McFeatters: Hospital pricing shows a sickening disparity
Don't feel bad if you don't understand the wide, sometimes huge, discrepancies in fees hospitals charge for the same procedure. Or if you don't understand the arithmetical magic the hospitals use to arrive at those fees.
Neither does the federal government. Their officials are mystified, too.
The Associated Press asked Jonathan Blum, Medicare's deputy administrator, why the same joint replacement costs 40 times as much at one hospital as at another across the country.
"It doesn't make sense," he said, noting that the higher charges don't necessarily reflect better care. Even the American Hospital Association calls the current billing system, "complex and bewildering," says USA Today.
To bring some clarity to the pricing, the Centers for Medicare and Medicaid Services published the costs for 100 common procedures at 3,337 hospitals (http://www.cms.gov). The government hopes publishing comparative costs will promote competition and lower prices, especially as the Affordable Care Act begins taking effect.
The wide discrepancy in prices cannot be totally explained by regional differences; the cost of treating older, sicker or indigent patients; the cost of running a teaching hospital; or exceptional levels of care.
News organizations quickly pinpointed huge and puzzling differences in what hospitals charge for the same operation.
AP said that, exclusive of the doctors' fees, the average charge for a joint replacement ranged from about $5,300 in Ada, Okla., to $223,000 in Monterey Park, Calif.
Beyond simple side-by-side price comparisons, hospital costs become vastly more complicated by such issues as the complexity of the ailment and the length of the hospital stay.
Private insurers, Medicare and Medicaid negotiate their own reimbursement rates with hospitals and doctors. The uninsured are often carried on the hospital's books as being charged the full rate but that amount is subject to negotiation based on the patient's ability to pay, and the truly indigent don't pay at all.
The base charges are the simplest means of comparison. But beyond that, patients are largely on their own in navigating the complex world of medical fees. President Barack Obama's health-care advisers are hoping that some bright entrepreneur will create an app for that.