Price Variations and Their Trends in U.S. Hospitals

Kathleen Carey, Ph.D., Avi Dor, Ph.D.

Abstract


The Centers for Medicare and Medicaid Services (CMS) publishes hospital-specific charges for frequently billed discharges in over 3,300 hospitals.  Actual payments differ widely from these, however, because Medicare payments are set administratively and commercial prices are negotiated between hospitals and insurers.  This study tracks trends in prices paid to hospitals by commercial insurers over the period 2008 to 2014 using private sector claims data that contain actual payments.  We contrast these with trends in the CMS published charges.  Results indicate that variation in actual commercially-transacted prices is substantially lower than variation in published charges, and that while there is a downward trend in variation among prices over time, variation in charges is increasing. 


Full Text:

PDF

References


Reinhardt UE. The pricing of U.S. hospital services: chaos behind a veil of secrecy. Health Affairs 2006;25(1):57-69.

Radnofsky L, Barry R. Data shine light on hospitals bills. The Wall Street Journal. 2013 May 9. [cited Sept. 2 2015] Available from: http://www.wsj.com/articles/SB10001424127887324059704578471453118371838

Meier B, McGinty JC, Creswell J. Hospital billing varies wildly, government data shows. The New York Times. 2013 May 8. [cited Sept. 2 2015] Available from: http://www.nytimes.com/2013/05/08/business/hospital-billing-varies-wildly-us-data-shows.html

Kliff S, Keating D. One hospital charges $8,000 – another, $38,000. The Washington Post. 2013 May 8. [cited Oct. 12 2015] Available from: http://www.washingtonpost.com/news/wonkblog/wp/2013/05/08/one-hospital-charges-8000-another-38000/

Brill S. Bitter pill: Why medical bills are killing us. Time Magazine. 2013 Apr 4. [cited October 12] Available from: http://time.com/198/bitter-pill-why-medical-bills-are-killing-us/

U.S. Bureau of Labor Statistics. Archived consumer price index detailed report information. [cited Sept. 28 2016]. Available from: http://www.bls.gov/cpi/cpi_dr.htm#2015

Ginsburg PB. Wide variation in hospital and physician payment rates evidence of provider market power. Center for Studying Health System Change. 2010 Nov. Research Brief No. 16.

Franzini L, White C, Taychakhoonavudh S, Parikh R, Zezza M, Mikhail O. Variation in inpatient hospital prices and outpatient services quantities drive geographic differences in private spending in Texas. Health Services Research 2014;49(6):1944-1963.

Brill S. America’s bitter pill: Money, politics, back-room deals, and the fight to fix our broken healthcare system. New York: Random House; 2015.

Center for Health Information and Analysis. Health care provider price variation in the Massachusetts commercial market: Results from 2011. Commonwealth of Massachusetts; Feb 2013.

Reinhardt UE. Too many different prices paid to providers and the flawed theory of cost shifting: Is it time for a rational all-payer system? Health Affairs 2011;30(11):2125-2133.

Institute of Medicine. Variation in health care spending: target decision making, not geography. Washington (DC): National Academics Press; 2013.

Newhouse JP, Garber AM. Geographic variation in health care spending in the United States: Insights from an Institute of Medicine report. Journal of the American Medical Association 2013;310(12):1227–8.

Cooper Z, Craig S, Gaynor M, Van Reenen J. The price ain’t right? Hospital prices and health spending on the privately insured. 2015. [cited Sept. 28 2016] Available from: http://www.healthcarepricingproject.org/sites/default/files/pricing_variation_manuscript_0.pdf

Moriya AS, Gaynor M, Vogt WB. Hospital prices and market structure in the hospital and insurance industries. Health Economics, Policy and Law 2010;5(4):459-479.

Centers for Medicare and Medicaid Services. Wage Index. 2016. [cited Sept. 28 2016] Available from: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/wageindex.html

Carey K. Price increases were much lower in ambulatory surgery centers than hospital outpatient departments in 2007-12. Health Affairs 2015;34(10):1738-1744.

Medicare Provider Utilization and Payment Data: Inpatient [Internet] Baltimore (MD): Centers for Medicare and Medicaid Services; [cited Sept. 28 2016] Available from: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Medicare-Provider-Charge-Data/Inpatient.html

Dor A, Encinosa WE, Carey K. Medicare's Hospital Compare quality reports appear to have slowed price increases for two major procedures. Health Affairs 2015;34(11):71-77.


Refbacks

  • There are currently no refbacks.


©Journal of Health Care Finance