Providing Perpective on Provider Rates…

Late last year the Center for Studying Health System Change released a study about the variation in provider rates which concludes that providers, specifically hospitals, have the upper hand in payment negotiations. And that this is part of a pattern of increasing leverage that providers wield, commanding higher rates.

Using Medicare as a point of reference, the study (based on data from the Medicare Payment Advisory Commission) found that hospitals in the Los Angeles area have negotiated inpatient payment rates averaging 149% of Medicare and outpatient rates averaging 277% of Medicare. In the San Francisco area, average inpatient rates negotiated by hospitals are 210% of Medicare and outpatient rates average 366% of Medicare.

So when we hear that “rate regulation will force insurers to lower provider payments” from opponents of AB52 (Feuer) to argue against giving insurance regulators the authority to reject rate increases that are unreasonable and unjustifiable, we are skeptical. In a health care system where payers, insurers, and providers battle over affordability issues, are providers really the victims?

This data, coupled with what we know about health insurance company profits would seem to suggest that the only parties *not profiting* in this system are rate paying consumers.

Health Access California promotes quality, affordable health care for all Californians.
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