Cost discrepancies for common acute care surgery diagnoses in Ohio: influences of hospital characteristics on charge and payment differences

Abstract

Background: Charge and payment discrepancies exist between hospitals, although such variation is understood incompletely. We hypothesized that hospital characteristics may account for such differences.

Methods: The 2011 Medicare Inpatient Prospective Payment System for Ohio hospitals was queried for discharge diagnoses of gastrointestinal bleed (GIB), GI obstruction (GIO), and laparoscopic cholecystectomy (LC). Analyses were performed to assess the association of hospital variables with charges and payments.

Results: For all three diagnoses, urban hospitals had greater median charges than rural hospitals; payments were not significantly different. Consequently, urban centers had lesser cost to charge ratios than rural centers for GIB, GIO, and LC: 0.29 versus 0.32 (P = .004), 0.27 versus 0.47 (P = .0007), and 0.26 versus 0.40 (P = .04), respectively. Centers with the greatest bed size had higher median charges and payments. Other discrepancies for all three diagnoses were greater payments at verified Level 1 centers and major teaching institutions (P value range <.0001 to .03). On multivariate analysis, excess charges were greater at urban centers for both GIB ($4,482, P = .02) and GIO ($5,700, P < .01).

Conclusion: Hospital characteristics are associated with differences in charges and payments for acute care surgery diagnoses. Further study should investigate whether these cost discrepancies are associated with outcomes.