With Medicare posting hospital charges, are doctors next?

Federal officials highlight significant differences among some facilities' prices but are noncommittal about whether they might do the same reporting of physician charges.

By Charles Fiegl amednews staff — Posted May 20, 2013

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In an unprecedented move, the Medicare agency has released a database of average charges for inpatient services provided by hospitals and has announced plans to expand the transparency initiative, which could include posting online how much individual physicians charge for their patient care.

The 163,000-line spreadsheet released in May contains individual hospital charges and Medicare payment amounts for 100 common inpatient services, such as treatment of chest pain and pneumonia. The Centers for Medicare & Medicaid Services published the data files to help consumers understand variations in pricing by hospitals, in response to a recent investigation by Time that detailed the widely variable and murky world of health care billing. Insurers and covered patients rarely are expected to pay anywhere close to the full charge amount. But many patients without insurance are subject to these charges, and the data release shines a brighter light on the marketplace, said Jonathan Blum, CMS deputy administrator and director of the agency's Center for Medicare.

The charge data use information from billings by hospitals in 2011, representing 60% of the Medicare patient discharges for the year. Medicare does not pay the charge amount but pays a set fee that is adjusted based on geography, the patient's clinical condition and other factors. The data do not include the amount paid to anesthesiologists and other hospital physicians for their care of inpatients. The release does not include outpatient figures, but that could change.

“We have started our focus on services provided by hospitals in the inpatient setting, and we could choose in the future to go to the outpatient setting,” Blum said during a call with reporters. He would not state definitively if or when physician data might be released in response to a question about physician claims for Medicare services.

“I think it is fair to say we intend to build upon this data release, and we are going to assess how the market uses this information to inform future decisions,” he said.

Hospital charges all over the map

Blum raised questions as to why some hospitals appear to charge so much more than nearby hospitals for the same services. The charge data alone do not clarify how facilities arrive at their price points.

For instance, the database shows that the University of Illinois Hospital in Chicago charged an average of $118,070 for a major joint replacement procedure. Elsewhere in Chicago, Northwestern Memorial Hospital charged $97,197, and Rush University Medical Center charged $86,519 on average. Just outside Chicago, Northwest Community Hospital charged $73,304 for the procedure, while Advocate Lutheran General charged $66,720.

But most patients in Illinois do not pay the full charges set by hospitals, said Maryjane A. Wurth, president and CEO of the Illinois Hospital Assn., in a statement. The charges will vary in a way that reflects each hospital's care for the community, scope of services offered — such as a burn unit — and private and public payer mix.

Regardless of the amount actually charged, Medicare and Medicaid always will pay less than the total, she said. In 2011, Medicare paid the University of Illinois Hospital $47,874 on average for the joint replacement service, and Northwest Community Hospital received $19,422.

Private insurance plans negotiate contracts directly with hospitals and also pay rates that are less than the amount charged. An Illinois statute ensures that those without coverage do not pay full charges.

“Every year, Illinois hospitals and health systems provide inpatient and outpatient services to nearly 900,000 uninsured Illinoisans who seek medical care, and to thousands more who are underinsured and need financial assistance,” she said. “Hospitals provide $1.5 billion in care for which they receive no reimbursement.”

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Five-figure discounts hospitals give Medicare

Hospital charge data released by the Obama administration show the average amounts facilities billed Medicare for common procedures, the number of patient discharges in those categories and average Medicare payments received in 2011. For costlier services, there are significant differences between what hospitals charge and what Medicare pays. These data show services to treat heart failure without complication at the hospitals that performed the services the most in 10 large cities.

Hospital City Discharges Charge Payment
Grady Memorial Hospital Atlanta 65 $13,632 $6,328
Northwestern Memorial Hospital Chicago 99 $22,835 $6,049
Riverside Methodist Hospital Columbus, Ohio 93 $17,696 $4,376
St. Luke's Episcopal Hospital Houston 91 $21,904 $5,822
St. Vincent Hospital Indianapolis 78 $18,157 $4,796
Baptist Medical Center Jacksonville, Fla. 138 $19,579 $4,388
Cedars-Sinai Medical Center Los Angeles 112 $58,592 $6,537
New York-Presbyterian Hospital New York 139 $23,885 $7,964
Lincoln North Mountain Hospital Phoenix 22 $21,150 $4,478
Swedish Medical Center Seattle 63 $23,424 $4,718

Source: Medicare Provider Charge Data, Centers for Medicare & Medicaid Services (link)

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External links

Medicare Provider Charge Data, Centers for Medicare & Medicaid Services (link)

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