One of the transparent results of the Obama administration’s efforts to make our health care system more affordable and accountable has been publicly released data that show wide variance across the country and within communities the cost of hospitals procedures for common inpatient services.
Take for example The highest average charge for a lower joint replacement was $36,000 by University of Maryland Medical Center in Baltimore, much lower than the highest rates in other states. Now to be fair, Maryland has a unique system for hospital rate charges, so differences were smaller, and its average rate was lower than that of any other state in the most common procedures.
Considering that take a look at Las Colinas Medical Center just outside Dallas. They billed Medicare on average, $160,832 for lower joint replacements, while five miles away and on the same street, Baylor Medical Center in Irving, Tex. billed the government an average fee of $42,632. That’s huge difference for the same procedure, one of the most interesting aspects the data reveals.
The data provided includes hospital-specific charges for the more than 3,000 U.S. hospitals that receive Medicare Inpatient Prospective Payment System (IPPS) payments for the top 100 most frequently billed discharges, paid under Medicare based on a rate per discharge using the Medicare Severity Diagnosis Related Group (MS-DRG) for Fiscal Year (FY) 2011. These DRGs represent almost 7 million discharges or 60 percent of total Medicare IPPS discharges. Did you get all that?
I see some long term benefits from having this data available.
One, it will give patients the opportunity to compare cost between institutions and question variances. I also think hospitals will be more inclined to eliminate some of these gaps in pricing that exist between institutions, less they risk losing business to a less expensive competitor.
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. The Total Payment amount includes the MS-DRG amount, bill total per diem, beneficiary primary payer claim payment amount, beneficiary Part A coinsurance amount, beneficiary deductible amount, beneficiary blood deducible amount and DRG outlier amount.
For these DRGs, average procedure cost and average Medicare payments are calculated at the individual hospital level. Potential patients 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.
There are other huge benefits to having access to this data other than hospital billing being more transparent. It can result in people living healthier lives. I dare say less than 20% of Americans actually have any idea what the cost of even the most common medical procedure is, until they have to have it. For instance, you can flash all the scare Ads you want in front of most smokers and it’s not going to slow their roll. But if some knew up front that it could lead to a 60,000.00 and counting financial obligation one day, they may be more apt to give up the habit. A look at the cost of some procedures that unchecked diabetes can mandate will certainly motivate some to live healthy and practice effective health maintenance. The data gives people an in your face financial backlash on engaging in behavior that maybe one day detrimental to their health. Sometimes the best motivator is a financial threat to ones economic position.
Go here for the report (You can even export to your own spreadsheet –https://data.cms.gov/Medicare/Inpatient-Prospective-Payment-System-IPPS-Provider/97k6-zzx3
And for some healthcare lingo definitions from our research department.
Medicare Severity Diagnosis Related Group (MS-DRG) – Medicare Severity-Diagnosis Related Groups (MS-DRGs) are utilized by payors to group inpatient services into a global payment amount for the hospital stay, based in part on the patient’s diagnoses at discharge
Medicare Inpatient Prospective Payment System (IPPS) – Under Medicare Part A, payment for acute care hospital inpatient stays is based on set rates. This system for payment– the inpatient prospective payment system (IPPS)–categorizes cases into diagnosis-related groups (DRGs) which are then weighted based on resources used to treat Medicare beneficiaries in those groups. Important for safety net providers, hospitals that treat a large share of low-income patients receive additional add-on payment in the form of a disproportionate share hospital (DSH) adjustment. Teaching hospitals also receive additional add-on payments, which are based on resident to average daily census ratios. The IPPS rule is updated annually, with comment periods open prior to implementation of the final rule.