Commercial negotiated prices for hospital care are high and vary widely in the US.1,2 Over the past 2 decades, they have increased more than 200%, a magnitude far exceeding other consumer goods and services.3 As of 2022, mean commercial prices have reached 254% of Medicare rates for the same hospital and service.4 To address this affordability crisis among commercial patients, a growing number of self-insured employers, purchasing coalitions, and state public option plans are exploring Medicare reference-based pricing (RBP), which set their plans’ payment rates at a multiple (eg, 200%) of Medicare rates.5-7 A key success factor of this price benchmarking effort is to find out the appropriate commercial price targets that are effectively low to generate sizable savings but also viable and feasible to the local hospital markets (eg, not too low to undermine hospitals’ financial viability, operation, or patient access).8 Therefore, understanding the full range of commercial price variation, especially across different insurers for the same service delivered in the same hospital, benchmarked against Medicare rates, can help inform this price target calculation. Yet, little empirical work has been done in this regard. One major barrier is the nontransparent commercial price negotiation process, which prevents patients, employers, and policymakers from accessing necessary pricing information to effectively compare, negotiate, or regulate their payments.4

Effective in July 2022, the federal Transparency in Coverage (TiC) Final Rule required all commercial insurers to publicly disclose their negotiated prices for specific procedures and contracting health care organizations and clinicians.9 Leveraging this up-to-date, nationally comprehensive, and granular price data, we examine within-hospital commercial price variation across 5 national insurers for 10 common hospital services. We calculate the maximum-to-minimum price gaps at each hospital and service, relative to Medicare rates, and then estimate the corresponding savings if the minimum commercial prices at each hospital are used as the target payment level for RBP benchmark. Our study aims to shed light on the dynamics of within-hospital commercial pricing and support employers and policymakers interested in RBP with recommended price targets and estimated savings.

Wang, Y., Xu, J., & Anderson, G. (2024). Within-Hospital Price Gaps Across National Insurers. JAMA Network Open, 7(12), e2451941-e2451941.