WASHINGTON (Reuters) - The Obama administration revealed what over 3,000 hospitals charge for common medical procedures in an early effort to challenge healthcare costs by showing consumers how prices for the same service can vary by tens of thousands of dollars.
The most extensive release of hospital charge rates to date showed dramatic variations in prices between different hospitals, even when they are located in the same city or town.
In Denver, Colorado, for instance, treatment for heart failure ranges from $21,000 to $46,000, according to the data on services used in the 100 common hospital stays covered by the Medicare program for the elderly and disabled. In Jackson, Mississippi, fees for the same treatment range from $9,000 to $51,000. The data can be accessed at: go.cms.gov/16WaMfH
“When consumers easily compare the prices of goods and services, (providers) have strong incentives to keep those prices low,” said U.S. Health and Human Services Secretary Kathleen Sebelius.
“But even basic information about health premiums and hospital charges has long been hidden from consumers,” she told reporters in a conference call. “These rates can vary dramatically in ways that can’t be easily explained.”
While the figures will be eye-opening for many consumers, they still lack the information needed to make as informed a decision about medical care as they already do when choosing a new car.
The mountain of data is not available in a form easy to navigate, nor is it matched with quality ratings that would show whether a lower-priced hospital delivers care comparable to its more expensive neighbor, healthcare analysts said.
“The administration is doing something here that’s fairly meaningless, just to show that they’re doing something,” said Paul Ginsburg, who heads the Washington-based Center for Studying Health System Change, a nonpartisan research group.
“Everyone has known for years and years that those hospital charges bear little relation to what hospitals actually receive from different payors,” he added.
Medicare sets its own national rates for reimbursing hospitals, while private insurers, particularly large companies like UnitedHealth or Aetna, use their market leverage with hospitals and doctor practices to negotiate substantial discounts.
Government health officials said the data was intended particularly to help millions of uninsured and under-insured consumers get better access to hospital services. Many of these Americans are expected to gain coverage beginning in 2014 under the health reform, either through subsidies to purchase private insurance or an expansion of the Medicaid program for the poor.
Officials said they would eventually make software tools available to help Americans use the data. Some price information is already available to consumers who have private health insurance and through websites such as Healthcarebluebook.com and Clearhealthcosts.com, which allow users to compare local rates based on a procedure’s name and their zip code.
“For those who are navigating the healthcare system on their own, for those that don’t have a large bulk purchaser behind them, they have to navigate a very complicated market,” said Medicare director Jonathan Blum.
“There is no relationship ... to the cost of care being provided. There’s no relationship that we see to charges and the quality of care that’s being provided.”
HHS also announced that it would make about $87 million available to states to help set up pricing data centers and fund rate review programs to encourage pricing transparency.
The American Hospital Association said the list of charges presented are no longer relevant based on how facilities are actually reimbursed for care by the government and private insurance.
“(Hospital) ‘charges’ were a central part of the former cost-based reimbursement system that disappeared from the scene decades ago,” AHA President Richard Umbdenstock said.
The data release was welcomed as a step toward reining in healthcare costs by consumer advocacy groups including Families USA, which described hospital pricing as “the craziest of crazy quilts.”
Sebelius’ department plans to release more data over time by expanding the range of services and including charges set by outpatient clinics that would include physician services. Wednesday’s release was limited to hospitals that accept Medicare Part A coverage for inpatient facilities.
Editing by Michele Gershberg, David Gregorio and Tim Dobbyn