The Fight Over Hospital Chargemasters
For an industry fighting to maintain credibility, May 8, 2013, was a bad day.
For an industry fighting to maintain credibility, May 8, 2013, was a bad day.
The Centers for Medicare and Medicaid Services dropped a bomb on health care providers with its massive data release detailing average inpatient charges for the 100 most-billed discharges at 3,000 hospitals, along with the average Medicare payments for those same cases. (A less elaborate set of information for outpatient services came out in June.) Rarely has a CMS data release made such headlines. The inpatient files were downloaded 300,000 times in the first month.
"The reaction was pretty overwhelming," says Niall Brennan, CMS's director of information products and analytics.
While many states require hospitals to share at least some price information, it has taken an unusually determined consumer or an investigative reporter to pull together all that information for a side-by-side comparison of the sort that CMS has suddenly made almost simple.
Every news outlet was able to put its own spin on the story, from the Washington Post to the Huffington Post and hundreds in between.
The Chicago Tribune noted: "One of the most common ailments, pneumonia, had one of the largest ranges in average prices among Illinois hospitals. Gateway Regional Medical Center in Granite City charged $86,570 for treatment while Iroquois Memorial Hospital in Watseka charged $10,733. In Chicago, the priciest treatment was at the University of Chicago Medical Center at $72,845 and the cheapest was Holy Cross Hospital at $27,588."
The Miami Herald observed: "The University of Miami's average cost for a pacemaker implant was $127,000, about twice as much as the $66,000 that Jackson Memorial charged."
The Arkansas Times asked: "Why is one of the most common procedures in Arkansas, a cardiac procedure to insert a drug-eluting stent, $108,524 at Northwest Hospitals Inc. in Springdale but only $35,803 at St. Bernard's?"
Why indeed? It was no surprise to the hospital industry that there's wide variation in charges for the same procedure, even in similar hospitals in the same market. It's axiomatic that hospital chargemasters have only the loosest relationship to hospital revenue, and even less to hospital profits. Every hospital has its own unique approach to chargemaster computations.
But the public had never seen it laid out so starkly, and patients have come to realize that the apparently irrationality of their last hospital bills wasn't a fluke, but standard operating procedure.
"The variation surprised even us," Brennan says. "It wasn't necessarily that one part of the country had dramatically higher prices. You could pick any area and one hospital would be much higher than the others around it."
Elizabeth Gardner’s feature story in the August issue of Health Data Management examines how hospitals are defending their chargemasters as they learn the new rules of the game.
The Centers for Medicare and Medicaid Services dropped a bomb on health care providers with its massive data release detailing average inpatient charges for the 100 most-billed discharges at 3,000 hospitals, along with the average Medicare payments for those same cases. (A less elaborate set of information for outpatient services came out in June.) Rarely has a CMS data release made such headlines. The inpatient files were downloaded 300,000 times in the first month.
"The reaction was pretty overwhelming," says Niall Brennan, CMS's director of information products and analytics.
While many states require hospitals to share at least some price information, it has taken an unusually determined consumer or an investigative reporter to pull together all that information for a side-by-side comparison of the sort that CMS has suddenly made almost simple.
Every news outlet was able to put its own spin on the story, from the Washington Post to the Huffington Post and hundreds in between.
The Chicago Tribune noted: "One of the most common ailments, pneumonia, had one of the largest ranges in average prices among Illinois hospitals. Gateway Regional Medical Center in Granite City charged $86,570 for treatment while Iroquois Memorial Hospital in Watseka charged $10,733. In Chicago, the priciest treatment was at the University of Chicago Medical Center at $72,845 and the cheapest was Holy Cross Hospital at $27,588."
The Miami Herald observed: "The University of Miami's average cost for a pacemaker implant was $127,000, about twice as much as the $66,000 that Jackson Memorial charged."
The Arkansas Times asked: "Why is one of the most common procedures in Arkansas, a cardiac procedure to insert a drug-eluting stent, $108,524 at Northwest Hospitals Inc. in Springdale but only $35,803 at St. Bernard's?"
Why indeed? It was no surprise to the hospital industry that there's wide variation in charges for the same procedure, even in similar hospitals in the same market. It's axiomatic that hospital chargemasters have only the loosest relationship to hospital revenue, and even less to hospital profits. Every hospital has its own unique approach to chargemaster computations.
But the public had never seen it laid out so starkly, and patients have come to realize that the apparently irrationality of their last hospital bills wasn't a fluke, but standard operating procedure.
"The variation surprised even us," Brennan says. "It wasn't necessarily that one part of the country had dramatically higher prices. You could pick any area and one hospital would be much higher than the others around it."
Elizabeth Gardner’s feature story in the August issue of Health Data Management examines how hospitals are defending their chargemasters as they learn the new rules of the game.
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