July 2020
National Inpatient Hospital Costs: The Most Expensive Conditions by Payer, 2017
Lan Liang, Ph.D., Brian Moore, Ph.D., and Anita Soni, Ph.D.
Introduction
Healthcare spending in the United States increased 4.2 percent between 2016 and 2017 to $3.5 trillion, or $10,739 per person, and accounted for 17.9 percent of the Gross Domestic Product.1 Constituting nearly one-third of all healthcare expenditures, hospital spending rose 4.7 percent to $1.1 trillion during the same time period.2 Although this growth represented deceleration compared with the 5.8 percent increase between 2014 and 2015,3 the consistent year-to-year rise in hospital-related expenses remains a central concern among policymakers.
In 2016, there were over 35 million hospital stays, equating to 104.2 stays per 100,000 population.4 The average cost per hospital stay was $11,700, making hospitalization one of the most expensive types of healthcare utilization.5 Higher costs are documented for stays among patients with an expected payer of Medicare compared with stays with other expected payers ($13,600 for Medicare vs. $9,300-$12,600 for other payers).6
This Statistical Brief presents data from the Healthcare Cost and Utilization Project (HCUP) on costs of hospital inpatient stays in the United States using the 2017 National Inpatient Sample (NIS). It describes the distribution of costs by primary expected payer and illustrates the conditions accounting for the largest percentage of each payer's hospital costs. Hospital charges were converted to costs using HCUP Cost-to-Charge Ratios.7 The expected payers examined are Medicare, Medicaid, private insurance, and self-pay/no charge. Because of the large sample size of the NIS data, small differences can be statistically significant. Thus, only differences greater than or equal to 10 percent are noted in the text. Hospital costs in this Statistical Brief represent the hospital's costs to produce the services—not the amount paid for services by payers—and they do not include separately billed physician fees associated with the hospitalization.
Findings
Aggregate hospital inpatient costs and stays by payer, 2017
Figure 1 presents the distribution by primary expected payer for aggregate hospital costs and total hospital inpatient stays in 2017.
Highlights |
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Notes: Diagnosis groups are defined using the CCSR for ICD-10-CM Diagnoses. Conditions were identified using the CCSR default category assignment(s) for the principal diagnosis code of the hospital stay. The CCSR includes multiple category assignments for some diagnosis codes. The default CCSR category assignments facilitate analyses requiring a mutually exclusive diagnosis categorization scheme by selecting a single CCSR category for each hospital encounter based on clinical coding guidelines, clinical input on the etiology and pathology of diseases, coding input on the use of and ordering of ICD-10-CM codes on a billing record, and standards set by other Federal agencies.
Source: Agency for Healthcare Research and Quality (AHRQ), Healthcare Cost and Utilization Project (HCUP), National Inpatient Sample (NIS), 2017
- The 20 most expensive conditions accounted for slightly less than half (46.6 percent) of aggregate hospital costs in 2017.
Septicemia was the most expensive condition treated, amounting to $38.2 billion, or 8.8 percent of aggregate costs for all hospital stays in 2017. Other high-cost hospital stays were for osteoarthritis ($19.9 billion, or 4.6 percent), liveborn (newborn) infants ($16.0 billion, or 3.7 percent), acute myocardial infarction ($14.3 billion, or 3.3 percent), and heart failure ($13.6 billion, or 3.1 percent).
- The 20 most expensive conditions constituted 43.3 percent of all hospital stays.
One out of every 10 hospital stays was for liveborn (newborn) infants (10.3 percent). Among the 20 most expensive conditions, septicemia was the second most common reason for hospitalization, representing 5.8 percent of all hospital stays, followed by osteoarthritis and heart failure (3.5 and 3.0 percent, respectively).
Most expensive conditions by primary expected payer, 2017
Tables 2 through 5 list the 20 most expensive conditions in 2017 for stays expected to be paid by Medicare, Medicaid, or private insurance, or that were expected to be self-pay/no charge.
In summary, similarities across the expected payer categories are described below:
- Five conditions were among the 20 most expensive conditions for all four expected payer groups.
There were some commonalities across payers in the conditions that generated high aggregate hospital costs. For all four expected payer groups, septicemia was among the top three most expensive conditions.
The following five conditions were among the 20 most expensive conditions for all four expected payer groups, ordered by aggregate cost among all payers:
- Septicemia
- Acute myocardial infarction
- Heart failure
- Respiratory failure; insufficiency; arrest
- Diabetes mellitus with complications
- Several other conditions were ranked among those with the highest aggregate hospital costs across three of the four expected payer groups.
- Complication of other surgical or medical care, injury, initial encounter; osteoarthritis; and spondylopathies/spondyloarthropathy (including infective) were among the 20 most expensive conditions for stays with an expected payer of Medicare, Medicaid, and private insurance.
- Cerebral infarction and coronary atherosclerosis and other heart disease were among the 20 most expensive conditions for stays with an expected payer of Medicare, private insurance, and self-pay/no charge.
- The diagnosis of liveborn (newborn) infants was among the four most expensive hospital stays with an expected payer of Medicaid, private insurance, and self-pay/no charge.
- Chronic obstructive pulmonary disease and bronchiectasis and pneumonia (except that caused by tuberculosis) were among the 20 most expensive conditions for stays with an expected payer of Medicare, Medicaid, and self-pay/no charge.
Notes: Diagnosis groups are defined using the CCSR for ICD-10-CM Diagnoses. Conditions were identified using the CCSR default category assignment(s) for the principal diagnosis code of the hospital stay. The CCSR includes multiple category assignments for some diagnosis codes. The default CCSR category assignments facilitate analyses requiring a mutually exclusive diagnosis categorization scheme by selecting a single CCSR category for each hospital encounter based on clinical coding guidelines, clinical input on the etiology and pathology of diseases, coding input on the use of and ordering of ICD-10-CM codes on a billing record, and standards set by other Federal agencies.
Source: Agency for Healthcare Research and Quality (AHRQ), Healthcare Cost and Utilization Project (HCUP), National Inpatient Sample (NIS), 2017
Notes: Diagnosis groups are defined using the CCSR for ICD-10-CM Diagnoses. Conditions were identified using the CCSR default category assignment(s) for the principal diagnosis code of the hospital stay. The CCSR includes multiple category assignments for some diagnosis codes. The default CCSR category assignments facilitate analyses requiring a mutually exclusive diagnosis categorization scheme by selecting a single CCSR category for each hospital encounter based on clinical coding guidelines, clinical input on the etiology and pathology of diseases, coding input on the use of and ordering of ICD-10-CM codes on a billing record, and standards set by other Federal agencies.
Source: Agency for Healthcare Research and Quality (AHRQ), Healthcare Cost and Utilization Project (HCUP), National Inpatient Sample (NIS), 2017
Notes: Diagnosis groups are defined using the CCSR for ICD-10-CM Diagnoses. Conditions were identified using the CCSR default category assignment(s) for the principal diagnosis code of the hospital stay. The CCSR includes multiple category assignments for some diagnosis codes. The default CCSR category assignments facilitate analyses requiring a mutually exclusive diagnosis categorization scheme by selecting a single CCSR category for each hospital encounter based on clinical coding guidelines, clinical input on the etiology and pathology of diseases, coding input on the use of and ordering of ICD-10-CM codes on a billing record, and standards set by other Federal agencies.
Source: Agency for Healthcare Research and Quality (AHRQ), Healthcare Cost and Utilization Project (HCUP), National Inpatient Sample (NIS), 2017
Notes: Diagnosis groups are defined using the CCSR for ICD-10-CM Diagnoses. Conditions were identified using the CCSR default category assignment(s) for the principal diagnosis code of the hospital stay. The CCSR includes multiple category assignments for some diagnosis codes. The default CCSR category assignments facilitate analyses requiring a mutually exclusive diagnosis categorization scheme by selecting a single CCSR category for each hospital encounter based on clinical coding guidelines, clinical input on the etiology and pathology of diseases, coding input on the use of and ordering of ICD-10-CM codes on a billing record, and standards set by other Federal agencies.
a Self-pay/No charge: includes self-pay, no charge, charity, and no expected payment.
Source: Agency for Healthcare Research and Quality (AHRQ), Healthcare Cost and Utilization Project (HCUP), National Inpatient Sample (NIS), 2017
- Four of the 20 most expensive conditions for self-pay/no charge stays did not appear in the top 20 for any other payer category.
The following conditions were in the 20 most expensive conditions for self-pay/no charge stays (but not for other payers, as shown in Tables 2-5), ordered by aggregate cost:
- Pancreatic disorders (excluding diabetes)
- Acute hemorrhagic cerebrovascular disease
- Internal organ injury, initial encounter
- Appendicitis and other appendiceal conditions
- Circulatory, respiratory, digestive, and injury conditions represented over two-thirds of the 20 most expensive conditions for self-pay/no charge stays.
Five of the 20 most expensive conditions during self-pay/no charge hospital stays were related to the circulatory system, ordered by aggregate cost:
- Acute myocardial infarction
- Heart failure
- Cerebral infarction
- Coronary atherosclerosis and other heart disease
- Acute hemorrhagic cerebrovascular disease
Three of the 20 most expensive conditions during self-pay/no charge hospital stays were related to injury:- Fracture of the lower limb (except hip), initial encounter
- Traumatic brain injury (TBI); concussion, initial encounter
- Internal organ injury, initial encounter
Three of the 20 most expensive conditions during self-pay/no charge hospital stays were related to the digestive system:- Biliary tract disease
- Pancreatic disorders (excluding diabetes)
- Appendicitis and other appendiceal conditions
Three of the 20 most expensive conditions during self-pay/no charge hospital stays were related to the respiratory system:- Respiratory failure; insufficiency; arrest
- Pneumonia (except that caused by tuberculosis)
- Chronic obstructive pulmonary disease and bronchiectasis
About Statistical Briefs
Healthcare Cost and Utilization Project (HCUP) Statistical Briefs provide basic descriptive statistics on a variety of topics using HCUP administrative healthcare data. Topics include hospital inpatient, ambulatory surgery, and emergency department use and costs, quality of care, access to care, medical conditions, procedures, and patient populations, among other topics. The reports are intended to generate hypotheses that can be further explored in other research; the reports are not designed to answer in-depth research questions using multivariate methods.
Data Source
The estimates in this Statistical Brief are based upon data from the HCUP 2017 National Inpatient Sample (NIS).
Definitions
Diagnoses, ICD-10-CM, Clinical Classifications Software Refined (CCSR) for ICD-10-CM Diagnoses
The principal diagnosis is that condition established after study to be chiefly responsible for the patient's admission to the hospital.
ICD-10-CM is the International Classification of Diseases, Tenth Revision, Clinical Modification. In October 2015, ICD-10-CM replaced the International Classification of Diseases, Ninth Revision, Clinical Modification (ICD-9-CM) diagnosis coding system with the ICD-10-CM diagnosis coding system for most inpatient and outpatient medical encounters. There are over 70,000 ICD-10-CM diagnosis codes.
The CCSR aggregates ICD-10-CM diagnosis codes into a manageable number of clinically meaningful categories.8 The CCSR is intended to be used analytically to examine patterns of healthcare in terms of cost, utilization, and outcomes; rank utilization by diagnoses; and risk-adjust by clinical condition. The CCSR capitalizes on the specificity of the ICD-10-CM coding scheme and allows ICD-10-CM codes to be classified in more than one category. Approximately 10 percent of diagnosis codes are associated with more than one CCSR category because the diagnosis code documents either multiple conditions or a condition along with a common symptom or manifestation. For this Statistical Brief, the principal diagnosis code is assigned to a single default CCSR based on clinical coding guidelines, etiology and pathology of diseases, and standards set by other Federal agencies. The assignment of the default CCSR for the principal diagnosis is available starting with version v2020.2 of the software tool. ICD-10-CM coding definitions for each CCSR category presented in this Statistical Brief can be found in the CCSR reference file, available at www.hcup-us.ahrq.gov/toolssoftware/ccsr/ccs_refined.jsp#user.
Types of hospitals included in the HCUP National (Nationwide) Inpatient Sample
The National (Nationwide) Inpatient Sample (NIS) is based on data from community hospitals, which are defined as short-term, non-Federal, general, and other hospitals, excluding hospital units of other institutions (e.g., prisons). The NIS includes obstetrics and gynecology, otolaryngology, orthopedic, cancer, pediatric, public, and academic medical center hospitals. Excluded are long-term care facilities such as rehabilitation, psychiatric, and alcoholism and chemical dependency hospitals. Beginning in 2012, long-term acute care hospitals are also excluded. However, if a patient received long-term care, rehabilitation, or treatment for a psychiatric or chemical dependency condition in a community hospital, the discharge record for that stay will be included in the NIS.
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 1 year will be counted each time as a separate discharge from the hospital.
Costs and charges
Total hospital charges were converted to costs using HCUP Cost-to-Charge Ratios based on hospital accounting reports from the Centers for Medicare & Medicaid Services (CMS).9 Costs reflect the actual expenses incurred in the production of hospital services, such as wages, supplies, and utility costs; charges represent the amount a hospital billed for the case. For each hospital, a hospital-wide cost-to-charge ratio is used. Hospital charges reflect the amount the hospital billed for the entire hospital stay and do not include professional (physician) fees. For the purposes of this Statistical Brief, costs are reported to the nearest hundred.
How HCUP estimates of costs differ from National Health Expenditure Accounts
There are a number of differences between the costs cited in this Statistical Brief and spending as measured in the National Health Expenditure Accounts (NHEA), which are produced annually by CMS.10 The largest source of difference comes from the HCUP coverage of inpatient treatment only in contrast to the NHEA inclusion of outpatient costs associated with emergency departments and other hospital-based outpatient clinics and departments as well. The outpatient portion of hospitals' activities has been growing steadily and may exceed half of all hospital revenue in recent years. On the basis of the American Hospital Association Annual Survey, 2017 outpatient gross revenues (or charges) were about 49 percent of total hospital gross revenues.11
Smaller sources of differences come from the inclusion in the NHEA of hospitals that are excluded from HCUP. These include Federal hospitals (Department of Defense, Veterans Administration, Indian Health Services, and Department of Justice [prison] hospitals) as well as psychiatric, substance abuse, and long-term care hospitals. A third source of difference lies in the HCUP reliance on billed charges from hospitals to payers, adjusted to provide estimates of costs using hospital-wide cost-to-charge ratios, in contrast to the NHEA measurement of spending or revenue. HCUP costs estimate the amount of money required to produce hospital services, including expenses for wages, salaries, and benefits paid to staff as well as utilities, maintenance, and other similar expenses required to run a hospital. NHEA spending or revenue measures the amount of income received by the hospital for treatment and other services provided, including payments by insurers, patients, or government programs. The difference between revenues and costs includes profit for for-profit hospitals or surpluses for nonprofit hospitals.
Expected payer
To make coding uniform across all HCUP data sources, the primary expected payer for the hospital stay combines detailed categories into general groups:
- Medicare: includes fee-for-service and managed care Medicare
- Medicaid: includes fee-for-service and managed care Medicaid
- Private insurance: includes commercial nongovermental payers, regardless of the type of plan (e.g., private health maintenance organizations [HMOs], preferred provider organizations [PPOs])
- Self-pay/No charge: includes self-pay, no charge, charity, and no expected payment
- Other payers: includes other Federal and local government programs (e.g., TRICARE, CHAMPVA, Indian Health Service, Black Lung, Title V) and Workers' Compensation
About HCUP
The Healthcare Cost and Utilization Project (HCUP, pronounced "H-Cup") is a family of healthcare databases and related software tools and products developed through a Federal-State-Industry partnership and sponsored by the Agency for Healthcare Research and Quality (AHRQ). HCUP databases bring together the data collection efforts of State data organizations, hospital associations, and private data organizations (HCUP Partners) and the Federal government to create a national information resource of encounter-level healthcare data. HCUP includes the largest collection of longitudinal hospital care data in the United States, with all-payer, encounter-level information beginning in 1988. These databases enable research on a broad range of health policy issues, including cost and quality of health services, medical practice patterns, access to healthcare programs, and outcomes of treatments at the national, State, and local market levels.
HCUP would not be possible without the contributions of the following data collection Partners from across the United States:
Alaska Department of Health and Social Services
Alaska State Hospital and Nursing Home Association
Arizona Department of Health Services
Arkansas Department of Health
California Office of Statewide Health Planning and Development
Colorado Hospital Association
Connecticut Hospital Association
Delaware Division of Public Health
District of Columbia Hospital Association
Florida Agency for Health Care Administration
Georgia Hospital Association
Hawaii, University of Hawaii, Hilo, Center for Rural Health
Hawaii Laulima Data Alliance
Illinois Department of Public Health
Indiana Hospital Association
Iowa Hospital Association
Kansas Hospital Association
Kentucky Cabinet for Health and Family Services
Louisiana Department of Health
Maine Health Data Organization
Maryland Health Services Cost Review Commission
Massachusetts Center for Health Information and Analysis
Michigan Health & Hospital Association
Minnesota Hospital Association
Mississippi State Department of Health
Missouri Hospital Industry Data Institute
Montana Hospital Association
Nebraska Hospital Association
Nevada Department of Health and Human Services
New Hampshire Department of Health & Human Services
New Jersey Department of Health
New Mexico Department of Health
New York State Department of Health
North Carolina Department of Health and Human Services
North Dakota (data provided by the Minnesota Hospital Association)
Ohio Hospital Association
Oklahoma State Department of Health
Oregon Association of Hospitals and Health Systems
Oregon Office of Health Analytics
Pennsylvania Health Care Cost Containment Council
Rhode Island Department of Health
South Carolina Revenue and Fiscal Affairs Office
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 Department of Health and Human Resources, West Virginia Health Care Authority
Wisconsin Department of Health Services
Wyoming Hospital Association
About the NIS
The HCUP National (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, nonrehabilitation hospitals). The NIS includes all payers. It is drawn from a sampling frame that contains hospitals comprising more than 95 percent of all discharges in the United States. The vast size of the NIS allows the study of topics at the national and regional levels for specific subgroups of patients. In addition, NIS data are standardized across years to facilitate ease of use. Over time, the sampling frame for the NIS has changed; thus, the number of States contributing to the NIS varies from year to year. The NIS is intended for national estimates only; no State-level estimates can be produced. The unweighted sample size for the 2017 NIS is 7,159,694 (weighted, this represents 35,798,453 inpatient stays).
For More Information
For other information on costs and charges of hospital stays in the United States, refer to the HCUP Statistical Briefs located at www.hcup-us.ahrq.gov/reports/statbriefs/sb_costs.jsp.
For additional HCUP statistics, visit:
- HCUP Fast Stats at https://datatools.ahrq.gov/hcup-fast-stats for easy access to the latest HCUP-based statistics for healthcare information topics
- HCUPnet, HCUP's interactive query system, at datatools.ahrq.gov/hcupnet
For more information about HCUP, visit www.hcup-us.ahrq.gov/.
For a detailed description of HCUP and more information on the design of the National Inpatient Sample (NIS), please refer to the following database documentation:
Agency for Healthcare Research and Quality. Overview of the National (Nationwide) Inpatient Sample (NIS). Healthcare Cost and Utilization Project (HCUP). Rockville, MD: Agency for Healthcare Research and Quality. Updated December 2019. www.hcup-us.ahrq.gov/nisoverview.jsp. Accessed February 3, 2020.
Suggested Citation
Liang L (AHRQ), Moore B (IBM Watson Health), Soni A (AHRQ). National Inpatient Hospital Costs: The Most Expensive Conditions by Payer, 2017. HCUP Statistical Brief #261. Month 2020. Agency for Healthcare Research and Quality, Rockville, MD. www.hcup-us.ahrq.gov/reports/statbriefs/sb261-Most-Expensive-Hospital-Conditions-2017.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:
Joel W. Cohen, Ph.D., Director
Center for Financing, Access and Cost Trends
Agency for Healthcare Research and Quality
5600 Fishers Lane
Rockville, MD 20857
This Statistical Brief was posted online on July 14, 2020.
1 Centers for Medicare & Medicaid Services. NHE Fact Sheet. Updated December 5, 2019.www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NHE-Fact-Sheet. Accessed December 7, 2019.
2 Ibid.
3 Ibid.
4 Freeman WJ, Weiss AJ, Heslin KC. Overview of U.S. Hospital Stays in 2016: Variation by Geographic Region. HCUP Statistical Brief #246. December 2018. Agency for Healthcare Research and Quality, Rockville, MD. www.hcup-us.ahrq.gov/reports/statbriefs/sb246-Geographic-Variation-Hospital-Stays.pdf. Accessed November 27, 2019.
5 Ibid.
6 Ibid.
7 Agency for Healthcare Research and Quality. HCUP Cost-to-Charge Ratio (CCR) Files. Healthcare Cost and Utilization Project (HCUP). 2001-2017. Agency for Healthcare Research and Quality. Updated December 2019. www.hcup-us.ahrq.gov/db/state/costtocharge.jsp. Accessed February 3, 2020.
8 Agency for Healthcare Research and Quality. HCUP Clinical Classifications Software Refined (CCSR) for ICD-10-CM Diagnoses. Healthcare Cost and Utilization Project (HCUP). Agency for Healthcare Research and Quality. Updated January 2020. www.hcup-us.ahrq.gov/toolssoftware/ccsr/ccs_refined.jsp. Accessed February 27, 2020.
9 Agency for Healthcare Research and Quality. HCUP Cost-to-Charge Ratio (CCR) Files. Healthcare Cost and Utilization Project (HCUP). 2001-2017. Agency for Healthcare Research and Quality. Updated December 2019. www.hcup-us.ahrq.gov/db/state/costtocharge.jsp. Accessed February 3, 2020.
10 For additional information about the NHEA, see Centers for Medicare & Medicaid Services (CMS). National Health Expenditure Data. CMS website. Updated December 17, 2019. www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/index.html?redirect=/NationalHealthExpendData/. Accessed February 3, 2020.
11 American Hospital Association. TrendWatch Chartbook, 2019. Table 4.2. Distribution of Inpatient vs. Outpatient Revenues, 1995-2017. www.aha.org/system/files/media/file/2019/11/TrendwatchChartbook-2019-Appendices.pdf. Accessed March 19, 2020.