Nationwide Evaluation of Health Care Prices Paid by Private Health Plans: Findings from Round 3 of an Employer-Led Transparency Initiative

Abstract

The largest source of health insurance coverage in the United States is through an employer or union. Despite the size and importance of this market, prices are opaque. In this study, we use 2016 to 2018 data from all but one state in the United States, covering $33.8 billion in hospital spending from three sources-self-insured employers, state-based all-payer claims databases, and health plans-to document variation in facility and professional prices for the commercially insured population. We also examine trends and potential reasons that may explain the observed variation in prices. In this study, prices reflect the negotiated allowed amount paid per service, including amounts from both the health plan and the patient, with adjustments for the intensity of services provided. We report differences in standardized negotiated prices and prices relative to Medicare reimbursement rates for the same procedures and facilities.This report is designed to provide price transparency to a large and important market. Price transparency has not been traditionally available in a manner that allows for an easy comparison of prices between hospitals and other providers. The price information in this report can help employers and other purchasers of health care assess the prices that they pay for health care services. This report can also help contribute to policy discussions on price transparency and how to lower health care prices for privately insured Americans.The findings of this study are reported at a high level in this report, and a supplemental Microsoft Excel spreadsheet and an interactive map both provide additional detail (www.rand.org/t/RR4394). This report follows two previous studies on hospital prices (White 2017; White and Whaley, 2019). The current report extends these prior studies by examining additional data sources and documenting prices for additional providers and for specific service categories. Unlike many other examinations of hospital prices, our studies identify hospitals and groups of hospitals under joint ownership ("hospital systems") by name.This research was funded by the Robert Wood Johnson Foundation and participating selfinsured employers and was carried out within the Payment, Cost, and Coverage Program in RAND Health Care in collaboration with the Employers' Forum of Indiana.RAND Health Care, a division of the RAND Corporation, promotes healthier societies by improving health care systems in the United States and other countries. We do this by providing health care decisionmakers, practitioners, and consumers with actionable, rigorous, objective evidence to support their most complex decisions. For more information, see www.rand.org/health-care, or contact

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