The federal Medicare program generated headlines this week when it released a big spreadsheet listing hospital charges for a number of different procedures. The numbers were compelling by the sheer fact that they varied so widely, across the nation and even within states. Seems like everyone from news anchors to Princeton economist Uwe Reinhardt debated whether this information on charges carries much relevancy. Virtually everyone acknowledged that what hospitals list as charges and what they actually get paid from Medicare, Medicaid and commercial insurance companies are two very different sets of numbers. But today, I want to cut through the clutter and just share three very important things that New Jersey healthcare consumers need to know about hospital charges and medical bills.

1. The overwhelming majority of you will never, ever see a bill that includes hospital charges. Only about 4.5 percent of N.J. hospital patients could potentially be billed at charges. These are the individuals who earn too much to qualify for a subsidized insurance program like Medicaid or NJ FamilyCare and who opt not to purchase insurance on their own.
2. A 2009 state law caps hospital charges for most uninsured patients. Any individual earning up to $117,750 annually for a family of four would have any hospital charges capped at 115 percent of what Medicare would pay for the same service. And since Medicare only pays N.J. hospitals about 90 percent of their costs, the “charge” to these patients would be just slightly above what it costs hospitals to provide their care.
3. And to the small group of individuals who may be billed at charges – or even for those insured patients who face major medical bills that their plans do not cover: Contact your hospital and ask about discounts and payment plans. Almost all New Jersey hospitals have a set of compassionate billing guidelines to work with patients who are struggling with medical bills.