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Variation in reported hospital cash prices across the United States and how they compare to reported payer-specific negotiated rates

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  • Ruiz Sánchez, Gerardo

Abstract

There is little empirical evidence on the hospital “cash” prices that self-paying patients (e.g., self-paying uninsured patients) face, and little empirical evidence of how these hospital cash prices compare to payer-specific negotiated rates. To address this gap in the literature, I use new data from U.S. hospitals on their reported cash prices and payer-specific negotiated rates for fourteen “shoppable” hospital services that are subject to mandated disclosure under a new federal rule that took effect on January 1, 2021. I find that the cash prices reported by hospitals for these services vary meaningfully across the United States. For example, hospitals with brain MRI cash prices in the 90th percentile of the distribution of my data have cash prices 7.9 times more expensive than hospitals in the 10th percentile. I also find that it is common for the reported cash price to be lower than several payer-specific negotiated rates within a given hospital. For example, for a given private payer (e.g. Aetna, Cigna), the share of reported payer-specific negotiated rates that are higher than the cash price within the same hospital ranges from 41.0 to 57.3 percent. These findings raise further questions about how hospitals decide to price services for the self-pay uninsured population and how these cash pricing decisions compare to transaction rates they negotiate with other payers.

Suggested Citation

  • Ruiz Sánchez, Gerardo, 2022. "Variation in reported hospital cash prices across the United States and how they compare to reported payer-specific negotiated rates," Economics Letters, Elsevier, vol. 211(C).
  • Handle: RePEc:eee:ecolet:v:211:y:2022:i:c:s0165176521004687
    DOI: 10.1016/j.econlet.2021.110226
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    References listed on IDEAS

    as
    1. Zack Cooper & Stuart V Craig & Martin Gaynor & John Van Reenen, 2019. "The Price Ain’t Right? Hospital Prices and Health Spending on the Privately Insured," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 134(1), pages 51-107.
    2. Craig, Stuart V. & Ericson, Keith Marzilli & Starc, Amanda, 2021. "How important is price variation between health insurers?," Journal of Health Economics, Elsevier, vol. 77(C).
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    More about this item

    Keywords

    Hospital prices; Uninsured; Cash prices;
    All these keywords.

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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