USE CASE: Investigating Commercial and Medicare Rate Setting

The National Bureau of Economic Research (NBER) was founded in 1920, and is the nation’s leading nonprofit economic research organization.  Twenty-four Nobel Prize winners in Economics and thirteen past chairs of the President’s Council of Economic Advisers have been researchers at the NBER.

Project Summary: This project is helping researchers understand how Medicare reimbursement rates impact the prices set by commercial health insurance plans. CO APCD data is being used to identify scenarios where commercial payments are closely tied to Medicare reimbursement rates. Results of this research will provide insights regarding how private health insurance payers set reimbursement rates potentially leading to a better understanding of the reasons for significant variation in prices for the same service.

Benefit to Colorado: Colorado is an excellent place to study the rate setting behavior of commercial payers given the large number of insurers and a generally competitive marketplace. A study of reimbursement rate-setting practices has the potential to positively change the health care system by uncovering the reasons for observed price variation. A better understanding of how rate-setting works in Colorado can help policymakers identify potential opportunities to make changes that lower overall health care costs.