What Medicare actually paid: Wild variations

PriceMap

Charges are not the same as payments.

This morning’s news brought a big helping of Medicare charge information: the release of a dataset of charges to the government’s Medicare program by hospitals across the U.S., as described in this article from The New York Times.

What’s charged by hospitals, of course, is seldom what’s paid by either Medicare or individual insurance companies.

The wide variation in charges made the biggest headlines today. But what did Medicare actually pay? The payments also vary widely, something we have reported on before.

We have a map based on slightly dated Medicare payment information, for about 70 different diagnoses in hospitals across the U.S. Take a look at the map here. It’s based on 2011 data.

As our map’s FAQ says: “Medicare pays  well below market price, so this would not necessarily be the cost that you would get walking in the door. That said, these numbers carry some correlation to market prices. Insurance companies and providers often use Medicare prices as a negotiating point.” We’ll be updating our map with the new figures.

The release of data today by HHS is a good step in the right direction. But it’s only part of the transparency picture. Hospital charges are sort of like the MSRP, an aspirational price. Those charges are applied to uninsured people, and that’s a huge problem: the people who are asked to pay those high prices, often, are those who are least able to afford them.

There’s another big important collection of information that we’d like to see: charges and payments for routine procedures, for the non-Medicare population. What does an MRI cost? We’ve found it could be from $400 to $3,500; here’s one of our pricing spreadsheets. A common prescription? From $9 to $63; here’s our partnership with the Brian Lehrer show on WNYC radio to bring to light the prices of common things like birth control and mammograms.

It’s hard to get the charge information from providers, but much harder to get the payment information from insurers. Insurance companies, you see, may not want Provider A to know she is getting $400 for an MRI, while Provider B is getting $2,300. (True story.) So getting the payment information from private payers is at least as important as getting the government payment information.

Another downside of the data release today: Most people don’t “shop” for the diagnoses that are posted in this data set: “Extracranial procedures w/o CC/MCC,” for example, means any extracranial procedure (?!) without complications or comorbidities, or without major complications or comorbidities. Many of us don’t need such treatment, and when we do, we tend to arrive in an ambulance and not with a shopping list. Plus, the data sets are delivered by diagnosis, not by isolated item or procedure (MRI, 1/2 hour in the operating room, for example). Here’s the data, on the Medicare site. Enjoy!

What the data released today includes:  “Data being released for the first time by the government on Wednesday shows that hospitals charge Medicare wildly differing amounts — sometimes 10 to 20 times what Medicare typically reimburses — for the same procedure, raising questions about how hospitals determine prices and why they differ so widely,” The Times writes.