If you have health insurance coverage, your insurer or Medicare or Medicaid ensure that you will pay much less. But many insurers’ rates of how much they will reimburse medical facilities for care are based on these Chargemaster rates and the uninsured are often charged rates similar to the baseline Chargemaster rates (although most hospitals have charity care programs to help defray some expenses for the uninsured who can’t afford to pay).
The data reveals what many experts and the Time article have argued, that what hospitals charge for different procedures varies wildly and does not seem to be based only on geography and the costs of real estate, labor and technology. A Washington Post analysis of the 10 most common procedures found that hospitals in more populous states such as California, Florida, Nevada, New Jersey, Pennsylvania and Texas often charged higher rates than hospitals in other parts of the country. Hospitals in North Dakota, Montana and Idaho, more sparsely populated states with lower real estate and labor costs, tended to have the lowest prices. But charges for the same procedure in the data released varied wildly even within the same state and metropolitan area.
One hospital in Miami charged Medicare an average of $127,000 for a permanent pacemaker implant (it was actually reimbursed an average of $20,800 from Medicare). Another hospital a few blocks away charged an average of $66,000 for the same procedure (it was reimbursed an average of $28,700). North Dakota hospitals had charges ranging from an average of $30,116 to an average of $47,352 for the same procedure. The amount North Dakota hospitals charged for a major lower joint replacement ranged from an average of about $26,122 to an average of about $43,391, with the most expensive and least expensive average charge coming from hospitals located in the same city.
All the 2011 hospital Medicare charges are available here if you want to search through them. See the graphic in this post for a look at the range of charged costs and national average of 10 common procedures compared with the North Dakota average (in pink).
What’s your biggest frustration about hospital billing?
Ryan Schuster is an editor in the Communications department at Blue Cross Blue Shield of North Dakota.