New Hospital Price Data Helps, But What About Quality?

May 9, 2013

You may have heard news yesterday that the federal government has released a greater level of detail on the prices hospitals charge for a list of common procedures and how widely those prices vary - not only from state to state but within states, and  even within the same city. The data comes from the Centers for Medicare and Medicaid Services (or CMS), from 3000 hospitals nationwide. But CMS only includes what hospitals charge for certain inpatient procedures and treatments and what they're actually paid (including reimbursement and co-pays) by Medicare.

What the data don't tell you is, well, quite a bit.

What the data tell you is what you probably already knew: a hip replacement can cost wildly different amounts depending on where you have it done. And what hospitals say is the price of that hip replacement isn't actually what they're going to recoup for it, at least from Medicare and from you, proud owner of a new hip.

What the data don't tell you is, well, quite a bit:

  • If a hospital charges more or less than its neighbors or peers, does that tell you anything about the quality of that hospital's care?
  • Who - if anyone - actually pays these prices? If you have Medicare, you'd never actually pay the $44,000 Memorial Hospital charges for a hip replacement, or the $24,000 it costs at Roger Williams. Medicare would cover a portion, and you might have co-payments. Those prices are likely what hospitals charge people who have no insurance.
  • What do hospitals charge private insurers for the same procedures and treatments?

In Rhode Island, there are a few efforts underway to make hospital prices more transparent when it comes to private, or commercial, insurance. Some of those efforts are at the state agency level (via the Office of the Insurance Commissioner), and some are working their way through the General Assembly. Sources tell me we're unlikely to see much movement on the legislative front, because hospitals and private insurers seem to like to keep this information confidential. But it impacts you directly because it translates into how much your insurance premiums are, if you have health insurance through your employer or buy it privately. And it impacts us all indirectly, in terms of the cost of health care, because hospital stays account for a huge chunk of what we spend on health care, because of course it's the most expensive kind of care.

For some national context, the New York Times does a great job, as does the Washington Post.

NPR's Julie Rovner was on All Things Considered last night talking about how the numbers aren't actually that useful. You can listen here or read a transcript.