CMS Releases Hospital Pricing Data

Margaret Dick Tocknell, for HealthLeaders Media , May 9, 2013

For the first time, the federal government has made public chargemaster data for the 100 most common Medicare inpatient diagnostic related groups or DRGs. Hospital prices vary widely even within the same within the same city or region.

In an unprecedented move Wednesday, the Centers for Medicare & Medicaid Services made public extensive hospital cost data, jolting healthcare providers, payers, and consumers alike.

MU proposed rules

How much hospitals charge for the same procedures (source: The New York Times)

The massive file contains chargemaster data or what some call the "sticker price" for the 100 most common Medicare inpatient diagnostic related groups or DRGs. The data does not include physician costs. But it does provide an inside look at how average covered Medicare charges can significantly vary from hospital to hospital within the same city or geographic area.

The data is for 3,400 hospitals and represent 92% of all hospital inpatient charges in fiscal year 2011. Here's a sampling:

  • In Birmingham, AL, the charges for of a hospital stay to treat chronic obstructive pulmonary disease with major complications range from $23,245 at St. Vincent's Birmingham to $87,065 at Brookwood Medical Center.
  • In Jacksonville, FL, the charges for treating simple pneumonia and pleurisy range from $13,923 at St. Vincent's Medical Center to $41,411 at Memorial Hospital.
  • In Seattle, WA, average covered Medicare charges for joint replacement with major complications range from $44,328 at the University of Washington Medical Center to $92,165 at Swedish Medical Center.
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4 comments on "CMS Releases Hospital Pricing Data"

Frank Poggio (5/12/2013 at 11:32 AM)
This report should be filed under the heading "We have seen the enemy and it is US!"...Pogo, circa 1960. If there was ever a report that was self-indicting this is it. Yes hospital charges are non-sense, all over the map, not based on logic, etc. All true. But how'd that happen. As a former CFO I can tell you it was all done via the Medicare Cost Report, the core basis of Medicare payment system. For almost five decades the government has used the Cost Report, and a myriad of other convoluted reimbursement systems, to calculate payments to hospitals. So over the decades any good CFO would make sure that his charges maximized his governmental payments. And Medicare and Medicaid usually make up 60% or the his total payments. Some fifty thirty years ago charges became a substitute for statistics and cost accounting to estimate how much the government was going to pay you. Ever hear of RCCAC? That's the Ratio of Costs to Charges as Applied to Costs, a key calculation in the Cost Report. One of the most insane ways of 'identifying' costs ever cooked up. And it's still used today! Hospitals get paid based on DRGs, but still must do a Cost Report to justify the DRG amounts. I was around in 1983 when the feds came up with DRGs, they said back then the DRG system would replace the Cost report...and here we are 30 years later- with both! If you want to know why charges are a mess...just look at the Cost Report, and ask who created that monster? Frank Poggio The Kelzon Group

Mark Egge (5/9/2013 at 7:03 PM)
It'll be interesting to see whether CMS's publication of charges either a) reduces and standardizes charges, or b) simply injects more confusion into healthcare pricing. Ultimately, there's almost no correlation between charges and actual payment[INVALID]so posting charges is going to make it hard for anyone (other than the uninsured) to shop around. In our view, hospitals could just as rationally charge $1m for every DRG. It wouldn't make a difference. Here's our take:

Linda Branam (5/9/2013 at 3:36 PM)
Ken, please note that you are not in the category of patients who will benefit most directly: Sebelius stressed the value of the data to the uninsured and underinsured, who she says are often expected to pay the full chargemaster rate. For elective procedures those consumers can "easily compare average prices" at local hospitals and factor those costs into their decision on where to have a procedure performed. [end quote] As for your insurance paying your charges, the more insurance companies have to pay, the higher your premiums are. So if they can compare costs, they can pay the lowest price. And you can keep an eye on whether they pass the savings on to you. ;-) Everyone benefits.




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