For the first time, the federal government on Wednesday released a massive, easy-to-browse collection of billing data submitted to Medicare in the 2011 fiscal year for the 100 most frequently treatments at 3,000-plus hospitals. The data reveal extraordinary differences in billing among hospitals, even among those located in the same city.
A searchable spreadsheet compiled by the Centers for Medicare and Medicaid Services allows prospective patients to sort the data by state, type of treatment, city, price and reimbursement rates.
Billing data for treatment of heart failure and shock without major complications shows that the hospital that billed the highest average dollar amount - Doctors Medical Center in Modesto Calif., at $92,057 - charged about 2,700 percent more than the hospital that billed the lowest average dollar amount - John Ed Chambers Memorial Hospital in Danville, Ark., at an average $3,334.
The government paid Doctors Medical Center an average of $6,023 for the treatments and John Ed Chambers Memorial Hospital $3,680 - a significantly smaller difference.
Hospitals set prices for Medicare reimbursement but the federal government pays far less than the sticker price. Some of the disparity in pricing could conceivably be the result of geographical differences, in that hospital overhead can be lower in rural areas than high-priced cities. But even so, the wide disparity for seemingly similar and routine procedures in some cases will add fuel to the debate over the high cost of American medicine. The release of the data comes as the Obama administration begins to implement its comprehensive health care reform plan.
Bayonne Hospital Center, N.J., which charged the second-highest average rate for heart failure treatment without complications at $78,147, was the top hospital nationwide in average bills submitted for heart failure and shock with complications, at an average $173,250, almost 2,400 percent greater than Tennessee's Decauter County General Hospital and Connecticut's Masonic Home and Hospital, which charged on average under $7,400. The government paid Bayonne an average of $10,134, the Masonic Home $9,382 and Decauter $7,762 - nearly eliminating the difference.
Stanford Hospital, associated with the California university of the same name, charged the third-highest average dollar amount for heart failure without complications - at $60,651 - and was in the top 10 for billing of heart failure with complications, at $153,972. That hospital's now former CEO earned $1.92 million in the 2010 fiscal year, according to Becker's Hospital Review.
The dollar amount billed for inserting a pacemaker device without complications also varies greatly. In Washington, D.C, the amount ranged from the average of $50,311 billed at Washington Hospital Center to $24,368 billed at Sibley Memorial Hospital. The government reimbursed the hospitals $16,589 and $13,252, respectively.
The hospital expense data do not evaluate the quality of treatment or patient outcomes, significant information for people choosing between hospitals. Some hospitals, notably so-called teaching hospitals, have argued their prices are higher because they support a wider array of medical procedures and often treat a population that is sicker than the norm.
A spokesperson for the University of Southern California's Keck Hospital told The New York Times that "[a]cademic medical centers have a higher cost structure, and higher acuity patients who suffer from many health complications." Experts told the Washington Post - which identified two Miami hospitals blocks apart with vast billing differences - that the historically opaque billing process allowed for billing differences because customers weren't able to compare costs.
A lengthy Time magazine article published in March focused on the reasons why hospital bills are so high. Unlike Medicare patients, whose bills are picked up and negotiated down by the government, younger Americans fend for themselves if they are uninsured or minimally insured. The article noted that line-item hospital bills revealed charges for items like generic Tylenol dramatically exceeding its market value, providing even non-profit hospitals enormous profits, supporting expensive construction projects and providing hospital executives lavish pay.