Medicare spills beans on hospital billing

Last edited Wed May 8, 2013, 02:41 PM - Edit history (1)

http://blogs.marketwatch.com/encore/2013/05/08/medicare-spills-beans-on-hospital-billing/

As if a stay in a hospital weren’t already stressful enough, many patients face an even bigger headache when they get their bill – as they’re presented with what can seem like outlandishly inflated charges for seemingly routine procedures. The force driving these shoot-the-moon bills is a complicated pricing tug-of-war among hospitals, which are trying to cover their staffing and overhead costs and also build in a profit margin; Medicare, which aims to pay only slightly more than cost for medical procedures; and private insurers, which use their leverage as payers to try to negotiate big discounts off a theoretical list price.

Underscoring just how disconnected from the cost of care a hospital’s bills can be, the Centers for Medicare & Medicaid Services – the federal agency that administers the huge health programs – today released a trove of data showing the average rates at which more than 3,000 hospitals billed Medicare in 2011 for 100 of the most commonly performed medical procedures. The disparities among the billing rates are enormous: In his coverage today, MarketWatch’s Russ Britt singles out an example of “a California facility billing 42 times what an Oklahoma health-care provider charges for the same procedure.” (Steve Brill covered this issue in an 36-page Time magazine story back in March; he reports online today that a CMS spokesman credits that story with helping prompt CMS’s data release.)

Few patients pay the full sticker price, of course, but the behind-the-scenes billing wars can still come back to hurt them, in the form of budget-busting co-pays or crippling bills for those without insurance. And the general lack of transparency in medical prices makes it harder for consumers to make informed choices about their treatment that could help the overall system keep costs down.

Even the hospitals billing at the low end of the scale aren’t exactly low-balling. A team of staffers at the New York Times are reporting today that, based on their analysis of the CMS data, the average hospital bills between three and five times what Medicare actually pays them for the procedure. For those who don’t feel like wading through the enormous Excel file that CMS released, the Times has also broken out some of the data in an interactive tool that lets readers see how each hospital’s billing rates compare to each other and to the typical Medicare reimbursement.
http://www.nytimes.com/2013/05/08/business/hospital-billing-varies-wildly-us-data-shows.html?_r=0