When you're trying to figure out whether your hospital bill is fair, you need a benchmark — a reference point for what a procedure "should" cost. The best benchmark available is the Medicare reimbursement rate.
What Is a Medicare Rate?
Medicare is the federal health insurance program for Americans 65 and older (and some people with disabilities). The Centers for Medicare & Medicaid Services (CMS) sets specific reimbursement rates for every medical procedure — these are called Medicare rates or Medicare fee schedule rates.
These rates represent what the federal government has determined is a reasonable payment for each service, based on:
- The complexity of the work involved
- The overhead costs of running a medical practice
- Malpractice insurance costs
- Geographic adjustments for local cost of living
Medicare rates are published publicly every year. Anyone can look them up.
Two Types of Medicare Rates
For most procedures, there are two rates:
Non-facility rate — what Medicare pays when a service is performed in a doctor's office or outpatient clinic. This is typically higher because the provider has more overhead to cover.
Facility rate — what Medicare pays for the physician's work when a service is performed in a hospital, where the facility also bills separately for its costs. This is typically lower.
If you received care at a hospital, the relevant comparison is usually the facility rate for the physician portion plus the OPPS (Outpatient Prospective Payment System) rate for the facility portion.
Why Medicare Rates Are the Right Benchmark
Here's why Medicare rates matter for negotiation:
1. Hospitals agree to accept them from Medicare patients. Any hospital that participates in Medicare (the vast majority) has already agreed that these rates are acceptable payment. They cannot claim the rates are too low to cover their costs — they've already accepted that argument from the federal government.
2. They're based on actual cost data. CMS spends considerable effort calculating what procedures actually cost to perform. The rates aren't arbitrary — they reflect real underlying costs.
3. They're widely used in insurance negotiations. Most private insurance contracts are negotiated as a percentage of Medicare rates (e.g., "150% of Medicare"). This makes Medicare rates the lingua franca of medical pricing.
4. They're public and verifiable. Unlike hospital chargemaster rates, which hospitals are reluctant to publish, Medicare rates are fully public. You can cite a specific dollar figure in a negotiation.
How Much Do Hospital Bills Exceed Medicare Rates?
The gap between what hospitals charge and what Medicare pays is enormous. According to research by the RAND Corporation:
- Hospital prices for commercial insurance average 2.5x Medicare rates
- Prices for uninsured patients (often charged the chargemaster rate) can exceed 5x Medicare rates
- Some procedures at some hospitals are billed at 10x or more of Medicare rates
This gap is the core of the negotiation opportunity. If you can demonstrate that a charge is 5x the Medicare rate, you have a compelling argument that the charge is inflated.
A Real Example
Say you went to an ER and the hospital billed $850 for CPT code 93000 (electrocardiogram). The Medicare facility rate for 93000 is approximately $18.
That's a 47x markup.
Armed with that number, you can call billing and say: "I see a charge of $850 for CPT 93000. The Medicare rate for this procedure is $18. I'd like to discuss a fair adjustment."
Most billing departments will work with you when you come prepared with specific data.
Medicare Rates Vary by Location
Medicare rates include a geographic adjustment — a "locality" factor that accounts for the higher cost of practicing medicine in expensive areas like New York City vs. rural Mississippi. So the Medicare rate for a procedure in Manhattan will be higher than the same procedure in rural Iowa.
This is why HaggleCare asks for your ZIP code — we look up the correct local Medicare rate for your area to give you the most accurate comparison.
Common Procedure Medicare Rates
Curious what Medicare pays for specific procedures? Here are some of the most common:
- Emergency room visit (99283) — ~$71 (facility rate)
- Chest X-ray (71046) — ~$35
- EKG (93000) — ~$15
- MRI Brain with Contrast (70553) — ~$130 (facility rate)
- Total Knee Replacement (27447) — ~$900 (facility rate; hospital facility fee is separate and much larger)
For a full breakdown by procedure type, see our guides to emergency room bills, MRI costs, knee replacement bills, and colonoscopy costs.
Where to Find Medicare Rates
You can look up Medicare rates directly on the CMS website, or use HaggleCare's CPT code lookup to find rates for specific procedures. When you upload a bill to HaggleCare, we automatically compare every line item on your bill to the Medicare rate for your location.
Understanding Medicare rates won't just help you negotiate one bill. It'll change how you think about medical pricing forever — because once you know the benchmark, every bill looks different.