Government Releases Hospital Prices

June 1, 2006 -- Consumers can now access limited information on the price of some hospital services under an initiative announced today by the Bush administration.

Health officials unveiled a new web site containing prices hospitals typically charge for 30 popular medical services, as well as how much MedicareMedicare pays for them. Medicare and private insurers usually pay only a fraction of hospitals' list prices because of their market clout.

The data is limited to average prices paid per county and does not tell consumers how much each individual hospital charges.

But officials said the move was a step toward increasing price transparency in health care. President Bush has called for more widespread pricing and quality information as a way to increase competition among hospitals and doctors and hopefully slow down rapidly rising health costs.

"People generally don't have a clue about what the health care they are consuming costs," Michael O. Leavitt, the Secretary of Health and Human Services, told reporters.

The site shows a range of how much Medicare pays for common medical reasons for hospital admissions and surgeries such as gall bladder, neck, and heart.

For example, hospitals nationwide charged an average of $36,644 for a knee or hip replacementhip replacement operation in the fiscal year 2005. In Los Angeles County, Medicare typically paid between $12,456 and $15,666 for the procedure, according to the government's data.

Mark McClellan, MD, head of the Medicare and Medicaid programs, said even limited pricing information could help consumers without insurance bargain for better prices from hospitals.

The prices are "certainly a reference point that people might use in trying to get the care that they need at a lower cost," he said.

Leavitt said the government plans by the fall to release similar county-level price data on outpatient surgery centers and medical procedures performed in doctors' offices.

The release is part of a broader administration strategy for slowing rising health care costs. President Bush favors broader use of personal health savings accounts as a way to spur consumers to spend more of their own money on health expenses. He has pushed greater price and quality transparency as a way to foster competition among health providers for consumers' dollars.

Backers say the move will cut down on unnecessary and wasteful care by making consumers more sensitive to price.

Critics warn that shifting more costs onto consumers could cause them to forgo needed care.

"People need to know how much their health care costs, and they need to know the quality of the care they receive, and they need to have a reason to care," Leavitt said.

The government's data can be viewed at http://www.cms.hhs.gov/HealthCareConInit/01_Overview.asp#TopOfPage.

SOURCES: Top 30 Inpatient Hospital DRG's, Centers for Medicare and Medicaid Services, June 1, 2006. Michael. O. Leavitt, Secretary, Health and Human Services. Mark McClellan, MD, administrator, Centers for Medicare and Medicaid Services.