Low Medicare payments to hospitals result in lower private rates for inpatient care, a new study by the Center for Studying Health System Change found.
Private insurance carriers have historically paid higher rates than Medicare for inpatient hospital care. But lower Medicare payments actually result in lower rates paid by private carriers, according to the study.
“The study found that when Medicare pays lower rates for inpatient hospital care, private insurers’ rates end up growing more slowly, too – it’s the opposite of what hospitals would have the public believe,” Senior Researcher Chapin White said in a prepared statement.
The study found that a 10 percent reduction in Medicare payment rates would lead to an estimated reduction of private payments of 3 percent or 8 percent, depending on the statistical model.
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A Pittsburgh Business Times analysis of Medicare data found big differences in what area hospitals were paid for the same procedures in 2011.
The National Institute for Health Care Reform funded the study, which looked at the combined private payment rates with Medicare cost reports from hospitals in 257 markets between 1995 and 2009. The average Medicare payment rate per discharge in 2009 was $11,031 and the average private rate was $17,286. One possibility for the disparity is that hospitals use the lower Medicare rates as leverage in negotiating higher rates with private carriers, the study found.
Date: May 23, 2013