KFF stated that increased provider consolidation as a result of the pandemic could lead to hospitals gaining additional leverage to "demand higher prices from private insurers."
Private insurance rates were up to 2.5 times higher than Medicare rates across 10 DRGs, according to a brief published by the Kaiser Family Foundation (KFF) Tuesday.
The KFF research found that private insurance rates "varied more widely" than Medicare rates and that the average private insurance rates for diagnoses related to coronavirus disease 2019 (COVID-19) rose up to 22% between 2014 to 2017.
The study noted that if Medicare's temporary 20% add-on for hospitals that treat patients infected with COVID-19 were applied in 2017, the gap with private insurers would have been smaller.
KFF stated that increased provider consolidation as a result of the pandemic could lead to hospitals gaining additional leverage to "demand higher prices from private insurers" and exacerbate the gap between commercial payers and Medicare payment rates.
"Our analysis also shows a much wider variation in private insurance payment rates when compared to Medicare. Past studies have found that market consolidation has contributed to higher private insurance hospital prices," the brief read. "Proposals to create a public option or allow people to enroll in Medicare earlier could constrain payment rates and make health coverage more affordable, but also decrease revenues for healthcare providers."
Breaking down the statistics by DRG, KFF found that the average private insurance payment rate for patients on a ventilator for more than 96 hours is $60,000 more than the average amount paid by Medicare for the same service.
Similarly, respiratory infections result in average private insurance payment rates of $33,786 compared to an average Medicare payment rate of $13,297.
For common diagnoses not related to COVID-19, private insurance rates still ranged 1.6 to 2.2 times high than the average Medicare payment in 2017.
KFF's brief is in line with prior research about the gap between private insurers and Medicare.
In May 2019, a study released by RAND Corporation found that private health plans paid hospitals 241% of what Medicare would have in 2017, up from 236% in 2015.
According to the analysis, some of the greatest price variation occurred at hospital systems, ranging from 150% to above 400% of what Medicare paid.
Jack O'Brien is the Content Team Lead and Finance Editor at HealthLeaders, an HCPro brand.