News: Employers, private insurers paid hospitals 247% what Medicare would have

Private insurers and employers paid 247% more than what Medicare would have for hospital services in 2018, according to a RAND Corporation report.

The study analyzed nearly $34 billion in hospital claims data from 49 states and the District of Columbia, excluding Maryland, during the three-year period between 2016 and 2018, HealthLeaders Media reported.

In 2016, private insurers and employers paid 224% more than what Medicare would have for hospital services, including professional and facility fees; that difference increased to 230% in 2017. In addition, RAND 3.0 found that reducing hospital prices to Medicare rates would have resulted in $19.7 billion in savings for employers during the research period, a reduction of 58%, HealthLeaders Media reported.

The study also analyzed the differences between prices for inpatient services and outpatient services. In 2018, relative prices for hospital inpatient services were 231% of Medicare while relative prices for hospital outpatient services were 267% of Medicare.

The American Hospital Association (AHA) issued a statement responding to RAND's study, stating that the findings "make broad claims about pricing based on a cherry-picked and limited data set."

With the higher private insurance payment rates, perhaps it’s unsurprising that nearly 92% of respondents to the 2020 CDI Week Industry Survey reported that the majority of their denials come from private payers. With more money on the line, it makes sense that private insurers would deny claims more aggressively than Medicare payers would.

Editor’s note: This article originally appeared in HealthLeaders Media. Read the full 2020 ACDIS CDI Week Industry Survey Report here.