Total charge is the amount set before any discounts. Hospitals are required by the federal government to utilize uniform charges as the starting point for all bills. The charges are based on what type of care was provided and can differ from patient to patient for similar services, depending on any complications or different treatment provided due to the patient’s health.
Cost: For a hospital, it is the total expense incurred to provide the healthcare. Hospitals have higher costs to provide care than freestanding or retail providers, even for the same type of service. This is because a hospital is open 24 hours a day, seven days a week, and needs to have everything necessary available to cover any and all emergencies. Non hospital healthcare providers can choose when to be available and typically would not provide services that would result in losses. A hospital’s cost of services can vary depending on additional factors such as:
Types of services it provides since many vital services are provided at a loss, such as trauma, burn, neonatal, psychiatric and others;
Medical education programs to train physicians, nurses and other healthcare professionals, again provided at a loss;
More patients with significantly higher levels of illness, that standard payment doesn’t cover;
A disproportionately high number of patients who are on public assistance or uninsured and unable to pay much, if anything, toward the cost of their care.
Total Price is the amount actually paid to a hospital. Hospitals are paid by health plans and/or patients, but the total amount paid can be significantly less than the cost of care. Consider the following information:
Medicare and Medicaid pay hospitals according to a set fee schedule depending on the service provided, and these amounts are much less than the hospital’s total charges and sometimes actually less than their costs.
Commercial insurers negotiate rates, i.e. discounts from the hospitals charges, on behalf of their enrollees and pay hospitals at varying discount levels, which can be much less than the actual cost of care provided to patients.
New Hampshire hospitals provided over $540 million in free and discounted care measured at cost in 2016.