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Which states have the worst hospital billing practices? Ranked by average markup ratio — what hospitals charge vs what Medicare pays.
Source: CMS Medicare Outpatient & Inpatient Hospitals by Provider and Service, 2022. Markup = avg submitted charge ÷ avg Medicare allowed amount. Higher = more expensive relative to Medicare rates.
Based on CMS Medicare data, states with the highest average hospital markup ratios (submitted charges ÷ Medicare allowed amount) tend to be Florida, Nevada, California, and certain southeastern states. These states have a concentration of for-profit hospital systems that historically set high chargemaster prices as a negotiating strategy with private insurers.
State-level markup variation reflects differences in hospital market concentration, for-profit vs. nonprofit hospital mix, state price transparency regulations, Medicaid expansion status, and the negotiating leverage of dominant insurance payers. States with high market concentration (few competing hospital systems) tend to have higher markups.
Not necessarily, since most insured patients pay negotiated rates — not the chargemaster price. However, high-markup states tend to have higher out-of-pocket costs even for insured patients, because insurer negotiations are anchored to the chargemaster. Uninsured patients and those receiving out-of-network care are most exposed to high chargemaster prices.