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New hospital data shows giant swings in prices

Have a heart attack in Ogdensburg, N.Y., and it’ll cost $15,087 on average. But if you are treated in Valley Regional Medical Center in Brownsville, Texas, the bill will be nearly $66,000.

The federal government, for the first time, has published the prices charged by thousands of different U.S. hospitals, and the numbers confirm what health reform advocates have been screaming about for years: The charges vary enormously, and for seemingly unclear reasons.

"These rates can vary dramatically in ways that can’t be easily explained," Health and Human Services Secretary Kathleen Sebelius told reporters in a telephone briefing. "Even within cities there can be massive variation in what consumers pay."

But the hospital industry said the prices were misleading and don't reflect what the government or insurers actually pay.

What the Obama administration hopes is that publishing these prices will help force health care providers to be more consistent in their billing. It’s called transparency, and experts say a lack of price information is one of the single biggest forces that has driven up health care costs in the United States.

“Hospital pricing is the craziest of crazy quilts. Prices are wildly different from one community to another; they are inexplicably and enormously different among hospitals in the same cities,” says Ron Pollack, executive director of the consumer health organization Families USA.

“Most perniciously, uninsured people are the ones who usually pay the highest prices for their hospital care. It is absurd – and, indeed, unconscionable – that the people least capable of paying for their hospital care bear the largest, and often unaffordable, cost burdens.”

The data uses billing information for the 100 most common hospital stays paid for by Medicare, from chronic obstructive pulmonary disease – mostly emphysema – to heart attacks, hip replacements and diabetes. The prices only cover Medicare, the federal health insurance plan for the elderly. Private insurers are often charged different prices, and people who pay cash are usually charged even more.

For treating acute myocardial infarctions -- heart attacks -- the costs ranged considerably, even within the same state. At Kingsbrook Jewish Medical Center in Brooklyn, N.Y., the average cost was $58,657, the data shows. Just across town, at Bellevue Hospital in Manhattan, the average was $38,514. Upstate at Crouse Hospital in Syracuse, N.Y., the cost was just $21,526.

Even in small states the cost varies widely. In South Carolina, Trident Regional Medical Center in North Charleston billed $59,059 on average to treat 26 heart attack cases in 2011. Aiken Regional Medical Center billed $36,895.

“Currently, consumers don’t know what a hospital is charging them or their insurance company for a given procedure, like a knee replacement, or how much of a price difference there is at different hospitals, even within the same city,” Sebelius said. “This data and new data centers will help fill that gap.”

The Centers for Medicare and Medicaid Services data show cost charges to treat a patient with heart failure ranged from $21,000 to $46,000 in Denver, Colo., and from $9,000 to of $51,000 in Jackson, Miss. 

"Making this available for free for the first time will save consumers money by arming them with information that can help them make better choices," Sebelius said. But the prices may not reflect what a patient's insurer pays and the database does not easily allow consumers to compare the price of a procedure from one hospital to another.

"Anybody who is insured, this is not what they ought to worry about," Chip Kahn of the Federation of American Hospitals told NBC news. "They will not find it helpful to look at that website. What they need to know is what their out of pocket will be and what their insurance premiums will be. No one is paying 10 times more at one hospital than another hospital. It is not where the rubber hits the road."

And the prices don't even reflect what Medicare actually pays. "We take out the variation that we see," said Jonathan Blum, deputy administrator at the Centers for Medicare and Medicaid Services.

Kahn puts it another way. "The government doesn't care what your price is. It sets a rate based on averages," he said. The private insurance companies negotiate rates with each hospital. Hospitals try to make up the difference in what procedures cost them and what they are reimbursed by the various payers -- who are almost never individuals, Kahn says.

The data also does not include charges made by doctors -- just the direct hospital charges.

"The prices that are listed in the CMS analysis have no direct effect on the consumer except in a few cases where a person walks through the door who is not indigent and may not have insurance," Kahn said. "And even in those cases there generally is some kind of discount offered to them. The consumer is not directly affected by this pricing system."

HHS officials said they hoped third parties would work to make the information more usable. The nonprofit Robert Wood Johnson Foundation plans to publish a map based on the data, so people can choose where to be treated.

"Transformation of the health care delivery system cannot occur without greater price transparency," says the group's president, Dr. Risa Lavizzo-Mourey. "While more work lies ahead, the release of these hospital price data will allow us to shine a light on the often vast variations in hospital charges."

Hospitals said the data did not reflect their different costs. For instance, teaching hospitals said they have higher expenses. Other point out that some hospitals may bill separately for various items. But Blum said that does not explain some of the biggest variation in prices - sometimes 30-fold differences from one center to another.

"We cannot see any business reason why there is so much variation," he told reporters.