Paul Levy: What on Earth Did CMS have in Mind When it Released 2011 Chargemasters?

Yesterday, CMS released 2011 chargemaster data for hospitals across the country, partially in response to a scathing March article in Time by Steven Brill that took aim at the wide pricing variation for similar services in America's hospitals.

While some have called the move an attempt to increase transparency on hospital pricing, Paul Levy, former CEO of Beth Israel Deaconess Hospital in Boston, says the move only creates confusion.

In a recent post on his blog "Not Running a Hospital," Mr. Levy argues the release of the chargemaster data won't do much to shed light on hospital pricing because — due to the nature of a chargemaster — very few payors or patients actually pay chargemaster rates.

"This is a case where the release of bad data is worse than having no data at all," he wrote.

He continues:

"A hospital's chargemaster is an archaic fiction, a way previously used to allocate the joint and common costs of the hospital to particular services. It does not serve as the basis for how much a hospital is paid by Medicare. It does not serve as the basis for how much a hospital is paid by Medicaid. It does not serve as the basis for how much a hospital is paid by private insurers.

Further because of federal and state prohibitions against balance billing of patients (i.e., the difference between the amount paid by an insurer and the amount of the charge), it also provides no basis to consumers that means anything at all."

Mr. Levy calls the data released by CMS "out-of-date" and "irrelevant," but said the agency's release of it is not surprising, given that the clinical outcome data the agency releases is also out of date.

More From Paul Levy:

Paul Levy: "We Can't Relax" About Healthcare Safety
The Dangers of "Too Big to Fail" Hospital Systems