Hospitals charged commercial insurers and employers rates 254% higher, on average, than what Medicare paid for the same services in 2022, according to a Rand Corp. report published May 13.
The study examined claims data from more than 4,000 hospitals and ambulatory surgical centers in 49 states.
Here are five findings to note:
- The discrepancy between commercial and Medicare rates varied by state. Five states — Arkansas, Iowa, Massachusetts, Michigan and Mississippi — had commercial prices below 200% of Medicare prices. Seven states — California, Florida, Georgia, New York, South Carolina, West Virginia and Wisconsin — had commercial prices above 300%.
- In 2022, hospital inpatient facility services averaged 255% of Medicare prices, and outpatient hospital facility services averaged 289%.
- Hospital prices have remained relatively stable across years. In 2018, commercial prices averaged 254% of Medicare prices.
- The study found little correlation between hospital star rating quality and the prices hospitals charge commercial plans.
- There was little variation in price explained by hospitals' share of patients covered by Medicare or Medicaid. The Rand Corp. did find a larger portion of price variation is explained by hospitals' market power.
In a May 13 statement, Molly Smith, group vice president for public policy at the American Hospital Association, said the report represents less than 2% of overall hospital spending.
"This offers a skewed and incomplete picture of hospital spending," Ms. Smith said. "In benchmarking against woefully inadequate Medicare payments, RAND makes an apples-to-oranges comparison that presents an inflated impression of what hospitals are actually getting paid for delivering care while facing continued financial and other operational challenges."
Read the full study here.