October 2, 2020
New RAND Study Finds Wide Gap Between Public and Private Insurance Pricing: Can Rethinking Payment Structures Help?
Last week, the RAND Corporation released a study on the hospital prices paid by private insurers, adding to the national discussion on hospital price transparency. RAND claims that hospitals charge private insurers 250% of Medicare charges, and that there is wide variation in hospital charges by state. The study suggests that this is due to price gouging coupled with the lack of transparent pricing. The American Hospital Association (AHA), however, argues that there is a need to shift costs onto private insurers, as Medicare rates do not cover the full cost of providing care. Despite this, the RAND study adds to the continuous efforts by law makers for price transparency in hospitals. Price transparency issues will likely not slow—despite the AHA’s efforts to dispute studies such as these—which may make it beneficial for hospitals to lead in rethinking reimbursement practices.
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