Medicare releases hospital prices for outpatient procedures

Building on last month’s unprecedented release of prices for common hospital inpatient procedures, Medicare officials on Monday released new data revealing charges for 30 outpatient procedures — showing big differences in the amounts that hospitals bill patients for the same service.

Th average charge for a Level 2 excision and biopsy at Aventura Hospital and Medical Center in Northeast Miami-Dade was $5,526.12, while the same procedure at Holy Cross Hospital in Fort Lauderdale cost an average of $7,310.79, according to the Centers for Medicare and Medicaid Services.

The lowest price in South Florida for that procedure among the hospitals reported in the data: $2,168.17 at Broward General Medical Center in Fort Lauderdale.

The national average cost for the procedure: $2,768.18.

By making public the costs of medical procedures, the Obama administration said it hoped to increase transparency from healthcare providers and empower consumers to be smarter shoppers for medical care.

Speaking at a healthcare data conference in Washington, D.C., on Monday, Health and Human Services Secretary Kathleen Sebelius announced the release of the data as an opportunity for researchers and consumers to make use of the information.

“A more data driven and transparent healthcare marketplace can help consumers and their families make important decisions about their care,” Sebelius said in a written statement. “The administration is committed to making the health system more transparent and harnessing data to empower consumers.”

But the data dump elicited a slightly different response from national hospital associations that represent the interests of healthcare providers.Rich Umbdenstock, president of the American Hospital Association, applauded the release in a written statement as “yet another step forward in transparency” but also urged that greater attention be given to the payments hospitals receive from Medicare and private insurers.

“Medicare currently pays only 89 cents for every dollar hospitals spend treating outpatient beneficiaries,’’ Umbdenstock said in the statement. “Most importantly, patients really want to know what they are required to pay out-of-pocket, which requires transparency on the part of all stakeholders.’’

Chip Kahn, president of the Federation of American Hospitals, issued a statement criticizing the Center for Medicare & Medicaid Services for “missing the mark” in providing genuine price transparency to help consumers.

“Consumers need the information on pricing that enables them to make these choices, which in most cases will be what it costs them out of pocket for their care,’’ Kahn said in the statement. “That is why we believe that insurers should be required to provide to their members meaningful cost-sharing information enabling them to make good healthcare choices.’’

The value of revealing hospital prices has been debated because few people actually pay the prices charged, especially privately-insured consumers, whose insurers pay pre-negotiated rates for services and whose choice of provider is often pre-determined.

Still, insurance companies set their reimbursement rates based on hospital prices and the Medicare payment rate for procedures.

Prices also may become a bigger factor in consumer decisions as healthcare reform changes the way consumers pay for insurance coverage. Many insurance plans are moving from co-pays to co-insurance, which means that instead of a fixed co-payment consumers will assume a percentage of the cost of a medical procedure.

That could add up when prices are so varied. For example, an MRI at the University of Miami Hospital charged Medicare an average of $4,984.50 while Jackson Health System, located across the street, charged the federal healthcare program $2,919.08, according to the numbers released Monday.

In Broward, the average charge submitted to Medicare for an MRI differed by about $1,700 between Memorial Regional Hospital in Hollywood ($4,860.22) and Broward General in Fort Lauderdale ($3,146.27).

The national average for an MRI, according to the data: $2,587.59.

Despite the price variances, though, Medicare paid all four hospitals about $350 for an MRI.

Another reason prices will become more important for privately-insured consumers is a shift toward high deductible plans, or “consumer driven healthcare,’’ in which patients are responsible for paying a pre-agreed amount of their total medical costs before the insurance kicks in. That’s also likely to push consumers to shop around more since the first chunk comes out of their pockets.

For years, though, hospitals have been reluctant to publish prices for fear of relinquishing a competitive advantage.

But the Obama administration’s release of hospital charges and Medicare reimbursement rates has spurred at least one local hospital executive to pledge even greater transparency in pricing — namely, the rates charged to and reimbursements paid by private insurers, which remains highly confidential.

Steve Sonenreich, chief executive of Mount Sinai Medical Center in Miami Beach, made a public pledge in May to divulge the contractual rates the hospital charges private insurers for diagnoses and treatments.

Like officials in the Obama administration, Sonenreich argues that price transparency among hospitals of similar quality will lead to lower healthcare costs. But he also accused some South Florida hospitals of driving up costs by leveraging their market position to extract higher fees from private health insurers.

But by charging higher rates, Sonenreich said, these hospitals force private insurers to negotiate lower rates of payment with other hospitals for the same procedure.

That leads to higher costs for employers and higher premiums for employees, he said.

Among the data released Monday were Medicare spending averages per beneficiary broken down by state.

Louisiana, Florida and Texas ranked the highest in the nation in terms of total cost per Medicare beneficiary, with the program spending an average total of $10,713 per capita in Florida in 2011, compared to a national average of $9,003 for the same year.

In Louisiana, home to the nation’s highest Medicare spending per beneficiary, Medicare spent $11,088 per capita in 2011. The federal healthcare program for seniors spent the lowest amount per beneficiary in Hawaii, at an average of $5,564 per capita in 2011.

Related stories from Miami Herald