Medicare Data Show Wide Divide In What Hospitals Bill For Outpatient Services

Medicare released average bill charges for 30 hospital outpatient procedures Monday, showing big differences from hospital to hospital in how much they bill patients for the same service.

Illustration by urbanbohemian via Flickr

The data come a month after the Centers for Medicare & Medicaid Services garnered front-page attention for its release of similar information about 100 common hospital inpatient procedures.

The value of hospital charge data is hotly disputed, because few people actually end up paying the amounts listed. Insurers negotiate their own rates and the uninsured often get steep discounts. However, others believe the extremely high amounts that hospitals bill, and the lack of any logical connection to procedures’ actual costs, is an illustration of the dysfunctional health care market.

The new data show that hospitals’ initial charges are many times the amount that Medicare pays using its own method to calculate costs. Hospitals billed an average of $148 for a Level 2 hospital clinic visit, which was nearly double the $76 that Medicare reimbursed on average. Hospitals billed for more than 8 million of these visits in 2011, more than for any other service in the CMS database.

The discrepancies were even higher for other popular services. Hospitals charged $2,587 for magnetic resonance imaging and magnetic resonance angiography without dye. That was more than seven times the $346 that Medicare ultimately paid. In the aggregate, those were big differences for Medicare’s budget: instead of paying $1.2 billion, Medicare paid $397 million.

The differences between charges from one hospital to another were substantial. For a level 3 diagnostic and screening ultrasound, St. Joseph’s Medical Center in Stockton, Calif., charged an average of $7,566 — 40 times the $186 that Medicare reimbursed on average. But in Hamilton, N.Y., Community Memorial Hospital billed $157 on average for the same service, and Medicare reimbursed $152. (Medicare’s payments vary for the same service because of a host of factors, such as the labor costs in the area.)

For a level 2 echocardiogram without dye, Crozer Chester Medical Center in Upland, Pa., charged an average of $11,451, which was 27 times the $417 Medicare paid. Morton County Hospital in Elkhart, Kan., charged $410 and was reimbursed $379.

Medicare has posted the outpatient billing data here.

jrau@kff.org

This article was produced by Kaiser Health News with support from The SCAN Foundation.