Private insurers paid hospitals 254% of Medicare rates in 2022: 5 things to know

The study examined claims data from more than 4,000 hospitals and ambulatory surgical centers in 49 states. 

Here are five findings to note: 

1. 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%. 
2. In 2022, hospital inpatient facility services averaged 255% of Medicare prices, and outpatient hospital facility services averaged 289%. 
3. Hospital prices have remained relatively stable across years. In 2018, commercial prices averaged 254% of Medicare prices. 
4. The study found little correlation between hospital star rating quality and the prices hospitals charge commercial plans. 
5. 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. 

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