Prices Paid to Hospitals by Private Health Plans: Findings from Round 4 of an Employer-Led Transparency Initiative
The RAND 4.0 Report was published by the RAND Corporation in May 2022. This study reported on 2018-2020 medical claims data from a large population of privately insured individuals. In 2020, across all hospital inpatient and outpatient services (including both facility and related professional charges), employers and private insurers paid 224% of what Medicare would have paid for the same services at the same facilities.
Because employer-sponsored spending comes from employee wages and benefits, employers have a fiduciary responsibility to administer benefits in the interest of participants. The lack of transparency of prices in the health care market limits the ability of employers to knowledgeably develop or implement benefit design decisions. Employers can view and use data from this study in Sage Transparency, a free, interactive hospital value dashboard that provides easy comparison of hospital prices and quality.
Billion dollars in hospital spending
Relative to other countries, a defining characteristic of the U.S. health care system is the wide variation in prices both within and across markets. Driving this variation, and the largest source of insurance coverage in the United States, is insurance provided through an employer or a union in the form of employer-sponsored health insurance. Several studies have highlighted variations in private health insurance prices, but information on provider prices in this market is not commonly available.
Beginning in 2021, federal policies have required hospitals to post prices for common services, however many hospitals have not complied with the policy. RAND 4.0 is designed to help fill this knowledge gap. Employers can use this report to become better-informed purchasers of health benefits. For broader policy and research audiences, the information in this report also highlights the levels and variation in hospital prices paid by employers and private insurers.
In this study, researchers analyzed health care claims obtained from self-insured employers, 11 state all-payer claims databases, and records from health insurance plans that chose to participate. The study uses data from 4,102 hospitals in all U.S. states except Maryland. Between 2018 and 2020, the fully processed data included $78.8 billion of spending on hospital-based claims. For the first time, the analysis also includes data from 4,091 ambulatory surgical centers (free-standing facilities that perform outpatient surgical services), with $2.0 billion of spending on ASC procedures.
- Relative prices continue to vary widely across states. Some states had relative prices below 175%, while other states had relative prices that were at or above 310%.
- In 2020, across all hospital inpatient and outpatient services (including both facility and related professional charges), employers and private insurers paid 224% of what Medicare would have paid for the same services at the same facilities.
- This reduction from the 247% figure reported for 2018 in the previous study is owed to a substantial increase in the volume of claims from states with prices below the previous mean price.
- Indiana continues to have two problems: high hospital prices and low physician payment. Indiana RAND 4.0 stats:
- 7th Highest for Inpatient and Outpatient Relative Price
- 4th Highest for Total Facility Price
- 4th Highest for Inpatient Facility Price
- 6th Highest for Outpatient Facility Price
- 4th Lowest for Professional Fees
Dive deeper into the RAND 4.0 study with additional resources, including presentation materials from the 2022 National Hospital Price Transparency Conference.
Use this free, interactive hospital value dashboard to compare and print reports for states, hospitals, and health systems with data from RAND 4.0 and additional price and quality data sources.
Read the press release from the RAND Corporation
View the RAND 4.0 slide deck from the 2022 National Hospital Price Transparency Conference.
All 2022 Conference Presentations
Browse all slide decks and videos from the 2022 National Hospital Price Transparency Conference.
Christopher Whaley, PhD
Associate Policy Researcher, RAND
Christopher Whaley is an Associate Policy Researcher at the RAND Corporation and also an Assistant Adjunct Professor of Health Policy and Management at the University of California, Berkeley.
Chris contributed to the RAND 2.0 study and took over as lead researcher for the RAND 3.0 and RAND 4.0 studies. His research focuses on how information and financial incentives influence patient’s choice of providers, how providers respond to changes in consumer incentives, and insurance benefit design innovations. His research has been published in leading clinical, health policy, and economics journals, including Health Affairs, JAMA, the Journal of Health Economics, and the New England Journal of Medicine.
Brian Briscombe, Rose Kerber, Brenna O’Neill, and Aaron Kofner provided additional research for the RAND 4.0 study.
2017 – 2020
Previous RAND Studies
See results and analysis for the previous RAND Hospital Price Transparency Studies, covering prices from 2013 to present. Each study is available, free of charge and in its entirety.
Published September 2020
A nationwide price study of more than 3,000 hospitals using employer claims.
Published May 2019
A study of more than $13 billion in hospital spending in 25 states.
RAND 1.0 (PILOT)
Published September 2017
The first Hospital Price Transparency study, focused on providers in Indiana.
Employers, health plans, business coalitions, all-payer-claim-databases, and other organizations that have employer hospital claims databases are invited to enroll in RAND 5.0, the fifth in a series of Hospital Price Transparency Studies.