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Patients admitted for treatment sometimes develop serious complications or die. Many of these events can be prevented when hospitals follow best practices. CMS risk-adjusts death rates so hospitals that treat sicker patients are compared fairly.

The readmission measures estimate the rate of unplanned readmission to an acute care hospital in the 30 days after discharge. Returning to the hospital disrupts patients’ lives, raises the risk of harmful events like infections, and costs more. Hospitals that give high quality care can keep patients from returning.

Infections are reported using a standardized infection ratio. The SIR compares the actual number of infections at a hospital to a national benchmark based on data reported to the CDC’s National Healthcare Safety Network (NHSN).

Average payment is what Medicare paid plus the patient’s deductible and coinsurance (and any other insurer), averaged over a hospital’s Medicare cases for one procedure. It covers the hospital’s part of the care: doctors and other professionals bill separately. For outpatient procedures it is Medicare’s allowed amount, which excludes the separate “outlier” payments Medicare makes for unusually costly cases (shown separately where CMS reports them). Billed charges are the hospital’s list prices before any discounts and are usually several times what is paid.

Inpatient stays are grouped into Medicare Severity Diagnosis Related Groups (MS-DRGs). Many come in versions “with MCC” (a major complication or comorbidity), “with CC” (a lesser one) or “without CC/MCC”, which are paid differently. Outpatient procedures are grouped into comprehensive Ambulatory Payment Classifications (APCs) of similar procedures, from “Level 1” (simplest) upward.

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 does not mean better or worse care. Maryland sets hospital rates for all payers, so its payments are higher and closer to its charges. Medicare Advantage, Medicaid and private insurance pay different prices.

CMS publishes these figures about 18 months after the year of care and leaves out any hospital with fewer than 11 Medicare discharges (inpatient) or services (outpatient) for a procedure. Averages, typical ranges (the middle half of hospitals) and comparisons cover the hospitals that are reported. Whether a procedure counts as a “surgery or procedure” is our classification from the CMS description.

The payment measures add up all payments for care starting the day the patient enters the hospital: payments to the hospital, doctor's office, skilled nursing facility and hospice, plus patient copayments. Risk adjustment accounts for patient age, medical history and other conditions, and removes differences unrelated to care such as geographic pricing.

Looking at payment together with quality-of-care measures such as death rates lets you compare the value of care between hospitals. Lower and to the left (low death rate, low payment) is the best combination.

Hospitals list charges that are usually much higher than what care costs them. The cost-to-charge ratio shows how far apart the two are. Values are calculated from the hospital’s annual Medicare cost report.