Document Type
Article
Department
Economics
Publication Date
2-1-2022
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.
Publication Title
Economics Letters
Volume
211
ISSN
01651765
DOI
10.1016/j.econlet.2021.110226
Comments
Author's post-print/accepted manuscript. Published version available at:
https://doi.org/10.1016/j.econlet.2021.110226