Study: Colo. hospitals charge 4 times what Medicare pays

Colorado hospitals charge an average of four times more than what Medicare pays for services, according to a study by the Colorado Center on Law and Policy.

The study compared hospital charges across Colorado for various services and Medicare payments received for those services. While the average charge is four times higher than Medicare payments, some hospitals in Colorado charge as much as five or six times what Medicare pays.

None of these hospitals are located in Northern Colorado, where an earlier study found that hospitals’ charges are lower than the state median.

All four of the hospitals in Northern Colorado charge just over three times more than Medicare payments on average for different services.

At Medical Center of the Rockies, charges are 383 percent
higher than Medicare payments, while charges at North Colorado Medical Center in Greeley are 377 percent higher, followed by Poudre Valley Hospital in Fort Collins with charges 339 percent higher and McKee Medical Center in Loveland at 333 percent higher.

Every hospital has a “chargemaster,” or a list of prices for every procedure and all supplies, according to the Colorado Center on Law and Policy.

Hospitals do not have to disclose these lists to the public, and the prices on the chargemasters to not typically reflect actual hospital costs. Insurance companies negotiate down from the chargemaster, and Medicare sets its own payment rates for bundles of services and supplies for specific diagnoses based on a formula.

Medicare pays based on local labor costs, the severity of the diagnosis, whether the hospital trains new doctors and the number of low-income patients treated at the facility, among other factors, according to the study.

Hospital charges vary widely from one facility to another, according to the study.

For the 10 most common diagnoses, the highest and lowest prices at hospitals across the state differed on average by a factor of nearly four, the study said.

According to the study, authored by Kyle Brown, senior health policy analyst at the Colorado Center on Law and Policy, the three most commonly cited reasons for price variation at hospitals are regional labor costs, whether or not the hospital trains new doctors, and the poverty level of patients.


Molly Armbrister covers real estate, banking and health care for the Northern Colorado Business Report. She can be reached at 970-232-3139, marmbrister@ncbr.com or twitter.com/MArmbristerNCBR
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