From 2012 to 2019, regional healthcare markets across the country experienced significant differences in commercial-to-Medicare price ratios, resulting in widely varying rates paid by insurers to hospital systems.

In areas such as Chico, California, and Tacoma, Washington, private payer hospital price ratios increased by more than 100 percentage points. Gulfport, Mississippi, on the other hand, dropped 109 percent.

Nationwide, Hospital costs According to a recent RAND Corporation data, commercial health plans charged an average of 173% of Medicare’s pay rate in 2012, while the national commercial-to-Medicare price ratio only increased to 180% in 2019 Learn.

However, individual hospital referral districts largely exceeded this overall minimum change of 7 percentage points, increasing and decreasing their commercial-to-Medicare price ratio by an average of up to 38 percent over the study period.

Regions where prices are rising tend to have more supplier consolidation and higher market concentration, while regions where prices are falling typically are rural areas with healthcare financing challenges.

The Seattle-Tacoma area in particular is showing a trend health system consolidation This may have resulted in a lack of competition and higher prices over the past decade.Several reports suggest that in concentrated markets, hospital mergers can Raise the cost of insurance companies and patience go through up to 20% or more.

The study used data from the Healthcare Provider Cost Reporting Information System to analyze changes in commercial hospital payment rates relative to Medicare rates in 3,612 hospitals and 306 hospital-referral districts based on tertiary care referrals. Patterns of zip code groupings into the healthcare market.

From 2012 to 2019, regions with high commercial-to-medical price ratios and large increases in ratios saw an average increase of 38 percentage points. Other high-cost areas with larger declines saw an average drop of 38 percentage points.

In areas with low initial price ratios and large increases, price ratios rose by an average of 31 percentage points, while in areas with similar large declines, price ratios fell by an average of 16 percentage points.

“The dominance of your market and health plan will drive how strong the health plan’s negotiating strategy is,” said Rick Kes, senior analyst for the healthcare industry at RSM. “It all depends on where you stand as a health system or provider. How strong, and how strong the health plan is, who has the upper hand.”

If an insurer has a majority of partially insured enrollees in the market, they have some power to negotiate more attractive rates, Kes said.But if there is no clear dominant payer and several health insurers each have market share, providers often have more leverage to negotiation their rates, he said.

Of the 19 high-cost areas with the largest price increases, 11 are in California and three are in Wisconsin. While four of the top 19 regions are in Indiana, the areas with the largest declines are more geographically diverse.

Some of the areas with the highest price increases were close to those with the lowest ratios or the most price declines, Whaley said.

Commercial prices in the Greeley Hospital referral area in Colorado increased from 266% of Medicare rates in 2012 to 296% in 2019. In the Pueblo area a few hours south of Colorado, prices dropped from 275% of Medicare rates to 197%.

The study estimates that if individual hospital referral districts capped their price-ratio increases at 7 percentage points (which is the overall national increase from 2012 to 2019), the national average commercial-to-health insurance price ratio would reach 164 in 2019 % instead of 180%, health care spending would be reduced by $39 billion in the same year.

In 2019, hospital care spending in the U.S. was $1.2 trillion, or 32 percent of all health care spending, the study said. The researchers found that some of these high costs were attributable to the increased prices paid by commercial health plans. The gap between public programs such as health insurance and the prices paid by private insurers is growing.

Policymakers and other entities seek more price transparency from hospitals, while some are considering adjusting prices or increasing competition in the hospital market as a way to reduce hospital prices for commercial payers and improve access to health care.