Total Charge: amount set before any discounts. Hospitals are required by the federal government to utilize uniform charges as the starting point for all bills.
Charges: based on what type of care was provided and can differ from patient to patient for the same service depending on any complications or different treatment provided due to the patient’s health.
Cost: for a hospital, cost is total expense incurred to provide the health care. Hospitals have higher costs to provide care than freestanding or retail providers, even for same type of service. This is because a hospital is open 24 hours a day, seven days a week and needs to have available everything necessary to cover any and all emergencies. Non-hospital health care 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 including: 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 health care professionals, again provided at a loss; some hospitals consistently treat patients with significantly higher levels of illness, yet payment doesn’t cover; some hospitals have disproportionately high numbers of patients who are on public assistance or uninsured and unable to pay much if anything toward the cost of their care.
Total Price: amount actually paid to a hospital. Hospitals are paid by health plans and/or patients, but total amount paid is significantly less than starting charges.
Medicare and Medicaid pay hospitals according to a set fee schedule depending on service provided, much less than the hospital charge and actually less than their costs.
Commercial insurers negotiate discounts with hospitals on behalf of their enrollees and pay hospitals at varying discount levels, but much less than starting charges.