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Employers, insurers paid hospitals more than double Medicare rates, finds RAND

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Employers and health insurers paid hospitals about 224% above what Medicare would have paid in 2020, according to a new RAND report comparing private insurer payments to Medicare rates.

The data was culled from about 4,000 hospitals across 49 states from 2018 to 2020, and found variation in what certain states paid hospitals. Some states, such as Hawaii, Arkansas and Washington, had relative prices below 175% of Medicare prices, while other states – Florida, West Virginia and South Carolina among them – had relative prices that were at or above 310% of Medicare prices.

When averaged out, the figure comes out to 224% above Medicare rates for all employers and private insurers, and while that’s high, it’s a slight reduction from the 247% figure reported for 2018 in the previous RAND study. Authors attributed this to an increase in the volume of claims from states with prices below the previous mean price.

Prices for common outpatient services performed in ambulatory surgery centers averaged 162% of Medicare payments, but if paid using Medicare, payment rates for hospital outpatient departments would have averaged 117% of Medicare.

Although relative prices are lower for ASC claims priced according to HOPD rules, HOPD prices are higher than ASC […]

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