$182,000 for appendix removal? Why hospital bills vary widely

Just how much does it cost to remove your appendix? Depending on your case and the hospital you go to, your bill could vary by tens of thousands of dollars, a new study suggests.

The results show the charges for treating appendicitis at hospitals in California ranged from about $1,500 to more than $182,000.

Moreover, patients usually have no idea what their bill will be when they enter the hospital, said study researcher Dr. Renee Hsia, an assistant professor of emergency medicine at the University of California, San Francisco. And those who provide care are usually unaware of how much their treatment recommendations cost, Hsia said.

"This is a huge problem," said Hsia, who noted that more than 50 million Americans are uninsured, and would be responsible for the entire bill.

To fix the problem of such wide variation in health care costs, health care providers could come up with a list of baseline prices for treating all medical conditions, Hsia said. Hospitals could then say they are going to charge a certain amount over the starting price because they have high costs, or they think they provide higher-quality care, she said.

Hsia and colleagues analyzed information from more than 19,000 patients ages 18 to 59 who were hospitalized in California in 2009. They looked at the total hospital charges per visit for those with appendicitis who stayed in the hospital for fewer than four days.

The charges ranged from $1,529 to $182,955. The median price was $33,611, meaning about half of the patients were charged more than that, and half were charged less than that.

The variation in price could partly be explained by differences in hospital ownership — whether a hospital was nonprofit, for profit or county-owned — and whether a facility was a trauma center or a "teaching" hospital. But about one-third of the variation remained unexplained, the researchers said.

There is no system in place to control health care costs, and insurers negotiate privately with hospitals over what they will pay, Hsia said. "Charges, therefore, have very little to do with what is actually paid by insurers," she said.

While people with insurance are shielded somewhat from the full price of health care, there is increasing pressure on state and federal governments to put more of the cost of health care in the hands of on those with public insurance, Hsia said. And even some with private insurance are becoming increasingly responsible for a greater proportion of their bill, she said. "For a lot of reasons, the true charge matters," Hsia said.

Prices could be agreed upon by a consensus of health care providers and insurers, and be made publicly available, Hsia said.

Medicare has taken some steps to make price information available to the public. For instance, it has a website, Hospital Compare, where consumers can learn general information about their hospital, such as whether Medicare spends more per patient there than it does per patient nationally. It also has a tool, called PC Pricer, to estimate Medicare prices.

However, right now, it is still quite difficult for consumers to find out what Medicare pays for treating a particular condition. For instance, the PC Pricer requires a software installation and knowledge of medical codes.

"Medicare has done a good job of trying to increase transparency, but a lot more needs to be done," Hsia said.

The new study is published today as a research letter in the journal Archives of Internal Medicine.

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