Medicare Reference Pricing

Medicare Reference-Based Price Report - 2018 Update

The new version of the Medicare Reference Pricing Analysis (released September 2022) is now available on the Affordability Dashboard.

Many cost reduction strategies have been implemented and tested to address rising health care costs both locally and nationally. One model in particular – negotiating rates using Medicare payments as a reference – has proven effective in reducing health care spending. This analysis shows what commercial health insurance companies pay hospitals for inpatient and outpatient services as a percent of Medicare, along with patient experience and an overall hospital quality rating. The data is also available by county and Division of Insurance (DOI) region across the state to help communities, employers, payers, providers, state agencies and others better understand local health care cost savings opportunities.

This report is based on a RAND Corporation analysis of commercial health insurance payments in the Colorado All Payer Claims Database (CO APCD).

Considerations

  • County and DOI information is based on 2018 claims in the CO APCD, and trend information compares 2017 to 2018 results by hospital.
  • Data represents hospital-based claims for the majority of fully insured and small group covered lives in Colorado, and approximately 25% of self-insured covered lives (see CO APCD Insights Dashboard for more information).
  • % Medicare payments reflect the percent above or below Medicare Fee-for-Service payments (equal to 100%) that were paid by commercial health insurance companies and patients.

Data Highlights

  • Colorado’s comparative outpatient service payments are significantly higher than the national average (267%) at over three times Medicare rates (312%). This places outpatient services in Colorado as 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 through both rural and urban counties. In fact, the two lowest-paid hospitals (Aspen Valley, Wray Community Hospital) and two highest-paid (Colorado Plains Medical Center, St. Anthony Summit Medical Center) are located in rural counties.
  • From 2017 to 2018, inpatient and outpatient hospital payments in all but one (West) region of the nine DOI regions in Colorado decreased. Compared to hospitals nationally, however, only two DOI regions (Denver, Boulder) were paid less than the national average.
  • Of the 52 hospitals with both 2017 and 2018 data available, for inpatient and outpatient services combined, the majority had a reduction in commercial payments in 2018 (-10% on average. Only eleven hospitals received payments that were higher than in 2017 (6%+ on average).