Kill Your Chargemaster

Philip Betbeze, May 10, 2013

Regardless of how your organization looks on the massive list of hospital pricing data released to the public by the Centers for Medicare & Medicaid Services, you've got some strategic thinking to do.

When you came to work yesterday, surely you spent some time combing through the massive amount of data released Wednesday by the Centers for Medicare & Medicaid Services regarding hospital procedure pricing.

After your tour through data on your hospital or health system and your local competitors, you're either embarrassed or pleased, depending on where your hospital or health system landed on the continuum. Probably, you're feeling a little bit of both.

Likely, you're pleased if you landed right in the middle. If you're at either end of the price continuum, you're likely looking for ways to address the problem. But regardless of how your organization looks on the list, you have some work to do.

Hospital pricing, as we all know, is complex. But if you're the CEO of Brookwood Hospital in Birmingham, AL, and your hospital is charging $87,065 to treat chronic obstructive pulmonary disease while across town, St. Vincent Hospital is charging $23,245, you have a problem today where you didn't yesterday.

But wait, you say, Medicare isn't paying Brookwood the full amount (it's actually paying $7,473), and it's not paying St. Vincent that amount either (it's actually paying $7,027).

Since the two are in the same small geographical area, Medicare is paying them both roughly the same amount for the procedure. As you know, Medicare pays based on a system of standardized payments based on the DRG.

Philip Betbeze

Philip Betbeze is the senior leadership editor at HealthLeaders Media.

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