Dysequilibrium

Average payment is what Medicare paid plus the patient’s deductible and coinsurance (and any other insurer), averaged over the hospital’s Medicare cases. It covers the hospital’s part of the care; doctors bill separately. Billed charges are the hospital’s list prices, which few patients pay.

Medicare sets its payments by formula, adjusting for local wages, teaching programs, the share of low-income patients and unusually costly cases. Those adjustments drive most differences between hospitals, so a lower payment doesn’t mean better or worse care, and Medicare patients’ own costs usually vary much less than the totals. Private insurance pays different, usually higher, prices.

Source: CMS Medicare Inpatient Hospitals by Provider and Service (Medicare fee-for-service claims). CMS omits hospitals with fewer than 11 stays. More in the glossary.