Last week’s release of the wildly varying prices that hospitals charge Medicare may no longer be news du jour, but it’s worth revisiting the topic, because it was and is an important story, it was an important step by the government, and it offers important follow-up opportunities for the media.
And there’s more to glean from the reaction to the release—some insight into the unfortunate way that some healthcare academics and experts, who consider themselves press critics, think. If something has already been reported somewhere, or is well known to a few elites, it’s not news, they argue, and not worthy of further coverage—even though zillions of people are still in the dark. They’re wrong, and a number of press outlets were right on the money to cover this.
Last Wednesday, The Centers for Medicare and Medicaid Services (CMS) took the bold step of releasing the prices that 3,300 hospitals charge for a variety of procedures. Guess what? The data show huge variations in prices from hospital to hospital—even in the same city. For example, at Las Colinas Medical Center, outside of Dallas, billed Medicare $160,832, for lower joint replacements, on average. On the same street, five miles away, Baylor Medical Center, in Irving, TX, billed an average fee of $42,632 for the same service. CMS also said sometimes hospitals charge 10 or 20 times more than what Medicare actually pays them.
It’s true, the health policy academy and some journalists have known for a long time that hospital prices vary a lot. They are quick to tell you that. In the lede for his piece on The Health Care Blog, David Dranov, a Distinguished Professor of Health Industry Management at Northwestern, opined:
The recent Medicare report on variation in hospital ‘prices’ is not exactly news. In fact, I wonder why anyone (including the NY Times and NPR) covered it let alone make it a lead story. This is not just a nonstory, it is an old nonstory.
He argues that prices without accompanying quality information can encourage patients to choose providers who skimp on quality. To pooh-pooh the CMS effort, he cites his own work—a 20-year-old paper that shows that the lack of quality information “can encourage a disastrous race to the bottom,” where hospitals deliberately “disinvest” in quality care to drive down their prices. He laments that the media pay little attention to report cards about hospital quality that are currently available.
Perhaps that’s for good reason. I personally learned, as a patient needing eye surgery last fall, that much of the “quality” data is not very useful. Furthermore, like most patients, I had little choice of facilities. If I wanted my eye surgeon to do the job, I had to go to the hospital where he had privileges.
Dranov faults the press for finding a new angle to an old story—the new angle being that the uninsured may have to pay the full charges that these hospitals charge, since they have no insurance company negotiating cheaper prices on their behalf.
Really? That’s hardly an insignificant issue, given that high deductibles and high coinsurance and copayments that come with the new crop of health coverage exposes them to high out-of-pocket costs, which will be even higher if they use some hospitals rather than others, a point some outlets did make.
Princeton health economist Uwe Reinhardt weighed in, too, in his New York Times Economix column. “Why was this news?” he asked. Reinhardt cited a 2004 piece by Lucette Lagnado of The Wall Street Journal, who reported on page 1 that hospital charges vary enormously. Reinhardt also cited his own work—a 2006 paper based on Lagnado’s data, in which he showed the chaos of hospital pricing.
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