Latest Study
Prices Paid to Hospitals by Private Health Plans: Findings from Round 5 of an Employer-Led Transparency Initiative
The RAND 5.0 Report was published by the RAND Corporation in May 2024. This study reported on 2020-2022 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 an average of 254% of what Medicare would have paid for the same services at the same facilities. Analysis of the ambulatory surgery center (ASC) data found that commercial prices were on average 170% of Medicare. In addition to hospital and ASC prices, this study also analyzed physician administered medication data and found that the median commercial price as a percent of the average sales price is 208%.
Because employer-sponsored spending comes from employee wages and benefits, employers have a fiduciary responsibility to administer benefits in the best interest of plan 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 tool that provides easy comparison of hospital prices and quality, as well as ASC and medication relative pricing.
Demographics
$77.4
Billion dollars in hospital spending
$3.1
Billion dollars in ambulatory surgery center spending
4,000+
Hospitals
49
States + DC*
*Maryland is excluded due to their all-payer rate-setting program
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 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 $77.4 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 164%, while Georgia and Florida tied for the highest prices at 345%.
- 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 5.0 stats:
- 8th Highest for Total Facility Plus Physician (297%)
- 11th Highest for Inpatient Facility Plus Physician
- 11th Highest for Outpatient Facility Plus Physician
- 8th Lowest for Total Physician (142%)
- 6th Lowest for Inpatient Physician
- 5th Lowest for Outpatient Physician
- 6th Highest for Total Facility (341%)
- 8th Highest for Inpatient Facility
- 7th Highest for Outpatient Facility
Additional Resources
Dive deeper into the PT5 study (RAND 5.0) with additional resources, including presentation materials from the 2024 National Healthcare Price Transparency Conference.
Sage Transparency
Use this free, interactive hospital value dashboard to compare and print reports for states, hospitals, and health systems with data from PT5 (RAND 5.0) and additional price and quality data sources.
Press Release
Read the press release from the RAND Corporation.
Slide Deck
View the PT5 (RAND 5.0) slide deck from the 2024 National Healthcare Price Transparency Conference.
All 2024 Conference Presentations
Browse all slide decks and videos from the 2024 National Hospital Price Transparency Conference.
Author
![](https://employerptp.org/files/2019/08/chris.png)
Christopher Whaley, PhD
Associate Professor in the Department of Health Services, Policy, and Practice, Brown University School of Public Health
Chris contributed to the RAND 2.0 study and took over as lead researcher for the RAND 3.0, RAND 4.0, and PT5 (RAND 5.0) 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.
Rose Kerber, Daniel Wang, Aaron Kofner, and Brian Briscombe provided additional research for the PT5 (RAND 5.0) study.
2017 – 2024
All Price Transparency Studies
See results and analysis for each of the Employer Price Transparency Studies, covering prices from 2013 to present. Each study is available, free of charge and in its entirety.
PT5 (RAND 5.0)
Published May 2024
A study of hospital prices from hospitals and ambulatory surgery centers from across the nation plus price variability among physician administered medications, conducted by RAND.
RAND 4.0
Published May 2022
A study of hospital prices from more than 4,000 hospitals and 4,000 ambulatory surgical care centers from across the nation, conducted by RAND.
RAND 3.0
Published September 2020
A nationwide price study of more than 3,000 hospitals using employer claims, conducted by RAND.
RAND 2.0
Published May 2019
A study of more than $13 billion in hospital spending in 25 states, conducted by RAND.
RAND 1.0 (PILOT)
Published September 2017
The first Employer Price Transparency study, focused on providers in Indiana and conducted by RAND.