Commercial Health Care Payments Compared to Medicare Remain Above the
National Average 

A new interactive Tableau report and accompanying infographics are now available as part of the Center for Improving Value in Health Care’s (CIVHC) Affordability Dashboard. The data, based on analysis of Colorado All Payer Claims Database (CO APCD) information conducted by the RAND corporation earlier this year, shows that most hospitals in Colorado are getting paid over three times what Medicare pays for the same hospital and outpatient services.

Negotiating rates using Medicare costs as a baseline has proven to be one of the most effective strategies to address rising health care costs for employers. This latest update based on a national RAND Corporation analysis that included 2018-2020 claims, helps fill gaps in price transparency related to what commercial payers pay hospitals in Colorado and across the nation. This data can be used by employers, consumers, and others to make informed decisions regarding purchasing health care with the ultimate goal of driving down health care costs.

RAND’s analysis reveals wide variation in payments across Colorado hospitals, with average payments outpacing national averages for outpatient services most significantly. Colorado’s highest payed hospital received more than six times Medicare rates (647% at the highest) for inpatient and outpatient services combined, while the hospital at the lowest end was paid just over Medicare rates (113%). For outpatient services, Colorado hospital payments average over three times (304%) Medicare rates for the same services at the same hospitals, compared to a national average of 231%.

CIVHC’s interactive report and downloadable data set includes Colorado hospital trend information and provides a look at inpatient and outpatient services at the hospital, county, and Division of Insurance (DOI) region level. Two infographics provide additional insights at the named hospital and DOI-level.

Quality of care is another critically important aspect of health care to consider when comparing hospitals, so CIVHC also included Centers for Medicare & Medicaid Services (CMS) hospital quality rankings and patient experience information to the price information.

Some additional highlights from this year’s RAND analysis include:

  • Colorado’s comparative outpatient service payments are significantly higher than the national average (231%) at over three times Medicare rates (304%). Outpatient services in Colorado are among the most expensive on average in the country and one of the highest cost drivers for health care services in the state.
  • Hospital prices vary widely throughout both rural and urban counties. In fact, the two lowest-paid hospitals (Aspen Valley Hospital, Wray Community Hospital) and two highest-paid (Colorado Plains Medical Center, St. Anthony Summit Medical Center) are located in rural counties.
  • Inpatient and outpatient hospital payments in all but one (East) region of the nine DOI regions in Colorado increased and all nine had average prices that were higher than the national average.
  • Thirty hospitals receive more than three and up to six times Medicare rates for inpatient and outpatient services combined.

CO APCD data included in the study includes all fully insured Coloradans and approximately 50% of those with self-insured employer coverage. Not all CO APCD claims met the minimum standards to be able to be matched and included in the analysis, and therefore the volume of claims included per hospital is lower than the actual number of inpatient discharges and outpatient visits. Download the complete RAND Excel file and methodology for more details.

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