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Commercial-to-Medicare Hospital Price Ratios Stable 2012 to 2019

Trends in ratios varied considerably across hospital referral regions

MONDAY, April 4, 2022 (HealthDay News) — From 2012 to 2019, the average prices charged to commercial health plans by hospitals compared with what Medicare pays remained relatively stable; however, there was considerable regional variation in trends, according to a study published in the April issue of Health Affairs.

Zachary Levinson, from RAND Corporation in Arlington, Virginia, and colleagues describe how commercial hospital payment rates changed relative to Medicare rates during 2012 to 2019 using data from the Healthcare Provider Cost Reporting Information System and describe how trends differed by hospital referral region (HRR).

The researchers found that the average commercial-to-Medicare price ratios were generally stable, but across HRRs, there was substantial variation seen in trends. For HRRs with high price ratios in 2012, there was a 38 percent increase in ratios in regions in the top quartile of growth and a 38 percent decrease in regions in the bottom quartile.

“Our findings suggest that restraining the growth rate of HRR commercial hospital price ratios to the national average during our sample period would have reduced aggregate spending by $39 billion in 2019,” the authors write. “Restraining the growth of commercial prices has the potential to achieve significant reductions in health care spending.”

Arnold Ventures provided funding for the study.

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