The Trump Administration has taken a small step in the right direction. The federal Centers for Medicare and Medicaid Services (CMS) required that hospitals publish their price lists, known as “chargemasters,” on their websites by Jan. 1, 2019. They’ve never been available to the public before.
I doubt this will be a great benefit to most health care consumers. Chargemasters can be complicated, and many code descriptions simply can’t be translated into something that most humans, even really smart ones, can actually understand. In addition, prices aren’t always presented in a common format that makes comparisons between hospitals possible, let alone easy.
It’s also true that chargemasters offers no light on what an insured patient will actually have to pay, since discounts are negotiated between hospitals and insurance companies. They also may not include the cost of a physician or anesthesiologist, as well as a wide variety of other items that could impact the bottom line.
But for uninsured patients, they can provide some idea of how much a procedure, test, X-ray, CT-scan or MRI might cost. The prices set in the chargemaster are close to what those uninsured patients may actually have to pay. The chargemaster also provides these patients with raw material for any discussion with their provider or the hospital billing department about what the final cost might actually be.
But for me, the biggest value of making chargemasters public is that for the first time we get an insight into what individual hospitals charge for what they do. That’s information that hospitals have fought to keep secret for decades. Understand that these chargemasters set the list prices that are the starting point for negotiations between providers and insurance companies. So, those list prices matter and have a direct impact on the insurance premiums that most of us, including businesses pay. The higher the starting price in the negotiation the more the consumer ultimately pays.
Being a wonk, I spent a couple of days in January downloading and comparing chargemasters from hospital websites all around Colorado and focusing on charges for the West Slope and the Front Range.
The first thing I noticed is that some hospitals, like Valley View, provide charges for the vast majority of the procedures and treatments that they offer. For other hospitals, like St. Mary’s in Grand Junction and St. Joseph in Denver, I could only find charges based on comparable DRG (Diagnosis Related Group) codes for around 50 inpatient procedures or treatments. It would be nice if every hospital listed all of their charges and made them easy for patients to access.
But what’s really interesting is what different hospitals charge for the same thing. The following examples are average charges by hospital for certain procedures based upon common DRG codes.
The average charge for a C-Section delivery without complications (DRG Code 788) ranges from $11,264 at St. Joseph Hospital in Denver to $33,857 at Valley View Hospital in Glenwood. Vaginal delivery without complications (DRG Code 807) averages $5,191 at St. Joseph and $12,383 at Valley View.
According to their chargemasters, a major intestinal procedure without complications (DRG Code 331) averages $24,547 at St. Joseph in Denver, $44,898 at St. Mary’s in Grand Junction, $73,004 at Valley View and an amazing $133,725 at Sky Ridge Hospital in Littleton.
Joint replacement for a lower extremity without major complication (DRG Code 470) can vary from an average of $27,356 at St. Joseph to $74,885 at Valley View, to $128,964 at Sky Ridge.
The average charge for treating pneumonia and pleurisy without complications (DRG Code 195) can range from $12,946 at Delta County Hospital to $23,881 at Valley View to $28,881 at Sky Ridge.
Finally, spinal fusion of the mid to lower back without major complications (DRG Code 460) can range from $39,863 at St. Mary’s to $141,170 at Valley View and a whopping $295,172 at Sky Ridge.
Now, there may be good reasons for why these charges vary so significantly. They may not be calculated in the same way that includes all of the same charges. Average charges can vary depending on the number of procedures performed. One hospital could receive more complicated patients than another, driving average charges up. I tried to avoid that by only comparing DRG codes with no or minimal complications. Cost of living variations could also come into play. One hospital may have more costly facilities than another.
That said, it’s interesting that, according to a November 2017 article in the Denver Business Journal, Sky Ridge Hospital, which had the highest prices in my comparison, reported an annual income of $173.8 million and a profit margin of 40.8 percent in 2016.
Making these chargemasters public provides a starting point for legislators, state regulators, health advocates, business organizations and the public to begin asking hospitals how and why they charge what they charge. Maybe asking these questions is long overdue.
Bob Semro of Glenwood Springs is a former health policy analyst for the Bell Policy Center, and a legislative and senior advocate. His column appears monthly in the Post Independent and at postindependent.com