charges, costs and reimbursement – a difference WITH distinction


We need to stop confusing charges with costs. If we want to affect what we pay for healthcare, relative to value, we need to talk about costs.  If we are talking about consumers’ ability to price compare, average reimbursement is more relevant. Charges are made up numbers.


CMS is touting this:


But are charges the right thing to focus on?

What each provider gets paid, their reimbursement, may be more relevant to most healthcare consumers. As a country, concerned about healthcare’s rising costs and its total percent of GDP, perhaps we should be asking providers to get clear and open about true costs.

  • Mighty Casey

    YES. I’ve been dying for a deep dive into the actual *cost* of hospital care components. I recognize that parsing every single piece of hospital care is challenging, but if that’s not the root of each and every part of the hospital charge list … what, are they just guessing? Throwing Jell-o at the wall?

    What are all the costs in that $24 niacin tablet that’s part of the graphics on Steve Brill’s “Bitter Pill” piece in TIME last year? Is it part of the multi-million-$ compensation packages that top hospital admins get? Are nurses that expensive? Are hospital purchasing departments handcuffed to radiators by vendors, unable to see that Amazon sells a lot of the same stuff they do, for a wee fraction of the amount on patients’ hospital bills?

    Why could Michael Shopenn find hip replacement surgery for $13,660 (in 2007, including travel costs) in Brussels, when at home in the US he was told it would run at least $78,000, which was only an estimate offered by his local hospital? Yeah, I know that Belgium has national healthcare – called “socialism” by some – but he was paying cash for his care as a non-citizen, and still managed to shave almost $65K off the US estimate.

    We need to rip the curtain off this stuff. Make the case for all the charges. Show what goes into them. Then let’s talk about how to stop the hockey stick price trajectory in US healthcare …