AHA Statement on the Center for Studying Health System Change
Report Examining Variation in Private Insurer Payment Rates
Marie Watteau - (202) 626-2351
Matthew Fenwick - (312) 422-2820
President and CEO
American Hospital Association
The newly released publication on variation in private insurer payment rates is too deeply flawed to be a usable policy tool.
The publication reaches faulty conclusions based on unverified data from a handful of powerful insurance companies. Each insurer used its own methods to generate price comparisons and no effort was made to verify, validate or correlate the information provided. This lack of consistency makes any comparisons, at best, unreliable. Using Medicare rates as the benchmark is also flawed. Because Medicare covers far less than the cost of caring for patients, virtually every hospital - not just those in the paper - is required to pass on some of that cost to others. Moreover, Medicare rates, like insurers', vary among hospitals for valid reasons. For Medicare, that variation is attributable to the costs of training physicians, caring for low income populations and serving rural communities among other things.
In addition, the publication concludes that very different types of hospitals all have "market power" without any coherent support. Respected economists that reviewed the publication found that it, like the previous work on California hospitals, lacks theoretical and empirical support for its claims that payment differences constitute "evidence" of market power. Simply put: there is no reliable evidence for these exaggerated claims.
Hospital quality and patient satisfaction are routinely measured and publicly reported, yet the study fails to acknowledge that consumers have powerful tools to choose providers that offer the greatest value. Hospitals believe that adding value, eliminating fragmentation and providing more patient-centered care is the future of health care. It is unfortunate that this deeply flawed work attempts to derail that future with spurious claims.
The AHA is a not-for-profit association of health care provider organizations and individuals that are committed to the improvement of health in their communities. The AHA is the national advocate for its members, which includes more than 5,000 member hospitals, health systems and other health care organizations, and 38,000 individual members. Founded in 1898, the AHA provides education for health care leaders and is a source of information on health care issues and trends.
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