Hospital costs can vary more than $200,000 for same procedure, government report reveals

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A new government report confirms what many Americans have experienced with their health care -- hospitals charging different prices for the same procedures.

In an effort to improve transparency, the Obama Administration today released a report that for the first time gives consumers information about what hospitals are charging, the Centers for Medicare & Medicaid Services said in a statement on Wednesday.

Hospitals determine what they will charge for items and services, and these charges are what's seen on our medical bills.

"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," Health and Human Services Secretary Kathleen Sebelius said in a statement. "This data and new data centers will help fill that gap."

The Administration also said today it made $87 million available to states to further transparency of health care pricing.

The new report looks at price information for 100 of the most frequently billed hospital discharges for Medicare patients at 3,000 health care facilities around the country. The costs in the report involve care for patients with common ailments like pneumonia, chest pain, diabetes or urinary tract infections.

What the report found was widespread variation in prices.

For example, the average inpatient hospital charges for a patient getting a joint replacement may range from $5,300 at a hospital in Ada, Okla. to $223,000 at a hospital in Monterey Park, Calif.

Jonathan Blum, director of the government's Center for Medicare, told the Associated Press that making this information available to the public free of charge will put pressure on the more expensive hospitals.

"It doesn't make sense," Blum said the significant cost differences. Higher costs don't reflect better care, he said.

Geography alone does not account for the differences in treatment and care costs, the report showed. When comparing care costs for a Medicare patient with heart failure, the report showed treatment in Denver can cost anywhere from a low of $21,000 to a high of $46,000. Meanwhile, in Jackson, Miss., heart failure care may cost a low of $9,000 or a high of $51,000.

Consumers can take this data to drive their medical-decision making, health officials said.

The Washington Post points out that Medicare and private insurers typically negotiate lower charges with hospitals, so these costs may not tell the full story. However, if you don't have insurance, that's another story.

"It's true that Medicare and a lot of private insurers never pay the full charge," Renee Hsia, an assistant professor at the University of California at San Francisco Medical School, told the paper. "But you have a lot of private insurance companies where the consumer pays a portion of the charge. For uninsured patients, they face the full bill. In that sense, the price matters."

The new government data on hospital costs can be accessed on CMS.gov.

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