OnDemand WTP Pricing Research

Private Health Plans Pay Hospitals 241% of What Medicare Would Pay | RAND

An examination of U.S. hospital prices covering 25 states shows that in 2017, the prices paid to hospitals for privately insured patients averaged 241% of what Medicare would have paid, with wide variation in prices among states, according to a new RAND Corporation study.

Some states (Kentucky, Michigan, New York, and Pennsylvania) had average relative prices that were 150% to 200% of what Medicare paid, while other states (Colorado, Indiana, Maine, Montana, Wisconsin, and Wyoming) had average relative prices that were 250% to 300% of what Medicare would have paid.

The analysis of 1,598 hospitals is a broad-based study of prices paid by private health plans to hospitals and is unique in presenting price information about a larger number of hospitals across many states.

Researchers analyzed health care claims for more than 4 million people, with information coming from self-insured employers, two state all payer claims databases and records from health insurance plans that chose to participate. For each private claim, researchers re-priced the service using Medicare’s grouping and pricing formulas.

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Private Health Plans Pay Hospitals 241% of What Medicare Would Pay | RAND.

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