By Elise Viebeck - 05/08/13 01:30 PM EDT
The federal government released stunning figures Wednesday showing dramatic variations in what hospitals charge Medicare for routine procedures.
The Medicare agency reported that medical claims for the same procedure can differ by tens of thousands of dollars, even within the same city — a situation healthcare experts have long lamented.
Health and Human Services (HHS) Secretary Kathleen Sebelius said the new data will help fill a major "gap" in patients' knowledge. Wednesday's report is part of a larger federal initiative to encourage healthcare price transparency.
HHS announced Wednesday that it will give $87 million to states to encourage the study of healthcare price variation.
The U.S. healthcare system is notoriously opaque when it comes to pricing. Critics charge that the status quo allows medical providers to demand what they want without pushback from consumers.
The Centers for Medicare and Medicaid Services (CMS) published data from 3,300 hospitals covering the costs of their 100 most common treatments and procedures in 2011.
In Dallas, CMS found, Las Colinas Medical Center billed Medicare an average of $160,832 for a lower joint replacement. The price was $42,632 five miles away, at Baylor Medical Center.
The report is full of similar examples. To treat heart failure, hospitals in Denver, Colo., charged from $21,000 to $46,000, while hospitals in Jackson, Miss., charged $9,000 to $51,000.
Medicare does not reimburse hospital bills in full — the program's payments are determined by standardized formulas. But the new CMS data suggests how little consumers know about the medical costs they incur.
Advocates praised the report as an important step in curbing healthcare cost growth.
Ron Pollack, executive director of Families USA, called hospital pricing "the craziest of crazy quilts" and expressed concerns for the uninsured, who bear the full cost of their 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," Pollack said in a statement.
—This post was updated at 9:48 a.m.