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New Study Shows What Hospitals Charge For Similar Medical Procedures Varies Widely

S.Z. Berg

NEW YORK (MainStreet)—For the past several years, the focus of the nation's public policy when it comes to health care has been on the increasing costs of health insurance premiums while largely ignoring pricing charged by hospitals and doctors. Now, a new report from the federal government looks at what hospitals are charging for various procedures and services.

Also see: Affordable Care Act Rate Shock

The Centers for Medicare and Medicaid Services recently made public data that showed a large variation, both nationally and the same geographic area, in charges for procedures and services at more than 3,000 hospitals across the country for 100 of the most common Medicare billed inpatient hospitalizations for 2011.

Also see: Your Badonk and Cancer Sticks Will Cost You Under Affordable Care

For example, a joint replacement in Ada, Okla., rang in at $5,300 while the same surgery in Monterey Park, Calif., was $223,000. There were also significant differences in hospital charges locally. Treating heart failure ranged from $21,000 to $46,000 in Denver, Colorado, and from $9,000 to $51,000 in Jackson, Miss.

A New York Times analysis of the data showed that the large variation in what the hospitals charged Medicare existed even among procedures that are standardized and did not involve patient complications.

"In some cases, a hospital having higher prices might be justified, but in order for patients and payers to understand why, providers should have quality and outcomes data that support the value of their services," says Jill Sackman, senior consultant with Numerof & Associates.

With that in mind, no matter which hospital a consumer chooses, there appears to be room for price negotiation.

What Medicare pays tells us the "low water mark," says Abhay Padgaonkar, president of Innovative Solutions Consulting.

--S.Z. Berg is the author of College on the Cheap.

Also see: Obamacare: What a Rise in Nongroup Health Insurance Premium Costs Means for You

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