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New study find that health insurance companies pay more for hospital services in San Francisco Posted: November 29th, 2010

By Maryalene LaPonsie

According to a new study, health care markets that are dominated by a prominent hospital system are able to charge health insurance companies more than twice what Medicare pays for inpatient care. The findings are part of a report commissioned by Catalyst for Payment Reform and completed by the Center for Studying Health System Change.

The study compared the price paid by four major health insurance companies for inpatient hospital care in eight health care markets. Medicare costs were used as a benchmark to factor in regional variations in the cost-of-living, which can affect patient care prices.

The survey found that, in all cases, private health insurance companies pay more than Medicare for inpatient services. Regional costs, as a percentage of Medicare payments, were as follows:

  • San Francisco: 210 percent
  • Milwaukee: 205 percent
  • Indianapolis: 198 percent
  • Richmond, Virginia: 192 percent
  • Rural Wisconsin: 169 percent
  • Cleveland: 151 percent
  • Los Angeles: 149 percent
  • Miami: 147 percent

However, even within regions, there were significant variations. For example, at one hospital in Los Angeles, private health insurers pay 418 percent more than Medicare.

In response to the allegation that certain hospital systems are using their weight to command higher prices, the American Hospital Association issued a statement saying that the report was "deeply flawed" and used unverifiable data to make "exaggerated claims."