Recently, the CBO released a report comparing rates paid to hospitals by public and private insurers for inpatient services, hospital outpatient department (HOPD), and ambulatory surgery center (ASC) service rates.A sort of Recent RAND Reports Aiming to perform a similar exercise, but by contributing to the literature with updated data from more states, allowing comparisons between HOPD and ASC. The data comes from health insurance claims data from three sources:
- State-based fully paid claims database from Arkansas, Delaware, Colorado, Connecticut, Maine, New Hampshire, Oregon, Rhode Island, Utah, Vermont, and Washington
- self-insured employer
- health plan
Note that the sample of self-insured employers and health plans is for convenience and not a representative sample. Additionally, all payer databases disproportionately cover the Northeast and Northwest states. Although the sample was not fully representative, a key benefit was that the data included allowable amounts (that is, amounts actually paid, including patient out-of-pocket costs), rather than hospital charges.
The author calculates the price difference in two ways:
- Standardized pricerepresenting the average allowable amount per standardized service unit, where services are normalized using Medicare’s relative weights
- relative pricewhich is the ratio of the actual private insurer allowable amount divided by the Medicare allowable amount for the same service provided by the same hospital
Relative prices have the advantage of viewing actual price ratios, including Medicare adjustments for case mix, wages, inflation, and medical education; standardized prices allow non-Medicare payers to be compared to a single nationalized Medicare rate (unadjusted) Compare.
Hospital data is also aligned with AHRQ’s
Outline of the U.S. Health System.
In 2020, when comparing hospital services with commercial versus Medicare, the average overall relative prices were:
- Overall: 224% of Medicare price
- Inpatient services: 217%
- Facility payment: 235%
- Professional Services: 163%
The study also looked at the relationship between price and quality. There does appear to be a positive correlation between price and quality, but it is rather weak.
…hospitals with prices below 150% Medicare (361 hospitals) had lower Quality Scores than those with higher prices (1,402 hospitals). However, mid-priced hospitals, those between 150% and 250% of Medicare (1,409 hospitals), had the highest percentage of five-star hospitals. Among high-price hospitals, 22% received five stars and only 3% received one star, while among low-price hospitals, only 14% received five stars and 17% received one star. star.
Commercial outpatient surgery is more expensive than Medicare patients, but at a much lower rate than inpatient services.
- ASC: 162% of Medicare costs
- Hospital Outpatient Clinic (APC): 117%
