Data on Both Urban and Rural Hospitals
This table provides information on how hospitals’ charges (i.e., prices) for their services compare to the costs of delivering those services, and the percentage of the charges that hospitals are actually paid. The table includes data for both urban and rural hospitals that were operating in 2021 if they reported the amounts they were paid for their services on their Medicare Cost Reports. (Some hospitals, such as hospitals operated by the Indian Health Service and by Kaiser Permanente, report the costs of delivering services at the hospital, but do not report the amount of revenue received for the hospital’s services.)
The table can be sorted by clicking the arrows next to each column heading. The data can be restricted to a specific state or hospital or to hospitals within a specific range of expenses or the values of other variables using the filtering boxes.
Rural vs Urban. A hospital is classified here as “rural” if it is located in a rural community that meets the criteria established by the Health Resources and Services Administration (HRSA). (Different definitions of “rural” are used by other federal agencies and some states.) Under the HRSA definition, a community is rural if it is either:
Payment Method indicates the method Medicare used to pay the hospital in the most recent fiscal year.
The data in the four final columns represent the average of the most recent three fiscal years at the hospital for which Medicare Cost Reports were available:
It is important to recognize that this ratio is an average across all of the hospital’s services, and the amount a hospital charges for any individual service may be a higher or lower percentage of the cost of that service than this average amount. The ratio will be influenced more heavily by services with higher costs and by services that are delivered more frequently.
In most cases, the amount the hospital is paid for a service is different than the amount the hospital charges. Medicare pays hospitals based on a fee schedule or based on the hospital’s average cost of delivering the service, regardless of the amount the hospital charges. Most health insurance plans have contracts with the hospital enabling them to pay less than the hospital’s standard charge (this is commonly referred to as a “discount” or “contractual adjustment” on the charge). In contrast, a hospital can require a patient to pay the full charge if the patient does not have insurance, and if a patient’s insurance plan does not have a contract with the hospital, either the patient or their insurance plan may have to pay the full charge.
Medicare Payment as % of Charges is the ratio of (1) the total amount the hospital was paid for services delivered to patients who had Original Medicare as their insurance, and (2) the hospital’s total charges for the services delivered to those specific patients. For example, a value of 50% means that, on average, the amount the hospital was paid for services to Original Medicare beneficiaries was one-half the amount the hospital charged for those services. (Medicare pays Critical Access Hospitals based on their costs, so if the amounts the hospital charged for services to Medicare beneficiaries were less than the cost of delivering the services, Medicare will pay more than the amounts charged, and if the charges were higher than the cost, Medicare will pay less than the charges.) This percentage only applies to patients who have Original Medicare, not those who have a Medicare Advantage plan; the latter are private health plans and are included in the Private Payment category; Medicare Advantage plans are not required to pay the same amounts for services that Original Medicare pays.
Private Payment as % of Charges is the ratio of (1) the total amount the hospital was paid by all payers other than Original Medicare or Medicaid, and (2) the hospital’s total charges for the services delivered to the patients insured by those payers. This includes commercial health insurance plans, Medicare Advantage plans, and self-pay patients (i.e., patients who do not have insurance but pay directly for services).
Ratio of Private to Medicare Payment is the ratio of the two previous columns. It is an approximate representation of how much more or less private health plans are paying for the hospital’s services than what the hospital is paid for services to patients with Original Medicare. For example, if the ratio is 2.0, it indicates that private payers are paying about twice as much for the hospital’s services as Medicare does. It is important to note that Medicare beneficiaries generally receive a different mix of services than younger patients with commercial insurance do (e.g., Medicare beneficiaries are more likely to receive inpatient care), so if the hospital sets higher prices relative to costs for some services than others, this ratio will be affected both by the difference in the mix of services received by different patients and by the differences in what payers pay for individual services.
What ultimately matters for the hospital’s solvency is not what the hospital charges, but how the amounts the hospital is paid compare to what it costs the hospital to deliver services. These comparisons are shown for rural hospitals in the tables on Payer Mix and Margins and Sources of Profits and Losses. However, the amount the hospital charges for its services does matter to patients who do not have insurance, since high charges for services can prevent them from receiving needed services or cause them serious financial problems.
Additional details on the methodology used to calculate the measures are available in the Methodology section.