Prices Paid to Hospitals by Private Health Plans Are High Relative to Medicare and Vary Widely: Findings from an Employer-Led Transparency Initiative

Abstract

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“…Also, we cannot determine how hospitals are allocating costs but that is not the purpose of this study. Finally, we made adjustments for payment source but these were based on published literature estimating the differences in Medicare and private insurance payments [22][23][24][25][26][27][28].…”

“…Prior studies have shown that private insurance pays more and Medicaid pays less than Medicare [22][23][24][25][26][27][28]. We utilized data from these reports to adjust payment rates by insurer type to account for differences in payment rates by payer [22][23][24][25][26][27][28]. Based on these published reports, we created a conservative and upper estimate of payment for inpatient cases:…”

“…Payments were adjusted by payer status based on published reports comparing outpatient payments from Medicare, Medicaid, and private insurance [22][23][24][25][26][27][28]. Using a conservative and upper estimate, the final reimbursement adjustment values for outpatient cases were:…”

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“…19 Concurrently, these same practices also benefit from provider leverage in establishing higher payment rates for privately insured patients in the hospital outpatient setting. 20 the years. 21 Another study found that hospitals eligible for the 340B program had more hematologist-oncologists (230 percent more) compared to non-340B participating hospitals.…”

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“…The cost of test and physician visits were estimated using the physician fee schedule from Centers for Medicare and Medicaid Services (CMS) for study population of ages 66 and above and a conversion factor (229%) was used to estimate the screening cost for privately insured population below 66 years of age. This conversion factor used to estimate the screening cost under private health plans was taken from a study conducted by Rand Corporation 14…”