PT5.1 (RAND 5.1)

Study Summary

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. PT5.1 Study 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, 12 state all-payer claims databases, and records from health insurance plans that chose to participate. The study uses data from more than 4,000 hospitals in all U.S. states except Maryland. ASC and physician administer medication data is from all 50 states. Between 2020 and 2022, the fully processed data included $80.2 billion of spending on hospital-based claims and $3.1 billion in ASC spend. For the first time, the analysis also includes physician administered medication data. Many of these drugs are administered by physicians or other clinicians through injections and infusions. Because of their type of administration, these drugs are commonly covered by a patient’s medical benefit rather than the pharmacy benefit.

Key Findings

• Commercial Prices as a Percent of Medicare continue to vary widely across states. In 2022, Arkansas had the lowest Total Facility Plus Physician price as a percent of Medicare of 162%, while Florida had the highest prices at 346%.
• In 2022, across all hospital inpatient and outpatient services (including both facility and related professional charges), employers and private insurers paid a median of 253% of what Medicare would have paid for the same services at the same facilities.
• Indiana continues to have two problems: high hospital prices and low physician payment. Indiana PTP 5.1 stats:
  • 9th Highest for Total Facility Plus Physician (300%)
  • 11th Highest for Inpatient Facility Plus Physician
  • 11th Highest for Outpatient Facility Plus Physician
  • 6th Lowest for Total Physician (127%)
  • 6th Lowest for Inpatient Physician
  • 5th Lowest for Outpatient Physician
  • 6th Highest for Total Facility (338%)
  • 8th Highest for Inpatient Facility
  • 7th Highest for Outpatient Facility