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Health Policy
July 22, 2019

The Commercial Differential for Hospital Prices: Responses From States and Employers

Author Affiliations
  • 1Milbank Memorial Fund, New York, New York
  • 2School of Public Health, Brown University, Providence, Rhode Island
  • 3Department of Healthcare Policy & Research, Weill Cornell Medicine, New York, New York
  • 4Department of Medicine, Weill Cornell Medicine, New York, New York
JAMA. 2019;322(8):723-724. doi:10.1001/jama.2019.9275

The prices paid for hospital services have long had a strange dichotomy. For the 37% of the population insured by Medicare or Medicaid, prices are publicly available and generally increase slowly. By contrast, prices for the commercially insured population are privately negotiated, proprietary, and confidential. These rates are closely guarded by health plans, who are convinced that negotiating with clinicians and health care organizations on behalf of consumers is a source of competitive differentiation.

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    1 Comment for this article
    Quality Must Be Compared at the Same Time
    George Karahalis, MHA | CMS retired, quality manager
    The work reported here on negotiated rates is not remarkably new. What continues to be missing is the direct link to relevant quality/value measures--simultaneously. For example, the crude, resource-focused analyses using Medicare measures in place by regulation revealed that larger hospitals, University medical centers, and related clinics are NOT necessarily better. Our CMS investigators (to include State Agency partners) apply professional standards and practices to the resource-based measures to make and enforce determinations. We recognize the limits. These have been in place for more than a decade. No consideration of cost, billed amount or quality/value has been included. Scientific research of an immense scope is needed ASAP to be fair to institutional providers, and their related physicians and non-physician practitioners. To report cost in the absence of quality is a significant shortcoming.