Fact Sheets

HHS RELEASES HOSPITAL DATA ON CHARGE VARIATION TO PROMOTE TRANSPARENCY

HHS RELEASES HOSPITAL DATA ON CHARGE VARIATION TO PROMOTE TRANSPARENCY
 

The Department of Health and Human Services (HHS) released new data on hospital charges today. The data show significant variation in charges from hospital to hospital�including those within the same community�for inpatient services that may be provided in connection with a given inpatient stay. Hospitals determine what they will charge for items and services provided to patients and these �charges� are the amount the hospital bills for an item or service.

Also today, HHS made approximately $87 million available to states to create health care pricing data centers to assist consumers and to continue enhancing their health insurance rate review programs. The data centers� work helps consumers better understand the comparative price of procedures in a given region or for a specific health insurer or service setting. Businesses and consumers alike can use these data to drive decision-making and reward cost-effective provision of care.

The data posted today on the Centers for Medicare and Medicaid Service�s (CMS) website include information comparing the charges for services that may be provided during the 100 most common Medicare inpatient stays. This data enables comparisons between the amounts charged by individual hospitals within local markets, and nationwide, for services that may be provided during similar inpatient stays.

The inpatient charge amounts vary widely. For example, average inpatient charges for services a hospital may provide in connection with a joint replacement (MS-DRG 470) range from a low of $5,300 at a hospital in Ada, Oklahoma, to a high of $223,000 at a hospital in Monterey Park, California.

Even within the same geographic area, hospital charges for similar services can vary significantly. For example, average inpatient hospital charges for services that may be provided to treat heart failure (MS-DRG 292) range from a low of $21,000 to a high of $46,000 in Denver, Colorado, and from a low of $9,000 to a high of $51,000 in Jackson, Mississippi.

Inpatient acute-care services are paid by Medicare based on a rate per discharge using the Medicare Severity Diagnosis Related Group (MS-DRG) to which the Medicare patient�s case is assigned. The MS-DRG is a classification system that groups similar clinical diagnoses and the procedures the hospital furnished to treat those conditions during the inpatient stay.

The data, compiled from hospital claims, by CMS, sets out hospital charges for services that may be provided in connection with the top 100 inpatient stays most frequently billed to Medicare by approximately 3,400 hospitals that receive payment for inpatient acute-care services under the Medicare Hospital Inpatient Prospective Payment System (IPPS). These hospitals together constitute 92 percent of all hospital inpatient discharges.

The data also provide average Medicare payment information for the top 100 inpatient or discharges based on rates per discharge that applied during FY 2011 to provide a point of comparison for charges for the same services.

CMS used the inpatient data from the Medicare Providers Analysis and Review (MedPAR) dataset for fiscal year 2011, which contains Medicare inpatient hospital claims for all Medicare beneficiaries enrolled in Medicare Part A.

The map below highlights the variation in average hospital inpatient charges for services that might be provided in connection with certain joint replacements by Hospital Referral Region (HRRs).

 

 

The national average inpatient charge for certain joint replacements (MS-DRG 470) is $50,116, while the average inpatient charge in the HRR of Minneapolis is $36,594. The average charge in the HRR of Birmingham is $53,139. In addition, within each market there is large variation, with charges varying from $22,788 to $58,683 in Minneapolis and $23,640 to $141,035 in Birmingham.

Average Hospital Inpatient Charges by Provider for MS-DRG 470, Major Joint Replacement or Reattachment of Lower Extremity without Major Complications or Comorbidities

Minneapolis, Minnesota

• HRR Average Charge = $36,594
• National Average = $50,116

Birmingham, Alabama

• HRR Average Charge = $53,139
• National Average = $50,116

The chart below compares average hospital inpatient charges to average Medicare payments for services that might be provided to treat Chronic Obstructive Pulmonary Disease (COPD) without complications, MS-DRG 192. The national average charge is $18,064 and the national average payment is $4,946.

Average Covered Charge and Average Medicare Payment for MS-DRG 192 � COPD

without Major Complications or Comorbidities

 

To view the new hospital dataset, please go to : http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Medicare-Provider-Charge-Data/index.html

To access the funding opportunity announcement, visit: http://www.grants.gov, and search for CFDA # 93.511.

To read the press release, please visit: http://www.cms.gov/apps/media/press_releases.asp

For more information on HHS efforts to build a health care system that will ensure quality care, please see the fact sheet �Lower Costs, Better Care: Reforming Our Health Care Delivery System,� at http://www.cms.gov/apps/media/press/factsheet.asp?

For additional information on how Medicare pays for inpatient hospital stays, please see: http://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/downloads/AcutePaymtSysfctsht.pdf