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Report Reveals Hospital Prices Vary Significantly: What Patients Need to Know

Hospitals in the same general geographic area often charge significantly different rates, according to a recent Medicare report. The new data offers a rare look into medical billing practices by revealing what more than 3,000 U.S. hospitals charge for 100 of the most common in-patient treatments and procedures.

In some cases, the cost of medical treatment can vary by tens of thousands of dollars. For instance, the cost of treating pneumonia in the Los Angeles area ranged from $17,000 to nearly $70,000.

Medicare and private insurers pay only a small percentage of the going rate. However, the prices revealed in the Medicare report often serve as the starting point for negotiations, akin to the sticker price on a car. Therefore, it is advantageous for hospitals to charge higher amounts.

For those without insurance, the cost is more directly passed on to the patient in the form of a higher hospital bill. The same is true for patients seeking treatment that is outside their insurance company’s network.

“We want to shine a much brighter light on practices that don’t seem to make sense to us,” said Jonathan Blum, deputy administrator for the Centers for Medicare and Medicaid Services. “We do not see any business reason for why there is so much variation in the data.” Blum also added that higher rates do not necessarily mean better care.

For patients, the new Medicare list is another piece of information to consider when selecting a doctor or hospital. While it may not reflect the quality of treatment received, it does offer new insight into what a specific hospital will charge or what insurance companies are paying for treatment.