US hospital charges vary wildly, Medicare data show

BMJ 2013; 346 doi: (Published 13 May 2013) Cite this as: BMJ 2013;346:f3072
  1. Michael McCarthy
  1. 1Seattle

A hospital in California charges Medicare $223 373.07 (£145 000; €172 000) for a major joint replacement, while a hospital in Oklahoma charges $5303.60 for the same procedure, US government data show.1

The data cover the average charges to Medicare in 2011 from more than 3000 US hospitals for the 100 most common inpatient treatments and procedures, such as joint replacement surgery, gallbladder removal, and treatments for heart attacks and heart failure.

The database shows wide disparities in hospital charges not only from region to region but even between hospitals a few miles apart.

The charge for the care of one patient with an acute myocardial infarction discharged alive from Capital Health Medical Center in Philadelphia, Pennsylvania, for example, was $210 229.31, while the charge for a patient with the same diagnosis discharged from Bryan W Whitfield Memorial Hospital in Demopolis, Alabama, was $4447.45. But also, in Los Angeles the charge for treatment of an acute myocardial infarction ranged from $184 662.49 at Cedars-Sinai Medical Center to $49 233.75 at East Los Angeles Doctors Hospital, 14 miles away.

For competitive reasons, hospitals and other healthcare providers have resisted disclosing their fees and billing practices.

The government hoped that releasing the data would make medical costs and billing practices more transparent to consumers, said the US secretary of health and human services, Kathleen Sebelius.

“Currently, consumers don’t know what a hospital is charging them or their insurance company for a given procedure, like a knee replacement, or how much of a price difference there is at different hospitals, even within the same city,” Sebelius said. “This data and new data centers will help fill that gap.”

But what hospitals charge differs greatly from what Medicare is willing to pay. Cedars-Sinai received just $22 797.91 for caring for the patient with an acute myocardial infarction, while East Los Angeles Doctors Hospital received $18 408.58. In most cases Medicare’s payments are far lower than the hospital bills.

Insurance companies, too, negotiate far lower charges from hospitals for their services, but people with no health insurance can be charged the full rate.

Ron Pollack, executive director of the consumer health organization Families USA, said, “It is absurd—and, indeed, unconscionable—that the people who are least capable of paying for their hospital care bear the largest, and often unaffordable, cost burdens.”

Hospitals have long been lobbying for legislation that would require states to disclose hospital and insurer information, said Rich Umbdenstock, president and chief executive officer of the American Hospital Association.

“The complex and bewildering interplay among ‘charges,’ ‘rates,’ ‘bills,’ and ‘payments’ across dozens of payers, public and private, does not serve any stakeholder well, including hospitals,” said Umbdenstock.

He also noted that all tax exempt hospitals were required by federal law to provide financial aid to those patients who could not afford to pay their hospital bills and provided $41bn in such assistance in 2011.


Cite this as: BMJ 2013;346:f3072