4 ms·

Would it be useful to have a 'show me the cheapest' button? The range in cost hints at the massive variance. The US is crazy. How does a procedure costing 4k in

by awjr 13y ago

Would it be useful to have a 'show me the cheapest' button? The range in cost hints at the massive variance. The US is crazy. How does a procedure costing 4k in one place cost 120k in another?

greyfade 13y ago
It doesn't. The price is set by a Chargemaster list that is drawn up by a committee. Hospitals are free to charge whatever they want above that, without any downward market forces. Paying more sometimes means better outpatient treatment (and sometimes lower readmittance rates), but it's not a guarantor.
neilsharma 13y ago
Thanks for the feedback. My next goal is to look more into why the price varies so much. The price spread is pretty crazy. Some hospitals have higher fixed costs or salaries depending on the geography. Also, if a hospital is more research-oriented, R&D funds are normally tacked onto the price (one of the reasons why Stanford's Hospital is really expensive). It's hard to find quantifiable data on the breakdown of bills, but based on a great article in Time a few months ago, prices are almost entirely arbitrarily defined: http://swampland.time.com/2013/05/08/an-end-to-medical-billing-secrecy/ http://swampland.time.com/2013/05/08/an-end-to-medical-billi...
- refurb 13y ago
  The cost adjustments you're talking about are MS-DRG adjustments (the amount the hospital actually gets paid by CMS). From what I can gather, the numbers on the website, are cost numbers, i.e. what the hospital tells CMS it costs them (which is a number they are free to make whatever). If you want to know why costs vary so much, starting looking at reimbursement. Hospitals are incentivized to raise their list prices because many of them are paid a set percentage.
  - neilsharma 13y ago
    I thought medicare reimbursement is relatively fixed, with minor fluctuations based on geography and some hospital-specific practices? Based on a rough glance at the data, it seems like medicare reimbursement is only loosely correlated with the cost numbers, so I don't know how much raising prices would increase their Medicare revenue. Also, from what I've learned about elderly care, Medicare reimburses a care center a fixed amount ($5000/mon/patient in California) regardless of the severity of the case. I'm assuming this number varies a bit too even in the same region. As a side note, if you click on any of the prices in the map, it'll show you medicare's reimbursement rates too. Should've made that feature more clear--it's rather important.

by awjr 13y ago

Would it be useful to have a 'show me the cheapest' button? The range in cost hints at the massive variance. The US is crazy. How does a procedure costing 4k in one place cost 120k in another?

greyfade 13y ago

It doesn't. The price is set by a Chargemaster list that is drawn up by a committee. Hospitals are free to charge whatever they want above that, without any downward market forces. Paying more sometimes means better outpatient treatment (and sometimes lower readmittance rates), but it's not a guarantor.

neilsharma 13y ago

Thanks for the feedback. My next goal is to look more into why the price varies so much. The price spread is pretty crazy. Some hospitals have higher fixed costs or salaries depending on the geography. Also, if a hospital is more research-oriented, R&D funds are normally tacked onto the price (one of the reasons why Stanford's Hospital is really expensive). It's hard to find quantifiable data on the breakdown of bills, but based on a great article in Time a few months ago, prices are almost entirely arbitrarily defined: http://swampland.time.com/2013/05/08/an-end-to-medical-billing-secrecy/ http://swampland.time.com/2013/05/08/an-end-to-medical-billi...

refurb 13y ago
The cost adjustments you're talking about are MS-DRG adjustments (the amount the hospital actually gets paid by CMS). From what I can gather, the numbers on the website, are cost numbers, i.e. what the hospital tells CMS it costs them (which is a number they are free to make whatever). If you want to know why costs vary so much, starting looking at reimbursement. Hospitals are incentivized to raise their list prices because many of them are paid a set percentage.
- neilsharma 13y ago
  I thought medicare reimbursement is relatively fixed, with minor fluctuations based on geography and some hospital-specific practices? Based on a rough glance at the data, it seems like medicare reimbursement is only loosely correlated with the cost numbers, so I don't know how much raising prices would increase their Medicare revenue. Also, from what I've learned about elderly care, Medicare reimburses a care center a fixed amount ($5000/mon/patient in California) regardless of the severity of the case. I'm assuming this number varies a bit too even in the same region. As a side note, if you click on any of the prices in the map, it'll show you medicare's reimbursement rates too. Should've made that feature more clear--it's rather important.