Are Medicare Fee Schedules Appropriate For Commercial Populations?

Editor’s Note

This article is the latest in the Health Affairs Forefront series, Provider Prices in the Commercial Sector, featuring analysis and discussion of physician, hospital, and other health care provider prices in the private-sector markets and their contribution to overall spending therein. Readers are encouraged to review the Call for Submissions for this series. We are grateful to Arnold Ventures for their support of this work.

RAND recently released its fifth version of percent-of-Medicare cost rankings of hospitals, in which the authors compare hospital unit costs using Medicare allowed charges as the standardized price list. Using Medicare fee schedules as a standardized price comparison tool for commercial and Medicaid contracted rates is very common. The problem is...