New data help explain hospital pricing, but experts caution that Medicare and insurers get much lower rates

May 10 2013

Although the government releases a list of what hospitals across the country charge for common procedures in an effort to make health costs more transparent, few patients or their insurers pay that.

The Wall Street Journal: Data Shine Light On Hospital Bills
The release of government data showing wide variation in hospital pricing removes a layer of secrecy but probably won't make medical charges more uniform, experts said Wednesday. … Hospitals are required to set an official value of treatment for a given procedure, but private insurance carriers, Medicare and Medicaid-;covering low-income people-;all negotiate their own reimbursement rates with providers. Some uninsured people could be billed for the list price, although the amount they end up paying is also often subject to negotiation (Radnofsky and Barry, 5/8).

Los Angeles Times: Hospital Prices Diverge Wildly, U.S. Data Show
New Medicare data reveal wildly varying charges among the nation's hospitals for 100 of the most common in-patient treatments and procedures, calling into question medical billing practices just as U.S. officials try to rein in rising costs. The escalating price of medical care may complicate the rollout of the new federal healthcare law, which is designed to make health insurance affordable for millions of uninsured Americans next year. And federal officials said they hope the data will encourage more price competition and make consumers better healthcare shoppers (Terhune and Poston, 5/8).

Politico: Big Price Swings Among Hospitals Driving Costs
Although the data are only available in a dense Excel spreadsheet, administration officials say they're hopeful to crunch the numbers in a way that's more accessible to consumers. It also comes on the heels of a Time magazine story by Steve Brill, which highlighted hospitals' use of "chargemaster" lists of procedure prices. "This release helps to highlight the opaque pricing/payment system used in health care, and along with the recent Time magazine story, should increase the public awareness of this fact," said Don Taylor, a public policy professor at Duke University. In response to the HHS release, Brill hailed the "fire hose of data -; which prints out at 17,511 pages" as a "tipsheet for reporters in every American city and town, who can now ask hospitals to explain their pricing" (Cheney, 5/9).

The Associated Press: High Hospital Bills Go Public, But Will It Help
For the first time, the government is publicly revealing how much hospitals charge, and the differences are astounding: Some bill tens of thousands of dollars more than others for the same treatment, even within the same city.  Why does a joint replacement cost 40 times as much at one hospital as at another across the country? It's a mystery, federal health officials say (Cass and Neergaard, 5/9).

Marketplace: Let's Go Shopping For Surgery: New Government Data Shines Light On Health Care Cost Variations (Audio)
Let's say you needed a pacemaker and you went to Uniontown hospital in Uniontown, Pennsylvania, the charge might be $20,000. If you went to Phoenixville Hospital near Philadelphia, the charge might have been $211,000. Hospitals list radically different charges "because they can," says Gerard Anderson, director of the Johns Hopkins Center for Hospital Finance and Management. "Nobody's been looking at their charges over the last 30 years." In the past, hospitals have kept their charges hidden, according to Peter Ubel , professor of Business Administration and Medicine, at Duke University. "If I'm negotiating prices with insurers, I don't want people to know about it" (Ben-Achour, 5/8).

The Fiscal Times: Why Your Hospital Bill Is Total Negotiable
Yesterday, for the first time, the government revealed how much hospitals charge for 100 of the most common medical procedures. The data revealed a seemingly random pricing scheme with the cost of the same procedure varying by tens of thousands of dollars from hospital to hospital. But it also painted a misleading picture of how the health care system works. Hospitals charge prices they know Medicare will not pay. They use these high prices as a starting point for negotiation and in the end, Medicare and private insurance pay just a fraction of the original charge. Consumers rarely foot the bill (Francis, 5/9).

Kaiser Health News: Capsules: Audio: Getting To The Bottom Of Hospital Pricing
The Centers for Medicare & Medicaid Services released data Wednesday on variations in hospital pricing and how much Medicare has actually paid to individual hospitals for various procedures. Jordan Rau joined NPR's "Talk of the Nation" Wednesday afternoon to discuss what the data tell us about the the cost of health care and whether higher prices are correlated with better quality (5/9).

Meanwhile, AP profiles two friends facing big medical bills and their efforts to help each other.

The Associated Press: 2 Florida Teens Who Are Best Friends Help Each Other Pay For Expenses During Cancer Treatment
Ashley was diagnosed with T-cell lymphoma in September. She needed a bone marrow transplant and would be in isolation for months. Tony knew how that would affect Ashley's family financially. … Starting with a garage sale and car wash, he gathered donations. Then he opened an account with www.giveforward.com, a site dedicated to raising money for people with medical bills. Within months, Tony raised about $25,000 for Ashley. Ashley's mom, Pat Myers, who had quit her job as a website programmer so she could care for her daughter, was overwhelmed. Myers recalled thinking: "I hope we never have to repay the favor." But two weeks after Ashley's diagnosis, Tony discovered his cancer returned. He would need costly treatment in Bethesda, Md., at the National Institutes of Health. Ashley, from her hospital bed, told her mother that she wanted to start an online fundraiser for her friend (5/9).