Statistical Brief #160National Inpatient Hospital Costs: The Most Expensive Conditions by Payer, 2011

Hospital costs by primary payer, 2011

In 2011, the aggregate cost for nearly 39 million hospital stays totaled $387 billion. Medicare and Medicaid bore responsibility for 63 percent of the national inpatient hospital costs (Figure 1). Medicare incurred approximately $182.7 billion in aggregate hospital costs in 2011 for 15.3 million hospital stays, representing 47.2 percent of the total aggregate costs.

During the same time period, Medicaid incurred approximately $60.2 billion in aggregate hospital costs for 7.6 million hospital stays, representing 15.6 percent of the total aggregate costs.

Private insurance incurred approximately $112.5 billion in aggregate hospital costs in 2011, representing 29.0 percent of the total aggregate costs for 12.2 million hospital stays. The uninsured accounted for 4.4 percent ($17.1 billion) of the total aggregate costs for 2.1 million stays.

Most expensive conditions treated in U.S. hospitals, 2011

In 2011, 47.1 percent of aggregate hospital costs were for the top 20 most expensive conditions (Table 1). The top five conditions accounted for nearly one-fifth of the total aggregate costs for all hospitalizations (18.5 percent). Septicemia resulted in an aggregate cost of $20.3 billion or 5.2 percent of the total aggregate cost for all hospitalizations and was the most expensive condition treated. Other high-cost hospitalizations were for osteoarthritis; complication of device, implant or graft; liveborn (newborn) infants; and acute myocardial infarction (heart attack).

Most expensive conditions by primary payer, 2011

Tables 2 through 5 illustrate the 20 most expensive conditions billed to Medicare, Medicaid, private insurance, and the uninsured in 2011.

There were some commonalities across payers in the conditions that generated high costs. For all four payer groups, septicemia ranked among the top four most expensive conditions.

Other conditions that appeared in the top 20 for all four payer groups were:

• Acute cerebrovascular disease
• Pneumonia
• Acute myocardial infarction
• Congestive heart failure
• Coronary atherosclerosis
• Complication of device, implant or graft
• Respiratory failure, insufficiency, arrest

Several conditions were ranked among the highest cost across three of the four payer groups:

• Complications of surgical procedures or medical care was top ranked for stays covered by Medicare, Medicaid, and private insurance.
• Diabetes with complications was top ranked for hospitalizations covered by Medicare and Medicaid as well as the uninsured.
• Mood disorders and stays for liveborn infants were top ranked for Medicaid, private insurance, and the uninsured.

Predictably, given payer differences in demographic mix and service coverage, certain conditions were relatively more prominent in the top ranking of some payer groups than in others. Osteoarthritis was ranked the second most expensive condition only for Medicare ($8.0 billion) and private insurance ($5.7 billion). Over 90 percent of the hospitalizations for osteoarthritis involved a knee or hip replacement. Cardiac dysrhythmias and back problems were also top ranked among hospital stays covered by Medicare and private insurance.

Hospitalizations associated with pregnancy and childbirth accounted for 7 of the top 20 most expensive conditions for hospital stays covered by Medicaid and 4 of the top 20 covered by private insurance. Appendicitis and biliary tract disease were among the most expensive conditions for private payers and for the uninsured. Skin infections were top ranked for hospital stays covered by Medicaid and for the uninsured.

In terms of injury-related hospital stays:

• Hip fracture was a top-ranked condition for Medicare.
• Fracture of the lower limb was top ranked for private insurance and the uninsured.
• Intracranial injury and crushing or internal injury was top ranked only for the uninsured.

Other conditions seen only in the top 20 most expensive conditions for the uninsured were:

• Unspecified chest pain
• Alcohol-related disorders
• Pancreatic disorders

Schizophrenia was the only condition that appeared in the top 20 only for Medicaid.

Conditions seen only in the top 20 most expensive stays for Medicare included:

• Chronic obstructive pulmonary disease
• Rehabilitation
• Acute and unspecified renal failure
• Heart valve disorder
• Urinary tract infections
• Intestinal obstruction without hernia

There were no conditions that appeared in the top 20 only for private insurance.

Diagnoses, ICD-9-CM, and Clinical Classifications Software (CCS)

The principal diagnosis is that condition established after study to be chiefly responsible for the patient’s admission to the hospital. Secondary diagnoses are concomitant conditions that coexist at the time of admission or develop during the stay.

ICD-9-CM is the International Classification of Diseases, Ninth Revision, Clinical Modification, which assigns numeric codes to diagnoses. There are approximately 14,000 ICD-9-CM diagnosis codes.

CCS categorizes ICD-9-CM diagnoses into a manageable number of clinically meaningful categories.³ This “clinical grouper” makes it easier to quickly understand patterns of diagnoses. CCS categories identified as “Other” typically are not reported; these categories include miscellaneous, otherwise unclassifiable diagnoses that may be difficult to interpret as a group.

Types of hospitals included in HCUP

HCUP is based on data from community hospitals, which are defined as short-term, non-Federal, general, and other hospitals, excluding hospital units of other institutions (e.g., prisons). HCUP data include obstetrics and gynecology, otolaryngology, orthopedic, cancer, pediatric, public, and academic medical hospitals. Excluded are long-term care, rehabilitation, psychiatric, and alcoholism and chemical dependency hospitals. However, if a patient received long-term care, rehabilitation, or treatment for psychiatric or chemical dependency conditions in a community hospital, the discharge record for that stay will be included in the NIS.

Unit of analysis

The unit of analysis is the hospital discharge (i.e., the hospital stay), not a person or patient. This means that a person who is admitted to the hospital multiple times in one year will be counted each time as a separate “discharge” from the hospital.

Costs and charges

Total hospital charges were converted to costs using HCUP Cost-to-Charge Ratios based on hospital accounting reports from the Centers for Medicare & Medicaid Services (CMS).⁴Costs will reflect the actual expenses incurred in the production of hospital services, such as wages, supplies, and utility costs; charges represent the amount a hospital billed for the case. For each hospital, a hospital-wide cost-to-charge ratio is used. Hospital charges reflect the amount the hospital billed for the entire hospital stay and do not include professional (physician) fees. For the purposes of this Statistical Brief, costs are reported to the nearest hundred.

Payer

Payer is the expected primary payer for the hospital stay. To make coding uniform across all HCUP data sources, payer combines detailed categories into general groups:

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Medicare: includes patients covered by fee-for-service and managed care Medicare

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Medicaid: includes patients covered by fee-for-service and managed care Medicaid

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Private Insurance: includes Blue Cross, commercial carriers, and private health maintenance organizations (HMOs) and preferred provider organizations (PPOs)

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Other: includes Worker’s Compensation, TRICARE/CHAMPUS, CHAMPVA, Title V, and other government programs

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Uninsured: includes an insurance status of “self-pay” and “no charge.”

Encounters billed to the State Children’s Health Insurance Program (SCHIP) may be classified as Medicaid, Private Insurance, or Other, depending on the structure of the State program. Because most State data do not identify SCHIP patients specifically, it is not possible to present this information separately.

When more than one payer is listed for a hospital discharge, the first-listed payer is used.