On average, among all of the procedure costs reported by Minnesota’s hospitals, the charges for procedures were more than 2.11 times what Medicare billed for it.
Some markup would likely be seen as acceptable, but huge increases over Medicare rates may invite questions.
“Hospitals that charge two or three times the going rate will rightfully face scrutiny,” Health and Human Services Secretary Kathleen Sebelius told reporters, according to the Associated Press.
Using that test — comparing what Medicare believes a procedure should cost with what hospitals actually charge — Mankato’s hospital, along with the rest, would attract scrutiny.
For example, a billing code for various digestive disorders shows Mankato’s hospital charged $24,880, but only billed Medicare less than a third of that total, or $7,632. It’s important to note that Mankato is unique; the average cost in Minnesota hospitals for this procedure was $26,939 and the average Medicare billing was $9,213.
Getting this procedure at the University of Minnesota Medical Center, Fairview costs a whopping $70,022 on average.
Another way of looking at these data, though, is that Medicare is not paying the hospital enough for these procedures.
The hospital’s charges in other areas were closer to Medicare rates. For certain types of spinal fusion procedures without major complications, for example, Mankato’s hospital charged customers $26,133 and Medicare paid $25,311.