CMS Publishes Hospital-Specific Medicare Charge Data for 100 Common Procedures

CMS has released data showing that U.S. hospitals charge widely varying amounts for the same services, and also illustrating the significant variation in how much Medicare pays for those services. The database includes hospital charges for 100 most frequently billed discharges by the more than 3,000 hospitals reimbursed under the inpatient prospective payment system. The numbers reflect $66.7 billion in Medicare spending during fiscal 2011 and represent 7 million discharges.

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.

One of the most concerning aspects of the data is the wide variation in what Medicare pays hospitals for treating the same conditions, which does not seem to be driven by the provider's status as a teaching hospital or higher capital costs of some facilities. CMS speculates that the reason for such disparity is the wide variations in the average morbidity of patients and local costs at different hospitals. Specifically, hospitals with sicker patients receive health status outlier payments and add-on payments based on the geographic location.