Shining the Light on Hospital Pricing
In May, the Centers for Medicare and Medicaid Services (CMS) released a treasure trove of data representing average charges submitted by more than 3,300 hospitals for the 100 most common procedures, such as hip replacements, heart operations and pneumonia treatment.
The data revealed that most hospitals bill Medicare for, on average, four times more than the insurer actually reimburses for a particular procedure. Prices also vary wildly between hospitals—even those located in the same city. For example, heart-failure treatment ranges from $9,000 to $51,000 in Jackson, Miss.; the price of joint replacement in New York City goes for between $15,000 and $155,000.
Making this data public gives consumers—especially the uninsured and those with hefty deductibles—a way to compare costs in their communities and puts pressure on hospitals to address extreme variation in pricing. As Risa Lavizzo-Mourey, MD, RWJF’s president and CEO, puts it, "Transformation of the health care delivery system cannot occur without greater price transparency."