Federal Initiative to Address Widely Disparate Hospital Charges in the U.S

by | Jun 7, 2013 | Medical Coding News, Resources | 0 comments

Healthcare costs are a major political issue in the United States. Hospitals routinely charge their patients higher costs than the actual medical costs involved. The price for the same service can vary widely across different hospitals. Moreover, even hospitals located in the same city or town may have different pricing policies. This disparity in hospital charges makes healthcare extremely expensive in the United States. Now, for the first time in the U.S., the government has taken steps to address this issue and make healthcare more affordable to the average American.

Hospital Charges Data Released by CMS

As part of The Affordable Care Act that was passed in 2010 with a view to improve the healthcare system in the country, the Health and Human Services (HHS) Department has announced a three-part initiative that provides information on what hospitals charge. Now, consumers for the first time will gain access to the varying hospital charges across the nation. Released in the website of Centers for Medicare & Medicaid Services (CMS), this huge database provides data of what 3,300 U.S hospitals charge for the 100 most common inpatient procedures.

CMS data reveals the fact that patients covered by Medicare and other private insurance plans are not harshly affected by these hospital charges. Uninsured people on the other hand, have to pay the full charges which may lead to bankruptcy. Government health officials said the data was intended particularly to help millions of uninsured and under-insured consumers get better access to hospital services.

  • The data shows random variation in the costs of similar services in different hospitals. For instance, the average inpatient charges for a joint replacement procedure in a hospital may vary from a low of $5,300 at a hospital in Ada, Okla., to a high of $223,000 at a hospital in Monterey Park, Calif.
  • Variation in charges is seen not only regionally but also among hospitals in the same area or city. The average inpatient hospital charges for services that may be provided to treat heart failure can range from a low of $21,000 to a high of $46,000 in Denver, Colo., and from a low of $9,000 to a high of $51,000 in Jackson, Miss.

Expected to be an Eye-opener for Consumers

According to experts in the industry, positive changes in the healthcare delivery system cannot occur without greater price transparency. The release of the hospital price data is expected to be any eye opener for consumers regarding the vast variations in hospital charges.

Passed in 2010, the Affordable Care Act also makes available many tools to help ensure consumers, Medicare, and other payers get the best value for their health care dollar. The Act is designed to reduce healthcare costs beginning in 2014 by enforcing limits on what consumers have to pay for healthcare, while at the same time discouraging fake insurance providers.

New programs such as value-based purchasing and readmission reductions by Medicare are implemented with a view to reimburse providers based on the quality of services rather than the quantity. HHS has already granted $170 million to states to improve their rate review programs. The department is also shelling out approximately $87 million to data centers to collect, analyze, and publish health pricing and medical claims reimbursement data.