HealthLawProf Blog

Editor: Katharine Van Tassel
Concordia University School of Law

Tuesday, May 14, 2013

Hospital Billing Varies Wildly, Government Data Shows

Coming right on the heels of the story by Steven Brill, Why Medical Bills are Killing Us, Time (March 4, 2013), the federal Centers for Medicare and Medicaid Services released the data for 3,300 hospitals that covers bills submitted from virtually every hospital in the country in 2011 for the 100 most common treatments and procedures performed in hospitals, like hip replacements, heart operations and gallbladder removal.

Barry Meier, Jo Craven McGinty and Julie Creswell reported on this data release in their New York Times story Hospital Billing Varies Wildly, Government Data Shows (May 8, 2013):

[H]ospitals charge Medicare wildly differing amounts — sometimes 10 to 20 times what Medicare typically reimburses — for the same procedure, raising questions about how hospitals determine prices and why they differ so widely.

A hospital in Livingston, N.J., charged $70,712 on average to implant a pacemaker, while a hospital in nearby Rahway, N.J., charged $101,945.

In Saint Augustine, Fla., one hospital typically billed nearly $40,000 to remove a gallbladder using minimally invasive surgery, while one in Orange Park, Fla., charged $91,000.

In one hospital in Dallas, the average bill for treating simple pneumonia was $14,610, while another there charged over $38,000.

[B]illing records showed that Keck Hospital of the University of Southern California charged, on average, $123,885, for a major artificial joint replacement, six times the average amount that Medicare reimbursed for the procedure and a rate significantly higher than the average for other Los Angeles area hospitals. ... Centinela Hospital Medical Center, also in Los Angeles and owned by Prime Healthcare Services, charged $220,881 for the same procedure.

One of the many disturbing aspects of this billing morass is that those who are least likely to afford these high costs are the most likely to have to pay the highest amounts for bills that may bear little relationship to the actual cost of treatment.  

Medicare does not actually pay the amount a hospital charges but instead uses a system of standardized payments to reimburse hospitals for treating specific conditions. Private insurers do not pay the full charge either, but negotiate payments with hospitals for specific treatments.

Since many patients are covered by Medicare or have private insurance, they are not directly affected by what hospitals charge. Experts say it is likely that the people who can afford it least — those with little or no insurance — are getting hit with extremely high hospitals bills that may bear little connection to the cost of treatment.

“If you’re uninsured, they’re going to ask you to pay,” said Gerard Anderson, the director of the Johns Hopkins Center for Hospital Finance and Management.


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