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Charge Amounts for Professional Procedures to Commercial Insurance and Traditional Medicare

In the start of 2019, Centers for Medicare and Medicaid Services finalized federal policies that required hospitals to publish the amount they charge for common services, documents commonly referred to as chargemasters. While similar policies have been in place at the state level since the early 2000s, this was the first federal mandate to require this type of transparency. These policies have been criticized for the convoluted way in which the information is often presented and the lack of information regarding the actual amounts the hospitals are paid for their services and the out-of-pocket costs to patient, not just what the hospitals charge. Most people in the United States have some form a health insurance and negotiations between private health insurers and providers determine the amount that will be paid for each procedure. The traditional Medicare fee-for service (FFS) sets the prices it pays for most medical procedures with annual updates to the payment rates. While studies have shown that the prices for procedures differ by payer and provider, charge amounts have been relatively ignored.

We hope to help fill this knowledge gap by comparing the amounts providers charge for professional procedures for patients with employer sponsored insurance (ESI) with the average charge amounts providers submitted for the same procedures for Medicare FFS beneficiaries. We use the HCCI data to estimate the average charges based on claims of over 40 million people who received health insurance through their employer and the average charges reported in the Centers for Medicare & Medicaid Services (CMS) Provider and Supplier public use files. We replicated the CMS methodology to designate the place of service a procedure was performed. Where patients receive care can have an impact on the cost of care and the amount charged. We classified each procedure as facility or office.

We found that the charge amount for professional services was similar for ESI patients and Medicare FFS patients. In 2017 for example, a 15-minute provider visit in an office setting had a charge of $141 for ESI and a charge of $134 for Medicare FFS. Similarly, the collection of a blood sample in an office setting had a charge of $17 for ESI and $16 charge for Medicare FFS and a chest x-ray in a facility setting had a $42 charge for ESI and a $38 charge to Medicare FFS. Check out the downloadable data for the charges of thousands of other professional services.

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