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Hospital Charges Are Not Associated With Episode-of-Care Costs or Complications After Total Joint Arthroplasty

Published:January 17, 2022DOI:https://doi.org/10.1016/j.arth.2022.01.018

      Abstract

      Background

      The Centers for Medicare and Medicaid Services (CMS) now requires hospitals to publish charges for commonly performed procedures. This study aimed to evaluate compliance with the price transparency mandate and to determine if there is a correlation between hospital charges and episode-of-care claims costs and outcomes after total hip arthroplasty (THA) and total knee arthroplasty (TKA).

      Methods

      We identified a consecutive series of 2476 Medicare patients who underwent primary THA or TKA from 2018 to 2019 at one of 18 hospitals. Each hospital website was explored to assess compliance with the new price transparency requirements. Demographics, comorbidities, complications, and readmissions were recorded. Ninety-day episode-of-care claims costs were calculated using CMS claims data. Multivariate regression was performed to determine whether hospital charges had any association with complications, readmissions, or episode-of-care costs.

      Results

      There was no correlation between published hospital charges and inpatient costs (r = 0.087), postacute care costs (r = 0.126), or episode-of-care costs (r = 0.131). When controlling for demographics and comorbidities, there was no association between published charges and complications (P = .433) or readmissions (P = .141). All hospitals posted some shoppable services information online, but only 7 (39%) were fully compliant by publishing all price data. Of the 11 hospitals (61%) publishing hospital THA and TKA charges, the mean charge was $48,325 (range, $12,625-$79,531).

      Conclusion

      Published charges for TKA and THA had no correlation with episode-of-care claims costs and were not associated with clinical outcomes. Despite efforts by CMS to increase price transparency, few hospitals were fully compliant, and a wide range in published charges was found.

      Keywords

      Starting January 1, 2021, the Centers for Medicare and Medicaid Services (CMS) requires hospitals to publish charges for commonly performed procedures [
      Hospital Price Transparency
      U.S. Centers for Medicare & Medicaid services.
      ]. The goal of this requirement is to make information available to consumers (patients), allowing patients to compare prices across different hospitals and estimate the cost of care prior to deciding where to receive treatment [
      • Benavidez G.
      • Frakt A.
      Price transparency in health care has been disappointing, but it doesn’t have to Be.
      ]. Elective surgeries, such as total hip arthroplasty (THA) and total knee arthroplasty (TKA), are most likely to be affected by the new price transparency policy as patients have the ability to shop around for different physicians. Proponents of this new rule argue that providing patients with this pricing information will lead to greater market competition and an eventual decrease in healthcare expenditure [
      • Bindman A.B.
      Rising prices and health care “empires”.
      ,
      • Broderick R.C.
      • Fuchs H.F.
      • Harnsberger C.R.
      • Chang D.C.
      • Sandler B.J.
      • Jacobsen G.R.
      • et al.
      Increasing the value of healthcare: improving mortality while reducing cost in bariatric surgery.
      ]. The CMS price transparency rule requires hospitals to make public 5 pieces of information for a group of “shoppable services.” This includes (1) gross charges, (2) discounted cash price, (3) payer-specific negotiated charges, (4) de-identified minimum negotiated charges, and (5) de-identified maximum negotiated charges [
      Centers for Medicare & Medicaid Services (CMS) H
      Hospitals: hospital price transparency.
      ].
      While new transparency regulations may help improve information asymmetry, hospital charges were not found to correlate with improved outcomes after bariatric surgery as similar rates of major complications and mortality were seen among low, medium, and high charging hospitals [
      • Telem D.A.
      • Yang J.
      • Altieri M.
      • Talamini M.
      • Zhang Q.
      • Pryor A.D.
      Hospital charge and health-care quality in bariatric surgery.
      ]. Total hip and knee arthroplasty has been shown to be a cost-effective solution for patients suffering from end-stage arthritis [
      • Agarwal N.
      • To K.
      • Khan W.
      Cost effectiveness analyses of total hip arthroplasty for hip osteoarthritis: a PRISMA systematic review.
      ,
      • Ethgen O.
      • Bruyère O.
      • Richy F.
      • Dardennes C.
      • Reginster J.Y.
      Health-related quality of life in total hip and total knee arthroplasty. A qualitative and systematic review of the literature.
      ]. This category of shoppable services (major joint replacements) has been of particular interest to policymakers when curtailing healthcare expenditure, especially since degenerative joint disease is the most prevalent condition in the Medicare population and accounts for the highest total Medicare episode payments [
      • Dobson A.
      • DaVanzo J.E.
      • Heath S.
      • Shimer M.
      • Gerger G.
      • Pick A.
      • et al.
      Medicare payment bundling: insightsfrom claims data and policy implications analyses of episode-based payment.
      ]. In our review of the literature, we found no studies which have evaluated the relationship between CMS-mandated published charges and costs or clinical outcomes in orthopedic surgery on an individual level.
      The purposes of this study were (1) to determine the relationship between average inpatient charges published by hospitals and 90-day episode-of-care costs, (2) to assess whether there was any correlation between hospital charges and individual complications and readmission rates after primary THA and TKA, and (3) to evaluate the compliance of these hospitals with the newly implemented price transparency requirements.

      Methods

      We identified a consecutive series of 2476 Medicare patients who underwent primary THA or TKA between 2018 and 2019 at one of 18 hospitals within our practice. A subset of 1237 patients (648 THAs and 589 TKAs), who had surgery performed at a hospital posting inpatient diagnosis-related group (DRG) charges, were further analyzed (Fig. 1). All patients completed 90-day follow-up as part of Medicare requirements. Although outcome data included all patients, outpatient procedures were excluded from our cost analysis, as were revision cases or partial knee replacements. The inpatient charges for each hospital were publicly available on hospital websites, which were explored by 2 independent observers to assess compliance with the new CMS price transparency requirements. Specifically, (1) gross inpatient charge, (2) discounted cash price, (3) payer-specific negotiated charges, and (4) de-identified maximum and (5) minimum payer rates for THA and TKA were 5 variables that were recorded [
      • Benavidez G.
      • Frakt A.
      Price transparency in health care has been disappointing, but it doesn’t have to Be.
      ]. THA and TKA information was often combined under DRG 470. In addition, as part of the CMS requirement, hospital compliance with posting both a machine-readable file and a consumer-friendly display of the information was assessed [
      • Benavidez G.
      • Frakt A.
      Price transparency in health care has been disappointing, but it doesn’t have to Be.
      ]. To be considered “machine readable,” the digital file had to be digitally searchable and saved under 1 of 3 specific file types (.json, .xml, and .csv). To be considered “consumer friendly,” plain language descriptions of each service had to be provided to enable patients to estimate the amount they would be required to pay for the shoppable service [
      Department HaHS
      Medicare and Medicaid programs: CY 2020 hospital outpatient PPS policy changes and payment rates and ambulatory surgical center payment system policy changes and payment rates. Price transparency requirements for hospitals to make standard charges public. In: Centers for Medicare & Medicaid services (CMS) H.
      ]. In cases where the discounted cash price was not available for a particular hospital but a patient price estimator tool was available, that value was used as the cash price. All data on compliance with posting price transparency information were collected through March 25, 2021.
      Figure thumbnail gr1
      Fig. 1Flow chart illustrating the patient selection process.
      Patient demographics, including patient age, sex, body mass index, and Elixhauser comorbidity index, were routinely recorded in our institutional joint registry. Clinical outcomes such as complications or readmissions occurring within 90 days were prospectively tracked through a nurse navigator program at our institution. Major medical complications, including cardiac (acute myocardial infarction and arrhythmias), respiratory (pneumonia and respiratory arrest), gastrointestinal (bleeding or ischemia), genitourinary (acute renal failure), neurologic (cerebrovascular infarction or hemorrhage), systemic sepsis, electrolyte abnormalities, wound complications (dehiscence, hematoma, or superficial infection), mechanical complications (fall with fracture, periprosthetic fracture, loosening, and dislocation), venous thromboembolism, and periprosthetic joint infection (according to 2018 International Consensus Meeting criteria), were recorded. This database was referenced to identify patients who may have presented with perioperative complications or were readmitted at a different facility among our affiliated health systems [
      • Phillips J.L.H.
      • Rondon A.J.
      • Vannello C.
      • Fillingham Y.A.
      • Austin M.S.
      • Courtney P.M.
      A nurse navigator program is effective in reducing episode-of-care costs following primary hip and knee arthroplasty.
      ], thus maximizing the capture rate for the endpoints of this study.
      Ninety-day episode-of-care costs were calculated for Medicare beneficiaries using CMS claims data obtained through our third-party bundle convener. This database was reviewed to identify the cases included in our Bundled Payments for Care Improvement Initiative (BPCI) (January through September 2018) and BPCI Advanced program (October 2018 through 2019) and record claims costs, including the total 90-day episode-of-care cost, inpatient claims cost, and postacute care cost. To account for inflation, all costs were adjusted to January 2019 US dollar values using the Consumer Price Index []. Institutional review board approval (IRB #08R.207) was obtained for this study.

      Statistical Analyses

      Continuous data were expressed in terms of mean and standard deviation, whereas categorical data were expressed in terms of count number and percentage. Pearson correlation was used to determine the relationship between published hospital charges and Medicare claims costs. A correlation coefficient of >0.7 was considered to be a strong correlation, 0.50-0.69 was considered to be a moderate correlation, 0.30-0.49 was considered to be a weak correlation, and 0.00-0.29 was considered to be a no correlation. A post hoc power calculation was subsequently performed for the Pearson correlation analysis. As our hypothesis was that published hospital charges would not correlate with episode-of-care costs, we assumed a small effect size of 0.1. Using an alpha of 0.05 and a power of 0.8, it was calculated that a sample size of 782 patients would be needed. Univariate analysis was performed to assess the association between average hospital inpatient charges and each outcome variable. Multivariate logistic regression was used to control for age, sex, body mass index, joint, and Elixhauser comorbidity index to determine whether average hospital inpatient charges had any independent association with 90-day complications or readmissions. Statistical analyses were performed using the SPSS 20.0 (SPSS Inc, Chicago, IL) software package. A P value of <.05 was used to define statistical significance.

      Results

      In total, all 18 hospitals posted at least one piece of shoppable services information. However, only 7 (38.9%) were fully compliant in publishing all 5 types of required information in the appropriate file types (Table 1). Of the 11 hospitals (61%) publishing hospital THA and TKA charges in DRG form, the median inpatient charge was $48,325 (range, $12,625-$79,531), cash pay price was $18,604 (range, $15,598-$26,440), minimum payer rate was $10,878 (range, $4262-$13,097), and maximum payer rate was $26,257 (range, $18,620-$46,161; Table 1).
      Table 1Posted Hospital Pricing Information.
      HospitalCompliant with all 5 RequirementsAverage ChargeCash Pay PricePayer-specific ChargesMinimum Payer RateMaximum Payer Rate
      Hospital 1NoNot posted
      Hospital 2NoNot posted
      Hospital 3No$12,624.95$23,138.00Not posted
      Hospital 4No$16,715.32Posted$6887.83$25,278.00
      Hospital 5No$16,715.32Posted$6141.46$25,278.00
      Hospital 6No$17,293.21Posted$10,878.00$25,278.00
      Hospital 7No$17,293.21Posted$10,878.00$25,278.00
      Hospital 8Yes$38,251.00$15,598.00Posted$8253.00$18,620.00
      Hospital 9Yes$47,824.18$19,129.67Posted$12,339.17$43,195.00
      Hospital 10Yes$52,770.32$21,108.13Posted$12,746.28$45,460.65
      Hospital 11Yes$54,307.01$21,722.80Posted$12,344.31$46,160.96
      Hospital 12Yes$48,324.86$19,337.14Posted$12,432.69$41,926.68
      Hospital 13NoNot posted
      Hospital 14No$79,531.00Not posted
      Hospital 15No$37,246.86$26,440.18Not posted
      Hospital 16Yes$16,950.80$16,677.54Posted$4261.55$26,256.53
      Hospital 17No$56,834.00$18,372.00Not posted
      Hospital 18Yes$75,341.00$18,835.00Posted$13,096.71$39,122.67
      The median inpatient claims cost was $15,803 (range, $10,413-$43,845), postacute care cost was $2488 (range, $0-$137,080), and episode-of-care cost was $18,916 (range, $14,816-$100,612). There was no correlation between published hospital charges and inpatient claims costs (r = 0.087), postacute care costs (r = 0.126), and episode-of-care costs (r = 0.131).
      A total of 59 patients (4.8%) had a complication within 90 days (Table 2), whereas 50 patients (4.0%) had an unplanned readmission. Univariate analyses showed that a history of stroke was associated with an increased risk of 90-day complications (Table 3), whereas a history of ischemic heart disease, congestive heart failure, lung disease, stroke, and cancer was associated with an increased risk of 90-day readmissions (Table 4). However, after using multiple logistic regression to control for confounding variables, published charges was no longer associated with 90-day complications (odds ratio: 1.000, P = .433) or readmissions (odds ratio: 1.000, P = .141).
      Table 2Details of Complications (n = 59).
      TypeN (%)
      Cardiovascular7 (0.57)
      Respiratory4 (0.32)
      Neurological2 (0.16)
      Gastrointestinal5 (0.40)
      Genitourinary5 (0.40)
      Electrolytes2 (0.16)
      Sepsis1 (0.08)
      Venous Thromboembolism6 (0.49)
      Wound7 (0.57)
      Mechanical12 (0.97)
      Periprosthetic Joint Infection7 (0.57)
      Mortality1 (0.08)
      Table 3Univariate Analysis of Patients Who did and did Not Have a 90-D Complication.
      VariableNo Complication (n = 1178)Complication (n = 59)P-value
      Age (y)72.7 ± 6.672.5 ± 7.7.850
      Sex.971
       Female756 (64.2)38 (64.4)
       Male422 (35.8)21 (35.6)
      BMI ≥35 kg/m2134 (11.4)6 (10.2).764
      Smoker37 (3.2)4 (6.8).131
      Ischemic heart disease182 (15.5)12 (20.3).324
      Congestive heart failure29 (2.5)2 (3.4).662
      Liver disease16 (1.4)0 (0).366
      Lung disease63 (5.4)6 (10.2).119
      Stroke32 (2.7)5 (8.5).012
      Kidney disease31 (2.6)3 (5.1).265
      Cancer262 (22.4)17 (28.8).249
      Joint.274
       Hip613 (52.0)35 (59.3)
       Knee565 (48.0)24 (40.7)
      Inpatient charge [IQR]47,824 [37,426, 56,834]48,324 [38,251, 56,834].201
      Values given as mean ± SD or N (%).
      Bold = P < .05.
      BMI, body mass index; IQR, interquartile range.
      Table 4Univariate Analysis of Patients Who did and did Not Have a 90-D Readmission.
      VariableNo Readmission (n = 1187)Readmission (n = 50)P-value
      Age (y)72.7 ± 6.673.5 ± 7.4.399
      Sex.977
       Female762 (64.2)32 (64.0)
       Male425 (35.8)18 (36.0)
      BMI ≥35 kg/m2134 (11.4)6 (12.0).888
      Smoker38 (3.2)3 (6.0).284
      Ischemic heart disease179 (15.2)15 (30.0).005
      Congestive heart failure26 (2.2)5 (10.0).001
      Liver disease16 (1.4)0 (0).407
      Lung disease61 (5.2)8 (16.0).001
      Stroke33 (2.8)4 (8.0).035
      Kidney disease31 (2.6)3 (6.0).154
      Cancer261 (22.1)18 (36.0).022
      Joint.829
       Hip621 (52.3)27 (54.0)
       Knee566 (47.7)23 (46.0)
      Inpatient charge [IQR]47,824 [37,246, 56,834]48,324 [38,251, 56,834].156
      Values given as mean ± SD or N (%).
      Bold = P < .05.
      BMI, body mass index; IQR, interquartile range.

      Discussion

      The most important findings of the present study were that gross inpatient charges published by hospitals as part of the price transparency initiative did not correlate with inpatient claims cost, postacute care costs, or 90-day episode-of-care costs for Medicare patients. More importantly, using patient-level data, we found that higher hospital charges were not associated with lower rates of 90-day readmissions or complications after TJA. Healthcare spending per capita in the United States is greater than in any other developed nation. In spite of this, it has been shown that American patients are not consuming more healthcare services compared with patients in other countries, but rather, the price of healthcare services has become increasingly expensive [
      • Moses 3rd, H.
      • Matheson D.H.
      • Dorsey E.R.
      • George B.P.
      • Sadoff D.
      • Yoshimura S.
      The anatomy of health care in the United States.
      ,
      • Walker J.
      Why Americans spend so much on health care—in 12 charts.
      ]. The new price transparency requirement by the CMS was implemented in hopes that publishing specific pricing information on shoppable services by respective hospital systems will lead to more informed patient decisions and, ultimately, a decrease in the price of healthcare in the United States.
      Similar to our finding showing no relationship between published hospital charges and inpatient claims cost on an individual level, Belatti et al analyzed CMS-released hospital-specific charge and payment data for patients undergoing total joint arthroplasty, reporting that top-ranked hospitals received higher Medicare payments compared with lower ranked hospitals and thus appeared more expensive to consumers [
      • Belatti D.A.
      • Pugely A.J.
      • Amendola A.
      • Phisitkul P.
      • Callaghan J.J.
      Medicare data transparency may confuse consumers comparing hospitals for total joint arthroplasty.
      ,
      ]. However, the authors noted that the variation in pricing was secondary to Medicare reimbursement policies and included grouped payments such as those given to teaching hospitals to support trainees [
      • Belatti D.A.
      • Pugely A.J.
      • Amendola A.
      • Phisitkul P.
      • Callaghan J.J.
      Medicare data transparency may confuse consumers comparing hospitals for total joint arthroplasty.
      ]. In a random sample of US hospitals that performed coronary artery bypass grafting, there was no association between the price of surgery and average reimbursement from major insurers [
      • Giacomino B.D.
      • Cram P.
      • Vaughan-Sarrazin M.
      • Zhou Y.
      • Girotra S.
      Association of hospital prices for coronary artery bypass grafting with hospital quality and reimbursement.
      ]. More interestingly, the price of coronary artery bypass grafting was shown to vary more than 10-fold across the sample of hospitals, and there was no evidence that hospitals that charged higher prices provided better quality of care.
      Although the absence of a significant relationship between published hospital charges and individual inpatient claims costs has not been shown in orthopedic surgery, other medical subspecialties have found similar results. Agarwal et al found there was no association between listed charges and actual prices paid by patients or insurers for prostate cancer radiation therapy [
      • Agarwal A.
      • Dayal A.
      • Kircher S.M.
      • Chen R.C.
      • Royce T.J.
      Analysis of price transparency via national cancer institute-designated cancer Centers' chargemasters for prostate cancer radiation therapy.
      ]. In line with these findings, Hamavid et al found that among the 10 largest causes of healthcare spending, average payments ranged from 23 to 55 cents per dollar charged. The authors reasoned that the variation was likely dependent on negotiations between the payer and the hospital system as well as a broad focus on maximizing revenue rather than tying individual charges to the cost of a given service during an inpatient admission [
      • Hamavid H.
      • Birger M.
      • Bulchis A.G.
      • Lomsadze L.
      • Joseph J.
      • Baral R.
      • et al.
      Assessing the complex and evolving relationship between charges and payments in US hospitals: 1996 - 2012.
      ]. A previous analysis of Medicare payment bundles found that nearly one-third of the average Medicare episode payment was for postacute care in the major joint replacement or reattachment of lower extremity without major complication or comorbidity [
      • Dobson A.
      • DaVanzo J.E.
      • Heath S.
      • Shimer M.
      • Gerger G.
      • Pick A.
      • et al.
      Medicare payment bundling: insightsfrom claims data and policy implications analyses of episode-based payment.
      ]. As such, the lack of correlation between published hospital charges and postacute care costs found supports our conclusion that increased price transparency does not provide consumers with information to seek better value health care.
      Studies have shown that even if pricing information is available, there are a small number of patients who will use that information when deciding where to receive care [
      • Mehrotra A.
      • Dean K.M.
      • Sinaiko A.D.
      • Sood N.
      Americans support price shopping for health care, but few actually seek out price information.
      ,
      • Semigran H.L.
      • Gourevitch R.
      • Sinaiko A.D.
      • Cowling D.
      • Mehrotra A.
      Patients' views on price shopping and price transparency.
      ]. If a consumer were to use the gross charge information in their decision-making process, this could negatively impact hospitals whose reimbursement for teaching trainees and performing complicated cases drives up their average gross charge for any procedure [
      • Belatti D.A.
      • Pugely A.J.
      • Amendola A.
      • Phisitkul P.
      • Callaghan J.J.
      Medicare data transparency may confuse consumers comparing hospitals for total joint arthroplasty.
      ].
      Concurrent with the emphasis on price transparency, there has been a renewed interest in value-based health care. In this study, the absence of a relationship between inpatient charges and readmissions or 90-day complications emphasizes that the CMS requirement for publishing average inpatient charges does not help patients determine which hospital will give them the best value treatment. This was similar to a database study by Day et al who demonstrated that an increased facility cost for TJA was in fact associated with an increased rate of readmission [
      • Day M.S.
      • Karia M.R.
      • Hutzler L.
      • Bosco J.A.
      Higher hospital costs do not result in lower readmission rates following total joint arthroplasty.
      ]. Similarly, Arenchild et al analyzed inpatient commercial claims to determine if higher paid hospitals had higher quality outcomes as defined as length of stay, complications, and 30-day readmission rate, concluding that there was no significant correlation between hospital-level payments and hospital quality of care [
      • Arenchild M.
      • Offodile 2nd, A.C.
      • Revere L.
      Do we get what we pay for? Examining the relationship between payments and clinical outcomes in high-volume elective surgery in a commercially-insured population.
      ].
      This study is not without limitations. Data on compliance with posting price transparency data were obtained from public websites on March 25, 2021. It is possible that hospital systems have updated this information, especially because the CMS sent warning letters out to a group of noncompliant hospitals in April 2021 [
      • Paavola A.
      Hospitals get 1st CMS warning on price transparency failure. Beckers Hosp Rev.
      ]. In addition, only half of the hospitals used by arthroplasty surgeons in our practice posted gross charges, and the lack of the information for the other hospitals could have influenced the relationship between gross charges and clinical outcomes as well as individual claims. Finally, this study was conducted at a single high-volume orthopedic practice with standardized perioperative care pathways, possibly limiting its generalizability. However, rather than analyzing national databases with hospital-level data to evaluate the association between published charges and clinical outcomes, we chose to use institutional data to analyze this association with individual patient-level outcomes, as this would provide greater insights on whether the new price transparency requirement would facilitate value-driven care.

      Conclusion

      Published hospital charges for TKA and THA had no correlation with Medicare episode-of-care claims costs and were not associated with clinical outcomes. Despite efforts by CMS to increase price transparency, few hospitals were fully compliant with the new regulations, and a wide range in published charges was found. In an era of providing value-based health care, metrics other than published hospital charges should be explored to determine which practices are providing patients with higher value care.

      Appendix A. Supplementary Data

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