To come to this conclusion, RAND researchers studied four proposals that cap out-of-network hospital billing to:
- 125 percent of Medicare payment rates
- 200 percent of Medicare payment rates
- the average of payments made by private health plans in a state, and
- 80 percent of average billed charges in a state
Under a strict proposal like limiting out-of-network payments to 125 percent of Medicare rates, the researchers found in-network negotiated hospital prices could be cut by 31-40 percent. This would save an estimated $108 billion to $124 billion each year, according to the study.
Erin Duffy, PhD, the study’s lead author and an adjunct researcher at RAND, warned against cutting hospitals’ revenue too much: “While cost containment can benefit patients who face rising health costs, such changes also would disrupt hospital revenues. A policy that reduces revenue so much that hospitals close or the quality of care is disrupted would not be in the best interests of patients.”
More articles on healthcare finance:
North Carolina health system files for bankruptcy
Physician-owned hospital in Ohio closes
8 hospitals have closed so far this year — here’s why
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