Private insurers pay significantly more to some hospitals than others within the same market and hospital prices vary widely across the U.S., a new study found. The Center for Studying Health System Change analyzed hospital rates as a percentage of Medicare rates across eight markets and results suggest some hospitals have market clout to raise rates, according to the study.
Payment study points to hospital clout
“Few would characterize the variation in hospital and physician payment rates found in this study to be consistent with a highly competitive market,” according to the study conducted by Paul Ginsburg, an economist and president of the center.
The analysis also found variation in outpatient payments for seven of the eight markets. Four insurers, Aetna, Anthem Blue Cross Blue Shield, Cigna Corp., and UnitedHealth Group, provided rate data for the study. The employer group Catalyst for Payment Reform funded the study and proposed research on hospital prices.
The American Hospital Association criticized the study as flawed because each insurer calculated commercial rates as percentage of Medicare using its own methodology. “This lack of consistency makes any comparisons, at best, unreliable,” Richard Umbdenstock, AHA president and CEO, said in a written statement.
In San Francisco, hospital prices as a percentage of Medicare rates, were highest, on average, at 210%, followed by: Milwaukee, 205%; Indianapolis, 198%; Richmond, Va., 192%; rural Wisconsin, 169%; Cleveland, 151%; Los Angeles, 149% and Miami-South Florida, 147%. Commercial rates as a percentage of Medicare also differed significantly within markets, as was the case in Los Angeles, where the highest rate was 418% of Medicare, compared with 84% of Medicare for rates that ranked in the bottom 25%.
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