health care

Medicare data show disparity in hospital charges, payments

THE RELEASE of billing and payment charge disparity data by the federal Centers for Medicare and Medicaid Services has led to the call for greater transparency from hospitals and insurers by business advocates.
Posted 5/8/13

PROVIDENCE – Leaders of the Rhode Island Health Insurance Small Employer Taskforce are calling for greater transparency in health care provider finances following the release of national data for the top 100 most frequently billed procedures under Medicare.

The analysis, done by the Centers for Medicare and Medicaid Services, details the differences between payments and charges by hospitals under Medicare for fiscal year 2011.

Broken down by states, the data “show significant variation across the country and within communities in what hospitals charge for common inpatient services,” CMS officials said.

Stephen C. Boyle, president of the Cranston Chamber of Commerce and a leader of the small employer task force, said the data showed the great disparity between hospitals here in Rhode Island.

“For years, we have been saying that health care costs were unpredictable and too high,” Boyle said. “And now, the data prove that what an insurer can pay for the exact same procedure depends on the hospital in which it takes place – and those hospitals can be in the same hospital system.”

As employers, Boyle said that much more transparency was needed in Rhode Island’s system. “If I need to buy a tool, I can find out what it costs at the local hardware store or the one across town and make my decision. But I have no such power when I buy health care services – and that needs to end.”

For instance, in Rhode Island, for hip and femur procedures (billing code 481), without a major joint but with complications or co-morbidities, what the hospitals charged Medicare, and what they were paid, varied greatly:

  • At Kent Hospital (a part of the Care New England network), the average covered charges – what the hospital charged Medicare, was $46,236. In turn, the average total payment – what the hospital was reimbursed, counting copays and deductibles, was $19, 493.

  • At The Miriam Hospital (Lifespan), the average covered charges for the same procedure were $56,158, and the average total payment was $21,034.

  • At Rhode Island Hospital (also Lifespan), the average covered charges for that same procedure were $100,903, and the average total payment was $29,658.

  • And, at South County Hospital, the average covered charges for that same procedure were $27,996, and the average total payment was $10,652.

Even worse, according to Boyle, is the fact that people who are not insured, or who are not fully insured, end up paying a larger portion of the bill than those with better health insurance. “People who can least afford it are often the ones paying a higher rate,” he said.

Boyle promised that the small employer task force “will be raising the disparities uncovered by this CMS report” throughout the current insurance rate review process.

“For far too long, insurance prices have been too high, and we have had no real recourse over what seem like arbitrary increases,” Boyle said. “The data help us see what we need to do to solve this problem.”

Spokeswomen from Lifespan and Blue Cross & Blue Shield of Rhode Island were not available to offer any comment on the CMS data showing disparity in hospital charges and reimbursements.

To view the entire database for Rhode Island, click HERE.

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