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Jacques-Banner

How Much Are Hospitals Charging? How Much Is Medicare Paying?

By | May 9, 2013 - 5:28 pm

Major Lower Joint Replacement

How much does a hospital charge for a certain procedure? That information can be difficult for consumers to access before they get a bill in the mail. Now for the first time, the federal government is publicly sharing what hospitals bill Medicare for the 100 most common procedures. The information shows hospitals across the country, and across Alaska, charge dramatically different prices for the same procedure.

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Rick Davis has spent more than a decade working in Alaska hospitals. And the CEO of Central Peninsula General Hospital in Soldotna was eager to review the massive Excel spreadsheet on hospital prices as soon as it was out.

“It’s going to create ripples across the nation really on pricing. It does show some pretty big disparities between hospitals.”

Heart Failure With Major Complication Graph

For example, Alaska Regional, in Anchorage, charges Medicare $46,252 for a patient with heart failure and a major complication. Alaska Native Medical Center, also in Anchorage, charges $20,839. In both cases, Medicare doesn’t pay anywhere close to the full charge. The government reimburses Regional $13,950 and Alaska Native, $12,935. Private insurance usually pays more than Medicare, but negotiates the amount. It’s a system that doesn’t make much sense. But Davis says more transparency will help:

“For there to be pressure on pricing on the consumer side, the consumer has to understand what it’s going to cost them. And so, I think this is a good report. I think it’s going to force hospitals to address their pricing.”

Davis says the data show the prices at his own hospital, Central Peninsula, are fair. And he doesn’t expect to make any adjustments. But Bruce Lamoureux, CEO of Providence in Anchorage says his hospital will consider changing some prices, down or even up, based on the report:

“There are some instances where our charges for a particular procedure are in one case, half of a different providers and in a different case twice a different provider.”

Lamoureaux thinks the information actually gives consumers some negotiating power when it comes to health care costs, something they’ve never had before. He says the system of hospital pricing and reimbursement is badly broken and this step towards more transparency is long overdue. But a hospital bill is only one part of the overall health care cost picture.  Karen Perdue is President of the Alaska Hospital Association. She says the hospital charge is just a starting point:

“That’s kind of like a rack rate in the hotel room. Most people aren’t paying that one rate in the hotel. Different payers are demanding different deals at the hospital, so I think what consumers need is not only a more accurate way to determine what their costs are going to be, but also what the full cost will be, not just the hospital cost.”

Like the charges from doctors and anesthesiologists, which aren’t included on a hospital bill.  Perdue says the Alaska Hospital Association board is looking at ways to make hospital cost data easily available to consumers. But healthcare is a complicated industry and it’s not an easy task:

“Transparency for us feels like the future and where we should be going and where we should be putting our effort. How we should do that in a way that is meaningful to the consumer is the challenge ahead of us.”

This story is part of a reporting partnership that includes APRN, NPR and Kaiser Health News.

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