AHA Responds to RAND Study on Prices Paid to Hospitals by Private Plans

The American Hospital Association responded to a recent RAND Corporation study that found that certain prices paid to hospitals by private health plans are high relative to Medicare and vary widely. The study examined hospital prices for a limited number of employers and health plans covering 25 states in 2017. In a statement, AHA General Counsel Melinda Hatton said, “We have a number of concerns about the report released by RAND Corp. Most notably the authors themselves point out that the study’s key limitation is its small sample size – less than 5 percent of all covered persons in about half of all states, and just 2 percent of the 181 million Americans with employer-sponsored insurance nationally. Further, Medicare payment rates, which reimburse below the cost of care, should not be held as a standard benchmark for hospital prices. In 2017, hospitals received payment of only 87 cents for every dollar spent caring for Medicare patients. Simply shifting to prices based on artificially low Medicare payment rates would strip vital resources from already strapped communities, seriously impeding access to care. Hospitals would not have the resources needed to keep our doors open, innovate to adapt to a rapidly changing field and maintain the services communities need and expect. Recent data from the National Health Expenditure report released by the Centers for Medicare and Medicaid Services in December 2018 show that price growth for hospital services was just 1.7 percent in 2017.  Similarly, a report from the Altarum Center for Value in Health Care found hospital-spending growth in 2018 was lower than all other categories of services, including physician and clinical services and prescription drugs. The AHA is committed to improving patients’ access to information on the price of their care. It’s important that individuals understand how much they will need to pay for their care, specifically their out-of-pocket costs. Yet hospitals, health systems and other providers do not always have access to detailed data on health plan benefit and beneficiary cost-sharing amounts; rather, insurers hold this information. We are encouraged by the growing ability for providers and insurers to work together to develop tools that they can use to help respond to patient pricing inquiries.”

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