Health Affairs August 4, 2023
Policy makers are increasingly turning their attention toward the prices health care providers charge private insurers, employer health plans, and their enrollees, and for good reason: Analyses highlight that private insurers pay nearly 2.5 times Medicare rates for hospital care and 1.2 times Medicare rates for physician care at the median. There is also considerable evidence that the prices providers negotiate with private insurers are increasingly a function of local provider market concentration as opposed to the resources necessary for providing care.
One component of provider pricing growing in prominence is hospitals charging “facility fees” for care provided in outpatient and physician office settings that hospitals own or control. These fees are ostensibly overhead charges, but for the hospitals and...
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