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Hospital Charges Increasing Higher than Inflation Rate

Published on Aug 21, 2014 at 8:51 am in Medical Malpractice.

For the second year, the Centers for Medicare and Medicaid Services (CMS) have released data showing what hospitals charge Medicare for their services. The numbers reveal important information for consumers, and show that hospital charges are increasing – some much faster than the rate of inflation.

The list of charges, called the “Medicare Provider Utilization and Payment Data,” is produced from the CMS Office of Information Products & Data Analytics (OIPDA). It is drawn from 2012 data from nearly 3,400 hospitals that take payment for inpatient acute care services under the Medicare Hospital Inpatient Prospective Payment System (IPPS). Together, these hospitals comprise 92% of all hospital inpatient discharges.

Disparity in Prices

Hospitals have long resisted publication of their billing rates – having this information made public allows consumers – and the government — now to compare and see that sometimes hospital charges have little to do with quality of care. Although Medicare only pays a fixed amount per procedure, regardless of what a hospital charges, knowing a hospital’s actual billing rate is very illuminating.

In presenting the data on its website, the Medicare agency CMS reports that it “showed significant variation in average charge from hospital to hospital, including those within the same community.”

The numbers came from actual hospital claims, presented to CMS. They set out hospital charges for services often provided in connection with the top 100 inpatient stays most frequently billed to Medicare, along with the 30 most common outpatient services, and all physician and other supplier procedures and services performed on 11 or more Medicare beneficiaries.

The CMS website gave this reason for making the data public: “[T]o make our health care system more affordable and accountable, data are being released that summarize the utilization and payments for procedures and services provided to Medicare fee-for service beneficiaries by specific inpatient and outpatient hospitals, physicians, and other suppliers.”

The AARP Bulletin pulled out one example showing the disparity in charges across the country: One Texas hospital charges $126,000 for a hip replacement, while a Wisconsin hospital charges $27,000 for the same procedure. The Medicare payout on a hip replacement is $14,000.

Increases faster than inflation?

Comparing the data to last year’s release, the New York Times noted the increase over the prior year’s charges:

“Charges for some of the most common inpatient procedures surged at hospitals across the country in 2012 from a year earlier, some at more than four times the national rate of inflation.”

The Wall Street Journal also noted the increase in the average price hospitals charged to treat common conditions. It noted that “vascular procedures and chest-pain treatment show[ed] some of biggest upticks.”