WASHINGTON - Ways and Means Committee Ranking Member Sander Levin (D-MI) today issued the following statement on the release of hospital pricing data by the Center for Medicare and Medicaid Services:
“Today’s data highlight yet again the importance of the Affordable Care Act’s efforts to reduce health care costs through transparency and other measures. It also reinforces the need for health reform’s provisions to expand access to affordable quality health insurance. The variation in charges for people who are uninsured or under-insured is unacceptable. People without the ability to negotiate prices down should not be caught up in a system that risks them paying the most."
Background:
The list price of hospital “charges" most directly affects people who are uninsured or have inadequate insurance (“under-insured"), and are a mark-up above actual costs. Private insurers, Medicare, and other government programs generally reimburse hospitals at levels far below what they actually charge.
It is important to note that Medicare’s payments are NOT based on those charges or bills, regardless of what is submitted by the hospital. Medicare sets a base payment for inpatient services that results in the same base payment for the same condition and treatment provided to the same type of patient.
Base payments to each hospital for a specific service are adjusted and thus can vary to some degree based on facility’s labor costs (e.g., “wage index"), whether the patient in question has been an “outlier", and other variables, but those adjustments are unrelated to the hospital’s charges and the underlying base payment is the same across hospitals irrespective of their submitted charges. In addition, a hospital may earn “add-on" adjustments that result in increased payment because of teaching activities or serving a disproportionately low-income uninsured population.
