Study Finds Half Of Cash Prices Below Commercial Rates In More Than 2,000 Hospitals

Cash prices for certain hospital services were lower than the average insurance rate in nearly half of the facilities examined in a new study, which could influence rate negotiations between payers and providers.

The study was published Monday in the journal Health Affairs and makes use of cash price data hospitals are required to disclose for 70 shoppable services. The findings suggest that some self-insured employers pay prices higher than the cash price, which could influence future negotiations with insurers or direct talks with providers.

Researchers looked at the cash prices, commercial negotiated rates and chargemaster prices disclosed by 2,379 hospitals as of Sept. 9, 2022, per a federal rule that went into effect in 2021.

The average and the median cash price made up 64% and 65% of the chargemaster rate.

“About 12% of the cash prices were set the same as chargemaster rates, and other cash prices were predominantly priced in increments of 5% off the chargemaster rates (64% of the time),” the study said.

The study found that the cash prices were lower than the median commercial rates in 47% of cases, most often at hospitals with government or nonprofit ownership, located outside of metropolitan areas or located in counties with relatively high uninsurance rates or low median household incomes.

Researchers also discovered that evaluation and management services were the most likely to have a lower cash price with 55% compared with medicine and surgery at 48%.

There are some important caveats to the study, chief among them low compliance among hospitals.

“Seventeen months after the implementation of the hospital price transparency rule, nearly half of the general acute care hspitals required to do so still had not disclosed most of their prices for mandated shoppable procedures,” the study said.

The Biden administration has sought to ramp up its enforcement of the price transparency requirements in a bid to boost compliance.

However, the findings could strengthen the negotiating leverage of self-insured employers that have been trying to find ways to lower healthcare costs by benchmarking their rates against Medicare prices or directly contracting with hospitals, the study added.

“Our findings suggest that some self-insured employers often pay prices higher than cash prices,” the research said. “Employers may wish to consider using the cash-price information as an input in their negotiations with insurers or directly contracting with providers with low cash prices and steering employees to them.”


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