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December 2007

Roxanne M. Andrews, Ph.D. and Anne Elixhauser, Ph.D.



Introduction

As healthcare costs rise and the population ages, policy makers are concerned with the growing burden of hospital-based medical care and expenses to governments, consumers, and insurers. This Statistical Brief presents data from the Healthcare Cost and Utilization Project (HCUP) on the national inpatient hospital bill (aggregate community hospital charges) in 2005 and annual trends for 1997 through 2005.

This report provides information on the top 20 most expensive conditions and the growth in the national bill for each of these conditions between 1997 and 2005. This report also describes the distribution of the nation's 2005 bill by primary payer and illustrates the conditions accounting for the largest percentage of each payer's hospital bills. The primary payers examined are Medicare, Medicaid, private insurance, and the uninsured.

Findings

The 2005 national hospital bill and changes since 1997
The nation’s hospitals billed nearly $875 billion in total charges in 2005 for inpatient hospitalizations. These charges involved 39.2 million hospital stays, but do not include hospital outpatient care, emergency care for patients not admitted to the hospital, or physician fees for the admissions. Figure 1 shows that from 1997 to 2005, the national hospital bill increased 89 percent from $462 billion (in 2005 dollars) to $875 billion. During this same time period the number of admissions increased from 34.7 million annually to 39.2 million—a 13 percent increase.

Most expensive conditions requiring hospitalization
In 2005, over half the U.S. hospital charges were for the 20 conditions with the largest national hospital charges, with the top five conditions accounting for approximately one-fifth of the charges (table 1). The top five conditions included three circulatory conditions—coronary artery disease (atherosclerosis), acute myocardial infarction (heart attack), and congestive heart failure. Coronary artery disease involved 1.1 million hospital stays and was the most expensive condition treated. This condition resulted in 5.3 percent of the total national hospital bill, translating into $46 billion in expenses. More than half of the hospital stays for coronary artery disease were among patients who also received percutaneous coronary angioplasty (PTCA) or coronary artery bypass grafts (CABG) during their stay. Acute myocardial infarction (heart attack) resulted in $32 billion of hospital charges for 662,000 hospital stays. The 1.1 million hospitalizations for congestive heart failure amounted to $30 billion in hospital charges.

The top five also included two pregnancy-related conditions—mother’s pregnancy and delivery, and newborn infants. Hospital stays for pregnancy and delivery resulted in a total hospital bill of $44 billion, or 5 percent of the entire national bill. Nearly 4 percent of the national hospital bill—$35 billion—was for stays involving newborn infants.

Growth in the national hospital bill for expensive conditions since 1997
Figures 2 and 3 present information on the increase in the national bill from 1997 to 2005 for the 20 most expensive conditions in 2005. Charges for all of the top 20 conditions increased over this time period as shown in Figure 2. The national bill for sepsis increased faster than for any other condition—183 percent, or about twice as fast as for all conditions. This was closely followed by chest pain, showing a 181 percent increase in the national bill. Chest pain is a nonspecific diagnosis which indicates that no cause for the symptom could be found during the hospital stay.

The national bill for respiratory failure and back pain increased about 170 percent from 1997 to 2005, while the bill for osteoarthritis increased 165 percent. The national bill for cardiac dysrhythmias increased 131 percent. Two condition categories which reflect complications of procedures, surgeries, devices, transplants and grafts showed 113–120 percent growth in hospital charges. The national bill for diabetes hospitalizations grew at a rate slightly higher than overall—97 percent.

Figure 3 shows those top 20 most expensive conditions for which the national bill increased more slowly than the overall rate of increase for all conditions. The national bill for newborn and pregnancy/delivery hospital stays grew 78 and 75 percent, respectively from 1997 to 2005. Charges for rehabilitation care grew by 77 percent. Gall bladder disease, chronic obstructive pulmonary disease (COPD), heart attack, pneumonia, and hip fracture all experienced 61–67 percent increases in the national bill. Total charges for stroke grew by 51 percent and coronary artery disease grew by 44 percent over the time period.

The national hospital bill, by primary payer
In 2005, two government payers, Medicare and Medicaid, bore responsibility for almost two-thirds of the national hospital bill (figure 4). Medicare incurred approximately $411 billion in total charges in 2005 for 14.5 million hospital stays, representing 47.0 percent of the total national hospital bill. Hospital stays billed to Medicaid totaled $124 billion, or 14.2 percent of the national bill. Private insurance was billed for 13.7 million hospital stays with total charges of about $272 billion (31.1 percent of the national hospital bill). Uninsured patients accounted for 4.4 percent ($38 billion) of the national bill.

Most expensive conditions requiring hospitalization, by primary payer
Tables 2 through 5 illustrate the 20 most expensive conditions billed to Medicare, Medicaid, private insurance, and the uninsured in 2005. Some commonalities exist across payers in the conditions that generated high total charges. For all four payer groups, coronary artery disease and pneumonia are ranked among the top 10, while heart attack, congestive heart failure, acute cerebrovascular disease (stroke), sepsis, respiratory failure, and gall bladder disease are ranked among the top 20 most expensive conditions. Conditions related to a mother’s pregnancy and delivery and newborn infants ranked in the top 5 for Medicaid, private insurance, and the uninsured. Diabetes with complications was included in the top 20 for Medicare, Medicaid, and the uninsured.

Predictably, given payer differences in demographic mix and service coverage, certain conditions are relatively more prominent in the top rankings of some payer groups than in others. For example, table 2 shows that circulatory diseases accounted for six of the top 20 most expensive conditions billed to Medicare, resulting in about $95 billion of total hospital charges. Osteoarthritis, a degenerative disorder that becomes more commonplace and debilitating with age, was the sixth most expensive condition billed to Medicare ($15 billion). More than 90 percent of these osteoarthritis patients were admitted for elective hip or knee joint replacement. Hip fracture ranked 12th for Medicare ($9.1 billion), but was not in the top 20 ranking for other payers.

Table 3 illustrates that the most expensive hospital stays billed to Medicaid were related to pregnancy and delivery ($18 billion) and the care of newborn infants ($16 billion). Two mental health disorders—schizophrenia and affective disorders (depression and bipolar disorders)—were included among the top 20 most expensive reasons for hospitalization. These two conditions resulted in hospital bills totaling $4.4 billion. Hospitalizations for cardiac and circulatory congenital anomalies ($2.2 billion) and for HIV infection ($1.3 billion) were also among the top 20 most expensive conditions billed to Medicaid, but this was not the case for the other payers. The high ranking for these conditions is related to the categories of people with Medicaid as their primary payer for hospital care: women of childbearing age (and their children) and disabled persons.

The top 20 most expensive reasons for hospitalization among patients with private insurance included six circulatory diseases (totaling $40 billion) and two conditions related to childbirth (totaling $40 billion) (table 4). Coronary artery disease ($15 billion), back pain ($9.5 billion) and osteoarthritis ($9.3 billion) constituted the third, fourth and fifth most expensive conditions billed to private insurers, respectively. Back pain and osteoarthritis did not appear among the top 20 most expensive disorders for Medicaid or the uninsured. Other nutritional, endocrine, and metabolic disorders—a condition which includes obesity—was the 17th most expensive reason for hospitalization among those covered by private insurance, though this condition did not appear in the top 20 rankings for other payer types.

Heart attack was the most expensive reason for hospitalization among the uninsured (table 5). Three of the top 20 most expensive reasons for hospitalization among the uninsured involved injuries. Hospitalizations for intracranial injury, crushing injury or external injury, and fracture of the lower limb, resulted in more than $2.7 billion of total hospital charges. The top 20 most expensive conditions for the uninsured also included two mental health-related disorders—affective disorders and alcohol-related mental disorders—that totaled $1.2 billion. Pancreatic disorders ($ 0.7 billion) ranked 15th for the uninsured, but were not included among the top 20 for other payers.

Data Source

The estimates in this Statistical Brief are based upon data from the HCUP 2005 Nationwide Inpatient Sample (NIS). Historical data are from the 1997 through 2004 NIS. The statistics were generated from HCUPnet, a free, online query system that provides users with immediate access to largest set of publicly available, all-payer national, regional, and State-level hospital care databases from HCUP.

Definitions

Principal 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.

ICD-9-CM is the International Classification of Diseases, Ninth Revision, Clinical Modification, which assigns numeric codes to diagnoses. There are about 12,000 ICD-9-CM diagnosis codes.

CCS categorizes ICD-9-CM diagnoses into 260 clinically meaningful categories.¹ This "clinical grouper" makes it easier to quickly understand patterns of diagnoses.

For this report, "Mother’s pregnancy and delivery" conditions were defined as CCS categories:
– 177 Spontaneous abortion
– 178 Induced abortion
– 180 Ectopic pregnancy
– 181 Other complications of pregnancy
– 182 Hemorrhage during pregnancy, abruptio placenta, placenta previa
– 183 Hypertension complicating pregnancy, childbirth and the puerperium
– 184 Early or threatened labor
– 185 Prolonged pregnancy
– 186 Diabetes or abnormal glucose tolerance complicating pregnancy, childbirth, or the puerperium
– 187 Malposition, malpresentation
– 188 Fetopelvic disproportion, obstruction
– 189 Previous C-section
– 190 Fetal distress and abnormal forces of labor
– 191 Polyhydramnios and other problems of amniotic cavity
– 192 Umbilical cord complication
– 193 Trauma to perineum and vulva
– 194 Forceps delivery
– 195 Other complications of birth, puerperium affecting management of the mother
– 196 Normal pregnancy and/or delivery

"Newborn infants" were defined as CCS categories:
– 218 Liveborn
– 219 Short gestation, low birth weight, and fetal growth retardation
– 220 Intrauterine hypoxia and birth asphyxia
– 221 Respiratory distress syndrome
– 222 Hemolytic jaundice and perinatal jaundice
– 223 Birth trauma
– 224 Other perinatal conditions

Types of hospitals included in HCUP
HCUP is based on data from community hospitals, defined as short-term, non-Federal, general and other hospitals, excluding hospital units of other institutions (e.g., prisons). HCUP data include OB-GYN, ENT, orthopedic, cancer, pediatric, public, and academic medical hospitals. They exclude long-term care, rehabilitation, psychiatric, and alcoholism and chemical dependency hospitals, but these types of discharges are included if they are from community hospitals.

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.

Charges
Hospital charges reflect the amount the hospital billed for the entire hospital stay and do not include professional (physician) fees. The charge is generally more than the amount paid to the hospital by payers for the hospitalization and is also generally more than the hospital's costs of care. For this brief, when a hospital record is missing charge information, a value is imputed by calculating the mean charge for all discharges with the same diagnosis-related group (DRG) with non-missing charges. Fewer than 2 percent of hospital records in the 2005 NIS have missing charge data.

Charges are adjusted for economy-wide inflation by removing increases that reflect the effect of changing average prices for all goods and services. In this report, the U.S. Bureau of Economic Analysis Gross Domestic Product Price Index was used to remove economy-wide inflation; additional inflation that is specific to the hospital sector is not removed in this calculation. All dollar values are expressed in 2005 dollars.

Primary payer
Each hospitalization and its related hospital bill are attributed to the payer who was expected by the hospital to pay the major portion of the bill (i.e., the expected primary payer). The expected primary source of payment at admission may not be the ultimate primary payer. In addition, other (secondary) payers may pay a portion of the bill. For this report, if the primary payer is listed as "self-pay" or "no charge," the payer is "uninsured". If the primary payer is some other third-party payer besides Medicare, Medicaid, or private insurance, the payer is "other." "Other" payer consists of Worker’s Compensation, TRICARE/CHAMPUS, CHAMPVA, Title V, and other government programs.

About HCUP

HCUP is a family of powerful healthcare databases, software tools, and products for advancing research. Sponsored by the Agency for Healthcare Research and Quality (AHRQ), HCUP includes the largest all-payer encounter-level collection of longitudinal healthcare data (inpatient, ambulatory surgery, and emergency department) in the United States, beginning in 1988. HCUP is a Federal-State-Industry Partnership that brings together the data collection efforts of many organizations—such as State data organizations, hospital associations, private data organizations, and the Federal government—to create a national information resource.

HCUP would not be possible without the contributions of the following data collection Partners from across the United States:

Arizona Department of Health Services
Arkansas Department of Health & Human Services
California Office of Statewide Health Planning & Development
Colorado Health & Hospital Association
Connecticut Integrated Health Information (Chime, Inc.)
Florida Agency for Health Care Administration
Georgia GHA: An Association of Hospitals & Health Systems
Hawaii Health Information Corporation
Illinois Health Care Cost Containment Council and Department of Public Health
Indiana Hospital&Health Association
Iowa Hospital Association
Kansas Hospital Association
Kentucky Cabinet for Health and Family Services
Maryland Health Services Cost Review Commission
Massachusetts Division of Health Care Finance and Policy
Michigan Health & Hospital Association
Minnesota Hospital Association
Missouri Hospital Industry Data Institute
Nebraska Hospital Association
Nevada Division of Health Care Financing and Policy, Department of Human Resources
New Hampshire Department of Health & Human Services
New Jersey Department of Health and Senior Services
New York State Department of Health
North Carolina Department of Health and Human Services
Ohio Hospital Association
Oklahoma Health Care Information Center for Health Statistics
Oregon Association of Hospitals and Health Systems
Rhode Island Department of Health
South Carolina State Budget & Control Board
South Dakota Association of Healthcare Organizations
Tennessee Hospital Association
Texas Department of State Health Services
Utah Department of Health
Vermont Association of Hospitals and Health Systems
Virginia Health Information
Washington State Department of Health
West Virginia Health Care Authority
Wisconsin Department of Health & Family Services

About the NIS

The HCUP Nationwide Inpatient Sample (NIS) is a nationwide database of hospital inpatient stays. The NIS is nationally representative of all community hospitals (i.e., short-term, non-Federal, non-rehabilitation hospitals). The NIS is a sample of hospitals and includes all patients from each hospital, regardless of payer. It is drawn from a sampling frame that contains hospitals comprising about 90 percent of all discharges in the United States. The vast size of the NIS allows the study of topics at both the national and regional levels for specific subgroups of patients. In addition, NIS data are standardized across years to facilitate ease of use.

About HCUPnet

HCUPnet is an online query system that offers instant access to the largest set of all-payer healthcare databases that are publicly available. HCUPnet has an easy step-by-step query system, allowing for tables and graphs to be generated on national and regional statistics, as well as trends for community hospitals in the U.S. HCUPnet generates statistics using data from HCUP's Nationwide Inpatient Sample (NIS), the Kids' Inpatient Database (KID), the State Inpatient Databases (SID) and the State Emergency Department Databases (SEDD).

For More Information

For more information about HCUP, visit www.hcup-us.ahrq.gov.

For additional HCUP statistics, visit HCUPnet, our interactive query system at https://datatools.ahrq.gov/hcupnet.

For information on other hospitalizations in the U.S., download HCUP Facts and Figures: Statistics on Hospital-based Care in the United States in 2005, located at http://www.hcup-us.ahrq.gov/reports.jsp.

For a detailed description of HCUP, more information on the design of the NIS, and methods to calculate estimates, please refer to the following publications:

Steiner, C., Elixhauser, A., Schnaier, J. The Healthcare Cost and Utilization Project: An Overview. Effective Clinical Practice 5(3):143–51, 2002.

Design of the HCUP Nationwide Inpatient Sample, 2005. Online. June 13, 2007. U.S. Agency for Healthcare Research and Quality.http://www.hcup-us.ahrq.gov/db/nation/nis/reports/NIS_2005_Design_Report.pdf

Houchens, R., Elixhauser, A. Final Report on Calculating Nationwide Inpatient Sample (NIS) Variances, 2001. HCUP Methods Series Report #2003-2. Online. June 2005 (revised June 6, 2005). U.S. Agency for Healthcare Research and Quality. http://www.hcup-us.ahrq.gov/reports/methods/2003_02.pdf

Houchens RL, Elixhauser A. Using the HCUP Nationwide Inpatient Sample to Estimate Trends. (Updated for 1988-2004). HCUP Methods Series Report #2006-05 Online. August 18, 2006. U.S. Agency for Healthcare Research and Quality. http://www.hcup-us.ahrq.gov/reports/methods/2006_05_NISTrendsReport_1988-2004.pdf

Suggested Citation

Andrews, R. M. and Elixhauser A. The National Hospital Bill: Growth Trends and 2005 Update on the Most Expensive Conditions by Payer. HCUP Statistical Brief #42. December 2007. Agency for Healthcare Research and Quality, Rockville, MD. http://www.hcup-us.ahrq.gov/reports/statbriefs/sb42.pdf.

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AHRQ welcomes questions and comments from readers of this publication who are interested in obtaining more information about access, cost, use, financing, and quality of healthcare in the United States. We also invite you to tell us how you are using this Statistical Brief and other HCUP data and tools, and to share suggestions on how HCUP products might be enhanced to further meet your needs. Please e-mail us at hcup@ahrq.gov or send a letter to the address below:

Irene Fraser, Ph.D., Director
Center for Delivery, Organization, and Markets
Agency for Healthcare Research and Quality
540 Gaither Road
Rockville, MD 20850



¹HCUP CCS. Healthcare Cost and Utilization Project (HCUP). August 2006. U.S. Agency for Healthcare Research and Quality, Rockville, MD. www.hcup-us.ahrq.gov/toolssoftware/ccs/ccs.jsp.