Insight into Health Cost Disparities

A new database from CMS reveals not just how costly medical services can be, but how much more expensive the same procedure can be hospital to hospital.

While Americans knew in a general sense that medical costs in the U.S. are high, even compared to peer countries, but now they can see just how high the costs can be.

The Centers for Medicare and Medicare Services released a new database that displays how much prices can vary from hospital to hospital and arm Americans with the proper information to make good health care choices. (See also: America's Uneven Health Care Coverage)

The Christian Science Monitor highlighted how large the difference in pricing can be not just in one state, but within a dozen miles.

“In one type of joint replacement procedure, charges vary from a high of $297,000 at Centinela Hospital in the Los Angeles area, to a low of $84,000 at St. John’s Health Center in Santa Monica or Pomerado Hospital in Poway.

Those locations are all in coastal Southern California. St. John’s and Centinela are only about a dozen miles apart.”

The CMS data includes hospital-specific charges for more than 3,000 hospitals. The hospitals determine what to charge for certain items or services, which they then bill. Users can make comparisons between the amount charged in local markets and nationwide for certain services.

“There are many parts of the health care delivery and financing systems that urgently need updating, and the matter of ‘charges’ is among those at the top of the list,” Rich Umbdenstock, president and chief executive officer of the American Hospital Association, said in a statement.

The AARP applauded CMS for making these records available and supporting transparency in health care pricing.

“Consumers deserve to know what a health care provider is charging — them or their insurance — for a given procedure,” Joyce Rogers, AARP Senior Vice President, Government Affairs, said in a statement. “This release of information is a step in the right direction toward a more fair and open market.”

Rogers said the AARP supports requirements that information about hospital charges is available to patients. The move toward transparency will allow patients to make the best decisions about their care and the costs associated, she said.

“Armed with more information about health care costs, consumers can better advocate for themselves and their loved ones,” Rogers said.