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CMS Posts Data Showing Big Hospital Price Swings

By John Reichard, CQ HealthBeat Editor

May 8, 2013 -- Government officials plan to fund the creation of "health care pricing data centers" to widen public awareness of new information released last week showing sometimes huge differences in what hospitals charge for surgical and other medical procedures.

The hope is that consumers, businesses, and insurers will shop for better deals based on the data, and that hospitals will be embarrassed into charging uninsured Americans prices for health care that are more in line with what Medicare or other insurers pay.

Health and Human Services (HHS) Secretary Kathleen Sebelius described the effort as part of a multi-stage program that for the first time gives consumers information on what hospitals charge.

HHS is making $87 million available to the states "to create health care pricing data centers to help consumers and to continue enhancing their health insurance rate review programs," the department said in a news release.

The pricing data posted on an HHS website last week is not easy to access.

HHS is apparently acknowledging the complexity of this data and said that the Robert Wood Johnson Foundation is planning "a data visualization challenge which will further the dissemination of these data to larger audiences."

The data include the prices charged by more than 3,000 U.S. hospitals and are based on 60 percent of the patient discharges from those facilities in fiscal 2011. They are hospitals that receive Medicare inpatient prospective payment system payments for the 100 most common types of Medicare inpatient stays.

"Users will be able to make comparisons between the amount charged by individual hospitals within local markets, and nationwide, for services that might be furnished in connection with a particular inpatient stay."

The data show that the charge for a joint replacement can range from a low of $5,300 at a hospital in Ada, Okla., to a high of $223,000 at a facility in Monterey Park, Calif. Or within the same area, charges range from $21,000 to $46,000 to treat heart failure in hospitals in Denver, Colo.

Hospitals say the postings fail to take into account differences in how sick patients are or the higher costs that facilities may have because they are academic medical centers, for example. And higher sticker prices are a tactic to counter insurers that are negotiating for better discounts. But consumer advocates say that the uninsured sometimes do get stuck with the full charge.

Deputy Centers for Medicare and Medicaid Services (CMS) Administrator Jonathan Blum made that point too in a noon press call during which reporters expressed skepticism about how useful the data are since in many cases consumers are covered by insurers who pay far lower prices than what hospitals charge. "There are clearly consumers who are subject to the chargemaster," Blum said. The term "chargemaster" refers to a hospital's listing of prices. When reporters asked Blum how many people, he didn't give any specifics, instead turning the question around and suggesting that it would be a good one to ask local hospitals.

The aim appears not be to simply allow comparison shopping but also to put pressure on hospitals to lower high prices. Blum said CMS does not see any business reason to justify such wide price variations.

Blum also indicated CMS might publicly post much more price data in the future. While the release is for 100 "diagnosis related groups" in Medicare, the data set could be expanded to all 760 Medicare inpatient DRGs, he said. Or it could be expanded to include what hospitals charge for outpatient services.

Senate Finance Committee Chairman Max Baucus, D-Mont., applauded the release of the data, praising the health care law (PL 111-148, PL 111-152) in doing so. "That's why the Affordable Care Act made price transparency a priority. Informed consumers make smart, efficient choices," he said.

"The data shows that there is no rhyme or reason to how much hospitals bill patients for common procedures," Baucus said in a news release. "Exposing this information to the light of day is a major step forward in the effort to bring down health care costs."

The American Hospital Association (AHA) issued a statement saying its members seek to assist patients without coverage.

AHA President Richard Umbdenstock said "hospitals have long followed AHA's guidelines on financial assistance for those of limited means. In addition, all tax-exempt hospitals are required by federal law to have financial assistance policies readily available to those who cannot afford to pay for their hospital care. Hospitals were pleased to be able to provide $41 billion in total assistance in 2011." He added that AHA favors legislation to more widely publicize pricing data.

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