On average, hospital charges are almost four times higher than what Medicare actually reimburses, and those charges are usually higher for hospitals that are investor-owned, within a system and located in urban regions.
In a blog post for Health Affairs, David Muhlestein, director of research at Leavitt Partners, conducted a study to find out characteristics of hospitals that have higher-than-average and lower-than-average charges compared with what they are actually reimbursed.
Mr. Muhlestein used data that HHS and CMS released in May. That data listed the top 100 most frequently billed inpatient discharges, charges and Medicare reimbursements for the thousands of hospitals paid under Medicare's inpatient prospective payment system.
Here are some of Mr. Muhlestein's findings:
• Across all hospitals and all diagnosis-related groups, the average amount charged by hospitals was 3.77 times higher than the actual Medicare reimbursement.
• Higher charge-to-reimbursement ratios mostly came from for-profit hospitals, hospitals that were part of a system or in a joint venture with physicians and hospitals that had more beds.
• Lower charge-to-reimbursement ratios mostly came from rural hospitals, academic medical centers, government-owned hospitals and hospitals that had a health plan.
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