Estimating inpatient hospital prices from state administrative data and hospital financial reports

Abstract

Objective: To develop a tool for estimating hospital-specific inpatient prices for major payers.

Data sources: AHRQ Healthcare Cost and Utilization Project State Inpatient Databases and complete hospital financial reporting of revenues mandated in 10 states for 2006.

Study design: Hospital discharge records and hospital financial information were merged to estimate revenue per stay by payer. Estimated prices were validated against other data sources.

Principal findings: Hospital prices can be reasonably estimated for 10 geographically diverse states. All-payer price-to-charge ratios, an intermediate step in estimating prices, compare favorably to cost-to-charge ratios. Estimated prices also compare well with Medicare, MarketScan private insurance, and the Medical Expenditure Panel Survey prices for major payers, given limitations of each dataset.

Conclusions: Public reporting of prices is a consumer resource in making decisions about health care treatment; for self-pay patients, they can provide leverage in negotiating discounts off of charges. Researchers can also use prices to increase understanding of the level and causes of price differentials among geographic areas. Prices by payer expand investigational tools available to study the interaction of inpatient hospital price setting among public and private payers--an important asset as the payer mix changes with the implementation of the Affordable Care Act.

Keywords: Inpatient hospital prices; Medicaid; Medicare; private insurance; revenue.