Private U.S. Health Plans Pay Hospitals 247 Percent of What Medicare Would Pay
Feb 24, 2021
The authors use data from 2016 to 2018 — covering $33.8 billion in hospital spending from three sources (self-insured employers, state-based all-payer claims databases, and health plans) — to document variation in facility prices for the commercially insured population. They report differences in standardized negotiated prices and prices relative to Medicare reimbursement rates for the same procedures and facilities.
Findings from Round 3 of an Employer-Led Transparency Initiative
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In the United States, low levels of price transparency make it hard for employers and other purchasers of health care to assess the prices that they pay for health care services. Using data from 2016 to 2018, the authors document variation in facility prices for the commercially insured population, reporting differences in standardized negotiated prices and prices relative to Medicare reimbursement rates for the same procedures and facilities.
The data come from all but one state in the United States and cover $33.8 billion in hospital spending from three sources: self-insured employers, state-based all-payer claims databases, and health plans. Prices reflect the negotiated allowed amount paid per service, including amounts from both the health plan and the patient, with adjustments for the intensity of services provided.
The authors calculate how much employers and employees are paying for hospital services, examine recent price trends, and identify strategies employers can use to address high hospital prices.
Overview of Hospital Markets and Pricing
Data and Methods
This research was funded by the Robert Wood Johnson Foundation and conducted by the Payment, Cost, and Coverage Program within RAND Health Care.
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