Does medical device price gauging really contribute to wide variation in hospital charges?

New data shows medical devices are probably not the problem in the wide variation of Medicare hospital charges for similar admissions, according to AdvaMed. The charges were actually lower for “device intensive” procedures–which showed a 59 percent fluctuation between charges from hospital to hospital–than “non-device intensive” procedures, which showed a 79 percent difference. If this holds true, medical devices probably aren’t the big problem in the variation of Medicare hospital charges. The study responds to a TIME article about the “puzzling” lack of hospital pricing transparency and difference between charges from hospital to hospital. (Although, many news outlets have implied medical device companies gauge their rates when they can.)

medicare hospital charges advamed

from AdvaMed

As for the 59 percent difference (which even the study itself deems “considerable”), well–the study doesn’t get into that.

“What hospital charge for these procedures . . . is not necessarily what they pay for the devices,” AdvaMed Senior Executive Vice President David Nexon said.

However, the data does clearly show devices are at least contributing much less to these charges and costs than other healthcare costs.

According to the press release:

The study divides FY 2012 Medicare hospital claims data into two groups, comparing variation in hospital charges for device-intensive procedures with the variation in hospital charges for non-device-intensive procedures. In the study, device-intensive procedures included hip and knee replacements, stents, pacemakers and defibrillators. The study’s findings reveal that the variation was significantly greater–22 percent greater–for procedures that were not device intensive.

According to the study, device intensive procedures also have less variation when you look at costs, not just charges:

Direct Research found that this was also true when costs, as opposed to charges, were examined. The same pattern occurred: there was there was considerable variation in costs for both types of admissions, but the variation was 40 percent greater for the admissions that were not device-intensive.

Several recent studies from Advamed (no doubt in an effort to repeal the device tax), have worked to create hard data to show the medical device industry is not at the center of the high cost of care.In fact, a previous study shows medical device companies only account for 6 percent of the cost in the healthcare system.

Leaders of the lobbyist group plan to lay this data at the feet of legislators (and more like it), probably in an effort to push for the medical device excise tax repeal.

“It’s not really the devices that are contributing to that variation,” Nexon said.

Article from MedCity News,


Josh Sandberg

Josh Sandberg is the President of Ortho Spine Partners and Partner for The De Angelis Group. He also serves as Co-Founder and Editor of OrthoSpineNews.

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