Simple Summary of Medicare Average Charge Payouts

Recently one of my friends challenged the idea that Medicare pays sometime as low as 28 percent on a procedure and asked for data to support that position. So I went to Centers for Medicare & Medicaid Services for the data. At CMS.Gov there is a variety of data were one can attempt to derive some statistics to get a sense of averages Medicare pays out. The simplest data set is this one http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Medicare-Provider-Charge-Data/Downloads/OPPS_NAT_STATE_SUM_CSV.zip which provides a summary all states in the nation for 30 APCs. I have included the tables as a graphic in figure 1.

Figure 1: CMS data on average payments for 30 sampled APC’s from hospitals through the US.

I have added a column called “Average Payments by Percentage Billed” which is simply the percentage of the averages paid out for that APC. I also added a simple mean of averages and sorted by descending to ascending average cost.

If you look at the data the Summary the Mean of the selected procedures is about 27 percent (26.64384218). You can see that the lower averages in the summary is for APC 0265, a diagnostic test, with an average pay out as low as 12.7 percent. The highest is an APC 0606 which is a level 3 Clinical visits with a 54.62 percent payout. While the data set is somewhat small, I will attempt to access more directly via the data.cms.gov API’s but this data, it provides a good insight into how Medicare rarely pays out anything close to a full charge for a procedure. Furthermore, as one can see, the level of payout is high for certain procedures and very low for others. This suggests that medical centers, Hospitals, and Physicians who are keenly aware of Medicare payouts might be influenced to either push certain procedures or stop accepting Medicare patients were the procedure might cost their organization more than the average payout from Medicare.

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