President Obama’s top health officials released a massive trove of medical billing data Wednesday, which they said will help expose hospitals that charge too much for common procedures.
The Department of Health and Human Services released details on prices at 3,300 hospitals, revealing significant variations in what providers charged Medicare for the same in-patient services. In some cases, hospitals charged tens of thousands of dollars more than another facility a few miles away.
The administration said it doesn’t have any plans to take action, but said patients can use the information to compare prices, and hospitals that charge more should feel pressure.
“Hospitals that charge two or three times the going rate will rightfully face growing scrutiny,” HHS Secretary Kathleen Sebelius said in a conference call with reporters.
The data looks at charges for the 100 most common procedures billed to Medicare, such as heart operations and major joint replacements, in fiscal 2011.
Federal officials said some charges vary so widely that they cannot be explained by hospitals’ typical justifications, such as high capital costs or a large number of very sick patients.
In one instance a hospital in Austin, Texas, charged about $38,000 for a gallbladder removal, while another hospital across town charged more than $62,000.
However, Medicare and private insurers don’t typically pay what the hospitals seek. Rather, their reimbursements to providers are based on standard formulas and can be much less than what the hospital charges.
It is the uninsured who are hardest hit by hefty hospital charges, said Jonathan Blum, deputy administration for the Centers for Medicare and Medicaid Services.
The American Hospital Association said Wednesday it is interested in working with policymakers to make prices more transparent. But AHA President and CEO Rich Umbdenstock said that insurers negotiate their rates with hospitals based on many factors, which may make the pricing appear to be arcane.
“It would create serious antitrust risks for hospitals to share the proposed or negotiated rates with each other,” he said. “Variation in charges, therefore, is a byproduct of the marketplace so all parties must be involved in a solution, including the government.”
Ron Pollack, executive director of Families USA, praised the data release as a “step toward reining in health costs for America’s consumers.”
“Hospital pricing is the craziest of crazy quilts … Most perniciously, uninsured people are the ones who usually pay the highest prices for their hospital care,” he said. “It is absurd — and, indeed, unconscionable — that the people who are least capable of paying for their hospital care bear the largest, and often unaffordable, cost burdens.”