Transparency in Health Data Reveals Significant Cost Differences

In an effort to make our health care system more affordable and accountable, HHS Secretary Kathleen Sebelius announced a three-part initiative that for the first time gives consumers information on hospital charges. For years, consumers have been left in the dark when it comes to how much things cost at a hospital. However, under this new initiative, consumers will now have access to data on health care costs, and this data reveals some significant differences across the country, as well as within communities, in what hospitals charge for common inpatient services. In addition to releasing the data, HHS has also made approximately $87 million available to states to enhance their rate review programs and further health care pricing transparency.

“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,” Secretary Sebelius said. “This data and new data centers will help fill that gap.”

To kick off the movement to transparency in health care, CMS posted data today that includes information comparing the charges for services that may be provided during the 100 most common Medicare inpatient stays. The charges included in the data are comprised of what hospitals determine they will charge for items and services provided to patients and then these “charges” are the amount the hospital bills for that item or service.

Data Differences

Because the hospitals make this determination, the amounts vary widely. For example, CMS noted that on average, inpatient charges for services a hospital may provide in connection with a joint replacement range from a low of $5,300 at a hospital in Ada, Okla., to a high of $223,000 at a hospital in Monterey Park, Calif. And it is not just from one part of the country to another that these changes are occurring. Even within the same geographic area, these charges vary. For example, CMS noted that the average inpatient hospital charges for services that may be provided to treat heart failure range from a low of $21,000 to a high of $46,000 in Denver, Colo., and from a low of $9,000 to a high of $51,000 in Jackson, Miss.

“Transformation of the health care delivery system cannot occur without greater price transparency,” said Risa Lavizzo-Mourey, M.D., Robert Wood Johnson Foundation (RWJF) president and CEO. “While more work lies ahead, the release of these hospital price data will allow us to shine a light on the often vast variations in hospital charges.”

Funding is also being provided to data centers such as the RWJF, to collect, analyze, and publish health pricing and medical claims reimbursement data, in the hopes that this data will be made useful to consumers. According to CMS, the data centers’ work will help consumers better understand the comparative price of procedures in a given region or for a specific health insurer or service setting. Businesses and consumers alike can use these data to drive decision-making and reward cost-effective provision of care.