CMS Publishes Hospital Charge Data

In an effort to take the first steps toward a more transparent pricing structure in the U.S. healthcare market, the Center for Medicare & Medicaid Services yesterday published nationwide hospital charge data showing wide variations in how much Medicare pays for services in different markets.

The data, which encompasses the 100 most commonly billed discharges was collected from more than 3,000 hospitals and represented more than 7 million discharges – roughly 60 percent of all Inpatient Prospective Payment System (IPPS) payments for 2011.

The hope from the administration is that the prices published by CMS will help people seeking healthcare to become more engaged as consumers for these services.

“What I know to be true is when consumers can easily compared the prices of goods and services, producers have strong incentives to keep those prices low,” said Health and Human Services Secretary Kathleen Sebelius in a teleconference announcing the data publication. “But even basic information about health premiums or health charges has long been hidden from consumers and has made it hard for them to make educated decisions.”

While the data released yesterday only includes pricing information for inpatient visits as paid by Medicare, Jonathan Blum, acting principal deputy administrator and director of the Center for Medicare at CMS indicated in the press call that this is likely only the first of many releases of pricing data.

“We don’t have a set timetable for expansion for this data release. I think it is fair to say we intend to build upon this data release,” Blum said.

But many feel that the “chargemaster” data – the amount hospitals would charge to those without any form of insurance – released yesterday may be nearly irrelevant in helping consumers with private insurance navigate the complex and varied pricing of hospital and other healthcare services.

“The complex and bewildering interplay among ‘charges,’ ‘rates,’ ‘bills’ and ‘payments’ across dozens of payers, public and private, does not serve any stakeholder well, including hospitals,” said Rich Umbdenstock, president and CEO of the American Hospital Association in a prepared statement. “This is especially true when what is most important to a patient is knowing what his or her financial responsibility will be.”

In an April interview with Healthcare Finance News, Jeffrey Rice, MD, CEO and founder of the Healthcare Blue Book, an online tool that allows consumers to look up pricing information, noted that the information they provide via their free website may help patients understand what a “fair price” may be in their market for a certain procedure. “It really stops there, because we don’t know their benefit design; we don’t know their network or any of that information.”

Steven Brill, whose March feature “Bitter Pill” in Time magazine helped remove the veil of pricing secrecy and variation, noted in a story posted on Time’s website yesterday that the next step would be for CMS to publish information on outpatient and diagnostic charges – areas he contends are “two huge profit venues in the medical world.”

Yet this would still only scratch the surface.

“But an even bigger step in transparency would be collecting data that Medicare doesn’t have: exactly what insurance companies pay to the various hospitals, testing clinics, and other providers for various treatments and services,” Brill wrote. “After all, as the hospitals themselves concede in downplaying their chargemasters, these insurance prices are the ones that affect most patients.”

If nothing more, the data illustrates in stark terms how broad the variation in charges can be from hospital to hospital for the same treatment. As Sebelius noted, “the data we are releasing today shows these rates can vary dramatically in ways that can’t be easily explained. Even within cities there can be massive variation in what consumers pay.”

As an example, Sebelius cited the variation in joint replacement with Birmingham, Ala., which can range from a low of about $20,000 to as high as $140,000.

“Hospitals that charge two or three times the going rate rightfully face greater scrutiny,” Sebelius added.

Article written by Chris Anderson, Senior Editor for Healthcare Finance News