This story was updated on May 20, 2013.
Two patients in Maryland go to the hospital for an identical procedure. If they both go to the same hospital, they will face the same charges. But if each goes to a different facility, the charges for that procedure could differ, sometimes by thousands of dollars.
That’s the broad picture shown by fiscal 2011 hospital charging data released by the federal Centers for Medicare & Medicaid Services this month. That data includes the average charges for the 100 most common inpatient procedures for Medicare patients, from chest pain to major joint replacement to pacemaker implantation.
Medicare is the government health insurance plan for those 65 or older as well as younger people with certain disabilities.
Among the five hospitals in Montgomery County and Frederick Memorial Hospital, the average charge to Medicare for hypertension without major complications, for example, varies from $4,963 at Suburban Hosptial in Bethesda to $6,667 at Washington Adventist Hospital in Takoma Park.
Treatment for “major cardiovascular procedures” without major complications can bring an average charge of $25,777 at Holy Cross Hospital in Silver Spring to $36,901 at Shady Grove Adventist Hospital in Rockville, according to the Medicare data.
There’s less variation in charges among Maryland hospitals for these procedures than among hospitals nationwide, due to Maryland’s unique rate-setting system, said Steve Ports, principal deputy director of the state’s Health Services Cost Review Commission.
While hospital rates in most states are determined by the market, Maryland’s state commission sets the price for each procedure at each hospital, meaning a procedure at one hospital costs the same no matter who the patient’s insurer is. This prevents a practice known as cost-shifting, in which a hospital might charge privately insured or uninsured patients more to make up for smaller payments from public insurers, Ports said.
The amount charged by a hospital is not the same as the amount actually paid by the patient, which varies from insurer to insurer and may be lower if the hospital can provide financial aid.
One of the largest differences in charges among the six hospitals in Montgomery and Frederick was for treatment of pulmonary edema — the buildup of fluid in the lungs — and the resulting respiratory failure, which averaged as low as $12,594 at Washington Adventist and as high as $25,243 at Shady Grove Adventist — a difference of more than $12,000, even though the hospitals are run by the same organization.
James Lee, the chief financial officer for Adventist Healthcare, could not be reached for an interview, but wrote in an email that the difference in prices between Adventist’s hospitals, as well as others in the state, were due to numerous factors, including the severity of each patient’s illness, fees for room and board, and what lab tests and supplies were needed.
Other area hospitals offered similar statements in response to the Medicare data.
Across Maryland, the average cost for treatment of pulmonary edema ranged from $9,072 at Atlantic General Hospital in Berlin to $49,698 at Prince George’s Hospital Center in Cheverly.
Nationally, the lowest average cost for such a treatment was $7,200 at a hospital in Cameron, Texas, and the highest was $169,832 at a hospital in Philadelphia, a difference of more than $162,000.
Underlying costs differ from one facility to another, and teaching hospitals in a particular often face higher costs associated with training doctors and treating more complex medical conditions, said Jim Reiter, spokesman for the Maryland Hospital Association.
Differing rates are also a reflection of how much uncompensated care — often treatment to the uninsured — hospitals provide, said Gene M. Ransom, CEO of MedChi, the Maryland State Medical Society.
In 2012, for example, MedStar Health, which runs Montgomery Medical Center in Olney, provided $113.1 million in charity or uncompensated care at its 10 hospitals in the region, according to Ann Nickels, a spokeswoman for the system.
During the same year, Holy Cross provided $23.7 million in financial assistance, Yolanda Gaskins, a hospital spokeswoman, wrote in an email.
Adventist Healthcare provided $63 million in charity and uncompensated care that year; Frederick Memorial provided $8.98 million in charity care in fiscal 2012 and Suburban provided a total of $14.4 million in uncompensated care during that time, with $4.4 million going to charity, according to those facilities.
The Maryland Hospital Association said the Medicare data shows that Maryland’s rate-setting system has kept the cost of health care below the national average.
The average charge in Maryland for treating pulmonary edema was $15,122; the national average charge was $31,953, according to the Medicare data.
Similarly, the average charge for the treatment of renal failure without major complications at the six hospitals in Montgomery and Frederick counties was $6,186. The state average was $6,302 and the national average was $16,954, according to the Medicare data.
The overall state average charge for the 100 procedures was $14,399; the overall national average was $39,674, according to the Medicare data.