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Dramatically Different Medicare Bills Set Hospitals Thinking

For the first time, the federal government has publicly shared what hospitals bill Medicare for the 100 most common diagnoses and treatments.

The information shows hospitals across the country — and across Alaska — bill dramatically different prices for the same things.

Hospital veteran Rick Davis, the CEO of Central Peninsula General Hospital in Soldotna, was eager to review the massive Excel spreadsheet on hospital charges as soon as it was out.

"It's going to create ripples across the nation, really, on pricing," he says. "It does show some pretty big disparities between hospitals."

For example, Alaska Regional, in Anchorage, charges Medicare $46,252 for a patient with heart failure and a major complication. Alaska Native Medical Center, also in Anchorage, charges $20,839.

In both cases, Medicare doesn't pay anywhere close to the full charge. The government reimburses Regional $13,950 and Alaska Native, $12,935. Private insurance usually pays more than Medicare, but negotiates the amount.

The system doesn't make much sense, but Davis says more transparency will help:

"For there to be pressure on pricing on the consumer side, the consumer has to understand what it's going to cost them. And so, I think this is a good report. I think it's going to force hospitals to address their pricing."

Davis says the data show the prices at his own hospital, Central Peninsula, are fair. And he doesn't expect to make any adjustments.

But Bruce Lamoureux, CEO of the Providence health system in Anchorage, says his hospital will consider changing some prices, down or even up, based on the report:

"There are some instances where our charges for a particular procedure are, in one case, half of a different provider's, and in a different case, twice a different provider."

Lamoureux thinks the information actually gives consumers some negotiating power when it comes to health care costs, something they've never had before. He says the system of hospital pricing and reimbursement is badly broken and this step toward more transparency is long overdue.

But a hospital bill is only one part of the overall health care cost picture.

"That's kind of like a rack rate in the hotel room," says Karen Perdue, president of the Alaska State Hospital & Nursing Home Association. "Most people aren't paying that one rate in the hotel. Different payers are demanding different deals at the hospital, so I think what consumers need is not only a more accurate way to determine what their costs are going to be, but also what the full cost will be, not just the hospital cost."

Like the charges from doctors and anesthesiologists, which aren't included on a hospital bill. Perdue says her board is looking at ways to make hospital cost data easily available to consumers. But health care is a complicated industry and it's not an easy task.

"Transparency, for us, feels like the future and where we should be going, and where we should be putting our effort," she says. "How we should do that in a way that is meaningful to the consumer is the challenge ahead of us."

This story is part of a collaboration with NPR, Alaska Public Radio Network and Kaiser Health News.

Copyright 2013 Alaska Public Radio Network. To see more, visit http://www.aprn.org/.

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