The Center for Improving Value in Health Care (CIVHC) has released an update to its health care payment comparison tool showing how much commercial health insurers pay hospitals and Ambulatory Surgery Centers (ASCs) compared to Medicare payments. The analysis reveals commercial insurers still pay hospitals two to five times Medicare rates, continuing previous years’ trends.
About the Tool
The tool was developed using 2019-2023 health insurance payment data in the Colorado All Payer Claims Database (CO APCD) in combination with Milliman’s Medicare Repricer software, which allows for the comparison of provider payments to Medicare benchmarks. The findings offer insight into how commercial payments compare to Medicare for hospital and non-hospital care. Using Medicare payments as a benchmark to understand how much commercial payers pay facilities offers a standard way to evaluate variation in health care spending.
Medicare payments are considered a reasonable benchmark because they are updated annually and take into consideration a variety of factors including where the facility is located, and how much care the facility provides to publicly insured and uninsured patients.
Kristin Paulson, JD, MPH,
How it’s being used
This new tool and others compare commercial payments to Medicare, often called Medicare reference-based prices, and are being used by state agencies, payers, hospitals and others addressing health care affordability. Similar data is also being used by large employers and purchasing alliances to negotiate facility payments and reduce health care premiums and spending.
From 2019 to 2023, commercial payments as a percentage of Medicare spending in Colorado increased by 9%. In 2023, across both inpatient and outpatient hospital services, most hospitals received payments from commercial insurers that were two to three times higher than Medicare rates, with many receiving three to five times more. In contrast, payments to Ambulatory Surgery Centers (ASCs) for outpatient services declined significantly, dropping by 28% over the same period.
Learn More
CIVHC updates the Medicare Reference Based Price tool on an annual basis to help employers, state agencies and others to better understand commercial payments and continue to seek ways to make health care more affordable.
For more detailed information and to access to the full report with the named hospital and ASC results and the associated infographic: