User Support

September 2008

Roxanne M. Andrews, 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. A recent AHRQ report finding that the national aggregate cost for hospitals to produce inpatient services increased by 52 percent (after adjusting for inflation) between 1997 and 2006¹ illustrates the importance of monitoring hospital costs.

This Statistical Brief presents data from the Healthcare Cost and Utilization Project (HCUP) on the national inpatient hospital bill (aggregate community hospital charges) in 2006. This report also describes the distribution of the nation’s 2006 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.

It should be kept in mind that hospital charges are generally more than the amount paid by payers because of negotiated discounts (the exception being the uninsured patients, who are expected to pay the full charge by many hospitals). Hospital charges are also more than the hospitals’ cost to produce the services. Nonetheless, charges can be a useful benchmark for comparing how expensive different types of hospitalizations are, such as comparisons between types of medical conditions.

Findings

The 2006 national hospital bill by primary payer
The nation’s hospitals billed nearly $950 billion in total charges in 2006 for inpatient hospitalizations. These charges involved 39.4 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. In 2006, two government payers, Medicare and Medicaid, bore responsibility for almost two–thirds of the national hospital bill (figure 1). Medicare incurred approximately $444 billion in total charges in 2006 for 14.7 million hospital stays, representing 47.0 percent of the total national hospital bill. Hospital stays billed to Medicaid totaled $135 billion, or 14.3 percent of the national bill. Private insurance was billed for 13.4 million hospital stays with total charges of about $287 billion (30.4 percent of the national hospital bill). Uninsured patients accounted for 4.6 percent ($44 billion) of the national bill.

Most expensive conditions requiring hospitalization
In 2006, over half of the U.S. hospital charges were for the top 20 most expensive conditions, with the top five conditions accounting for over one–fifth of the total 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 1.2 million hospital stays and was the most expensive condition treated. This condition resulted in 5.6 percent of the total national hospital bill, translating into $53 billion in charges. More than half of the hospital stays for coronary artery disease were among patients who received percutaneous coronary angioplasty (PTCA) or coronary artery bypass grafts (CABG) during their stay. Acute myocardial infarction (heart attack) resulted in $35 billion of hospital charges for 675,000 hospital stays. The 1.1 million hospitalizations for congestive heart failure amounted to $33 billion in national 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 $48 billion, or 5.1 percent of the entire national bill. Hospital stays involving newborn infants accounted for 4 percent of the national hospital bill—$38 billion.

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 2006. Some commonalities exist across payers in the conditions that generated high total charges. For all four payer groups, coronary artery disease ranked among the top 10, while heart attack, congestive heart failure, sepsis, pneumonia, respiratory failure, and acute cerebrovascular disease (stroke) 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; gall bladder disease and non–specific chest pain were among the top 20 most expensive conditions for these three payers. 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 $103 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 ($16 billion). More than 90 percent of these osteoarthritis patients were admitted for elective hip or knee joint replacement. Hip fracture ranked 11th for Medicare ($9.4 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 ($21 billion) and the care of newborn infants ($18 billion). Two mental health disorders–schizophrenia and affective disorders (depression and bipolar disorders)–were among the top 10 most expensive reasons for hospitalization. These two conditions resulted in hospital bills totaling $4.5 billion. Hospitalizations for asthma ($1.6 billion) and for HIV infection ($1.5 billion) were 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 types of people generally eligible for Medicaid as their primary payer for hospital care: women of childbearing age (and their children) and persons with disabilities.

The top five most expensive reasons for hospitalization among patients with private insurance included two conditions related to childbirth (mother’s pregnancy and newborn infants, totaling $41 billion) (table 4). Back pain ($10 million) was also among the top five most expensive conditions for private insurers.

Among the uninsured, heart attack was the most expensive reason for hospitalization (table 5). Three of the top 10 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 $3 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 $1.4 billion. Pancreatic disorders ($ 0.8 billion) ranked 16th 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 2006 Nationwide Inpatient Sample (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

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. Secondary diagnoses are concomitant conditions that coexist at the time of admission or that develop during the stay.

ICD–9–CM is the International Classification of Diseases, Ninth Revision, Clinical Modification, which assigns numeric codes to diagnoses. There are about 13,600 ICD–9–CM diagnosis codes.

CCS categorizes ICD–9–CM diagnoses into a manageable number of clinically meaningful categories.² This "clinical grouper" makes it easier to quickly understand patterns of diagnoses and procedures.

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
Charges represent what the hospital billed for the case. Hospital charges reflect the amount the hospital charged 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 2006 NIS have missing charge data. For the purposes of this Statistical Brief, charges are rounded to the nearest million dollars.

Payer
Payer is the expected primary payer for the hospital stay. To make coding uniform across all HCUP data sources, payer combines detailed categories into more general groups:

– Medicare includes fee–for–service and managed care Medicare patients.
– Medicaid includes fee–for–service and managed care Medicaid patients. Patients covered by the State Children’s Health Insurance Program (SCHIP) may be included here. Because most state data do not identify SCHIP patients specifically, it is not possible to present this information separately.
– Private insurance includes Blue Cross, commercial carriers, and private HMOs and PPOs.
– Other includes Worker’s Compensation, TRICARE/CHAMPUS, CHAMPVA, Title V, and other government programs.
– Uninsured includes an insurance status of "self–pay" and "no charge."

When more than one payer is listed for a hospital discharge, the first–listed payer is used.

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 Hospital Association
Connecticut Integrated Health Information (Chime, Inc.)
Florida Agency for Health Care Administration
Georgia Hospital Association
Hawaii Health Information Corporation
Illinois Department of Public Health
Indiana Hospital & Health Association
Iowa Hospital Association
Kansas Hospital Association
Kentucky Cabinet for Health and Family Services
Maine Health Data Organization
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 Department of Health and Human Services
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 State Department of Health
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 www.hcup.ahrq.gov.

For information on other hospitalizations in the U.S., download HCUP Facts and Figures: Statistics on Hospital–based Care in the United States in 2006, 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.

Introduction to the HCUP Nationwide Inpatient Sample, 2006. Online. May 14, 2008. U.S. Agency for Healthcare Research and Quality http://www.hcup–us.ahrq.gov/db/nation/nis/NIS_Introduction_2006.jsp.

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.

Suggested Citation

Andrews, R.M. The National Hospital Bill: The Most Expensive Conditions by Payer, 2006. HCUP Statistical Brief #59. September 2008. Agency for Healthcare Research and Quality, Rockville, MD, http://www.hcup–us.ahrq.gov/reports/statbriefs/sb59.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



¹ Levit K, Stranges E, Ryan K, Elixhauser A. HCUP Facts and Figures, 2006: Statistics on Hospital–based Care in the United States. Rockville, MD: Agency for Healthcare Research and Quality, 2008.

² HCUP CCS. Healthcare Cost and Utilization Project (HCUP). August 2006. U.S. Agency for Healthcare Research and Quality, Rockville, MD, http://www.hcup-us.ahrq.gov/toolssoftware/ccs/ccs.jsp.