AHRQ Stats: Hospital Stay Charges

The average charge for a hospital stay among all payers was $39,500 in 2013. Charges varied according to insurance coverage, averaging $47,200 for Medicare, $30,900 for Medicaid and $35,900 for private insurance. (Source: Agency for Healthcare Research and Quality, Healthcare Cost and Utilization Project Statistical Brief #209: Geographic Variation in Hospital Inpatient List Prices in the United States, 2013.)

Geographic Variation in Hospital Inpatient List Prices in the United States, 2013

Zeynal Karaca, Ph.D., and Brian Moore, Ph.D.

Introduction

In the United States, each hospital has a chargemaster that contains the hospital's own list prices for all billable procedures and services performed at the hospital. Chargemasters use codes from the American Medical Association's Current Procedure Terminology system and the International Classification of Diseases, Ninth Revision, Clinical Modification (ICD-9-CM) procedure system.¹ Hospital list prices, reported as charges in the Healthcare Cost and Utilization Project (HCUP) databases, reflect the amount the hospital billed for the entire hospital stay, usually excluding professional (physician) fees, and vary across hospitals and markets.²

Hospitals periodically update the list prices in their chargemasters to account for new procedure codes and changes in their operating costs, expected payer mix, expected service mix, and volumes.³ As a result, there might be substantial variation in charges for many individual items within the chargemaster over time and across hospitals and markets.^4,5

Major public and private insurance providers negotiate a discount from the list prices with hospitals. Actual payments to hospitals by public and private payers are generally much lower than their reported list prices and are typically adjusted by an area wage index (AWI) to account for geographic variation across regions in labor costs, which represent a component of pricing that is to some degree beyond the hospital's control. Hospitals across different regions might experience sizable differences in reimbursement because of these AWI adjustments.

This HCUP Statistical Brief presents variation in charges for inpatient stays in the United States in 2013. The variation in charges adjusted by an AWI⁶ also is presented to provide potential insight into the extent to which AWI adjustment accounts for geographic variation in hospitals' list prices. Mean charges per inpatient stay (with and without AWI adjustment) are calculated for each of the nine U.S. census divisions for all payers, Medicare, Medicaid, and private insurance. For each payer group, mean charges in each census division then are divided by mean charges nationally, and ratios are presented in maps to estimate the direction and magnitude of the difference in mean charges between each division and the nation as a whole. Ratios with values greater than 1.0 indicate divisions with mean charges that are greater than the national mean; values less than 1.0 indicate divisions with mean charges that are less than the national mean. All differences between estimates noted in the text are statistically significant at the 0.05 level or better.

Findings

Mean inpatient charges for all payers, by census division, 2013
Figure 1 displays the ratios of U.S. census division-level mean charges relative to the national mean values per inpatient stay for all payers. In the top map charges are unadjusted, and in the bottom map charges are adjusted by the AWI.

Highlights

In 2013, there was substantial variation in hospital inpatient list prices, reported as charges, across U.S. census divisions.

After adjustment for the area wage index (AWI), the mean charges per inpatient stay in most U.S. census divisions were closer to national means across all payer groups.

The AWI-adjusted mean charges per inpatient stay were $39,000 for all stays, $47,100 for Medicare stays, $30,000 for Medicaid stays, and $35,200 for privately insured stays.

Compared with the national average, the AWI-adjusted mean hospital inpatient charges per Medicare stay were 16 percent higher in the West South Central division, 15 percent higher in the Mountain division, and 14 percent higher in the Pacific division.

In the Pacific division, the AWI-adjusted mean charges per Medicaid stay were 11 percent higher than the AWI-adjusted national Medicaid mean charges.

In the West South Central division, the AWI-adjusted mean inpatient charges per privately insured stay were 16 percent higher than the AWI-adjusted national privately insured mean charges.

In the New England, East North Central, and West North Central divisions, the AWI-adjusted mean charges for all stays, Medicare stays, Medicaid stays, and privately insured stays were lower than their corresponding AWI-adjusted national mean charges.