Does medicare or private payers pay hospitals better? What about transparency?

The inclination among physicians is that private (commercial) insurances pay better than Medicare reimbursement. Research and Development (RAND) Corporation reviewed data from self-insured employers, state-based all-payor claims databases from Colorado and New Hampshire, and health plans covering 4 million patients and 1,598 Medicare certified acute care hospitals during the period of 2015 to 2017. ( ) RAND then compared Medicare reimbursement rates with allowed amounts per service, including payments by patients and health plans.

For hospital services, commercial insurance payers paid four times more than Medicare reimbursement. Consider that in 2017, 56% of the population (down from over 65% some years ago) in the USA were covered through employer plans compared to 17% through Medicare. ( ) β€œThe states with the largest increase in relative prices were Colorado, Montana, Wisconsin, Maine, Wyoming, and Indiana, with relative prices ranging from 250-300% of Medicare.” High quality service did not always correlate with higher reimbursement.

Conclusion: What will transparency do to this well suspected differential in payments to hospitals? It is likely that health insurers and employers will have the upper hand in ratcheting down cost further. Out of network payments will also get closer scrutiny. This all comes when there is talk about eliminating private health insurance. I do not see that happening with well over 100 million subscribers through their employers. We would however, love to see lower administrative and compensation packages for insurer and pharma CEOs but that is the down side with a capitalistic system, which has to attract the best executives.