By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
Health Works CollectiveHealth Works CollectiveHealth Works Collective
  • Health
    • Mental Health
    Health
    Healthcare organizations are operating on slimmer profit margins than ever. One report in August showed that they are even lower than the beginning of the…
    Show More
    Top News
    improving patient experience
    6 Ways to Improve Patient Satisfaction Within Hospitals
    December 1, 2021
    degree for healthcare job
    What Are The Health Benefits Of Having A Degree?
    March 9, 2022
    custom software development is changing healthcare
    Digital Customer Journey Mapping and its Importance for Healthcare
    July 21, 2022
    Latest News
    Grounded Healing: A Natural Ally for Sustainable Healthcare Systems
    May 16, 2025
    Learn how to Renew your Medical Card in West Virginia
    May 16, 2025
    Choosing the Right Supplement Manufacturer for Your Brand
    May 1, 2025
    Engineering Temporary Hospitals for Extreme Weather
    April 24, 2025
  • Policy and Law
    • Global Healthcare
    • Medical Ethics
    Policy and Law
    Get the latest updates about Insurance policies and Laws in the Healthcare industry for different geographical locations.
    Show More
    Top News
    Can Thinking Younger Make You Live Longer?
    April 20, 2011
    Image
    Obesity’s Outlook Unchanged
    June 13, 2011
    When It’s An Emergency Elderly Not Treated As Well in Hospitals
    July 16, 2011
    Latest News
    Building Smarter Care Teams: Aligning Roles, Structure, and Clinical Expertise
    May 18, 2025
    The Critical Role of Healthcare in Personal Injury Recovery: A Comprehensive Guide for Victims
    May 14, 2025
    The Backbone of Successful Trials: Clinical Data Management
    April 28, 2025
    Advancing Your Healthcare Career through Education and Specialization
    April 16, 2025
  • Medical Innovations
  • News
  • Wellness
  • Tech
Search
© 2023 HealthWorks Collective. All Rights Reserved.
Reading: Data Alone Does Not Make Health Care Pricing Meaningful
Share
Notification Show More
Font ResizerAa
Health Works CollectiveHealth Works Collective
Font ResizerAa
Search
Follow US
  • About
  • Contact
  • Privacy
© 2023 HealthWorks Collective. All Rights Reserved.
Health Works Collective > Policy & Law > Health Reform > Data Alone Does Not Make Health Care Pricing Meaningful
Health ReformPolicy & LawPublic Health

Data Alone Does Not Make Health Care Pricing Meaningful

Joanne Conroy
Last updated: May 10, 2013 8:02 am
Joanne Conroy
Share
5 Min Read
healthcare data release
SHARE

healthcare data releaseThe Department of Health and Human Services (HHS) released new data this week, showing significant variation in what hospitals charge for inpatient services.

healthcare data releaseThe Department of Health and Human Services (HHS) released new data this week, showing significant variation in what hospitals charge for inpatient services. The release is part of a health care transparency initiative designed to help patients compare charges for common procedures. Increasing transparency is an important step toward effective health care reform, but simply providing data won’t help patients navigate and better understand the complex system used to price and pay for health care services.

To chart a path forward, we must understand how our current system was built and why it is so complicated. Many charges were established before hospitals could accurately assess costs. The assessment has improved substantially, but the payment system formed around hospital chargemasters—extraordinarily lengthy lists (some containing up to 45,000 items) of the costs of every hospital procedure and supply item. While the chargemaster reflects individual item prices, the prices that hospitals are actually paid are largely reflective of the payment rates negotiated by private insurers and the extensive payment rules that Medicare and Medicaid follow. Medicare relies on a system of centrally administered prices by paying hospitals a flat fee for groups of services that are assigned a relative payment weight, multiplied by a conversion factor, and then adjusted for a range of variations that impact cost of care (such as the regional cost of labor and the costs associated with training residents). Medicaid also uses flat fees for groups of services, per diem payments, or cost reimbursement based on fee schedule unique to the state and the setting in which the service is provided. Commercial insurers apply steep discounts to hospital charges, negotiate rates on contracts irrespective of the charges, or pay flat charges for cases (modeled to some degree off of the Medicare system).

In short, the prospective payment system, flat payment arrangements, and contractually negotiated rates have made hospital billed charges much less meaningful. Therefore, solely making information about charges available to the public does not generally help patients become informed health care consumers.

More Read

The Problem with Medical Training: We Are Not Learning About the Causes of the Causes
Eric Topol’s 9 Steps Toward Better Health Care—We Add a 10th
The Time Bomb No One Is Talking About
Would Consumer Accountability for Healthcare Actually Reduce Costs? [INFOGRAPHIC]
Create Tracking Metrics for ICD-10 Preparation

It is clear that the system is not optimal. It is burdensome for hospitals to manage and update extensive chargemasters. It can be confusing and stressful for patients when they look at charges on their bills, even if they understand that the charges are much higher than the prices they or their insurers will have to pay. Further, billed charges can matter for patients whose insurers do not have contracts based on discounted charges, or who are required to pay coinsurance based on a portion of the hospital bill. While uninsured patients were billed based on the chargemaster in the past, many hospitals now offer means-tested discounts for these patients. Additionally, those patients with very low incomes may receive free care.

So where do we go from here?

Hospitals and health care policy experts are evaluating better ways to price health care services. Academic medical centers, which are responsible for training the nation’s future doctors as well as providing quality care, are committed to transparency and standardizing different cost accounting methods and assumptions used to capture costs across health systems. This is a challenge to all stakeholders in the health care system, including private payers and government health care programs. We all play a role in understanding and reflecting actual costs, as well as in simplifying payment systems and their communication to consumers. We must contain costs together while maintaining the quality of health care we deliver to our nation’s patients.

(image: healthcare data / shutterstock)

Original Post

TAGGED:healthcare costs
Share This Article
Facebook Copy Link Print
Share

Stay Connected

1.5kFollowersLike
4.5kFollowersFollow
2.8kFollowersPin
136kSubscribersSubscribe

Latest News

Clinical Expertise
Building Smarter Care Teams: Aligning Roles, Structure, and Clinical Expertise
Health care
May 18, 2025
Grounded Healing: A Natural Ally for Sustainable Healthcare Systems
Grounded Healing: A Natural Ally for Sustainable Healthcare Systems
Health
May 15, 2025
Learn how to Renew your Medical Card in West Virginia
Learn how to Renew your Medical Card in West Virginia
Health
May 15, 2025
Dr. Klaus Rentrop Shares Acute Myocardial Infarction heart treatment
Dr. Klaus Rentrop Shares Acute Myocardial Infarction
Cardiology
May 13, 2025

You Might also Like

australia healthcare legal right
News

Melbourne Legal Advocates Ensure Healthcare is a Human Right

December 17, 2023

Calling for More Than an Ounce of Prevention

November 1, 2012
debunking-myths-myth2_1.png
DiagnosticseHealthMedical Ethics

Debunking Digital Patient Recruitment Myths for Clinical Trials: Myth #2

April 7, 2016
mass tort injury claims
News

How Long Do Mass Tort Injury Claims Usually Last?

July 24, 2023
Subscribe
Subscribe to our newsletter to get our newest articles instantly!
Follow US
© 2008-2025 HealthWorks Collective. All Rights Reserved.
  • About
  • Contact
  • Privacy
Welcome Back!

Sign in to your account

Username or Email Address
Password

Lost your password?