Crain’s Grand Rapids published an article May 16 on the release of Rand Corp. study on hospital pricing. Michigan reportedly has the third lowest hospital care costs relative to Medicare in the country, although the analysis relies on limited data sets and provides an inaccurate view of pricing.
MHA CEO Brian Peters is quoted in the article criticizing the methodology used in the study. He also explains the consequences of being a state with low hospital reimbursement.
“Even if the findings were proven accurate, the study’s results would show Michigan hospitals are reimbursed at some of the lowest levels in the country,” said Peters. “Hospitals are price takers where fixed reimbursement rates are either negotiated in advance with commercial payers or dictated by the government. These reimbursement models put hospitals at a disadvantage because commercial and government payers are insulated from adjusting rates to recognize increased costs and inflation. Hospitals must bear all cost increases with minimal or no payment adjustments.”
The American Hospital Association (AHA) also criticized the report as “a skewed and incomplete picture of hospital spending.”
“In benchmarking against woefully inadequate Medicare payments, Rand makes an apples-to-oranges comparison that presents an inflated impression of what hospitals are actually getting paid for delivering care while facing continued financial and other operational challenges,” said Molly Smith, the AHA’s group vice president for public policy. “Ultimately, the Rand study only underscores what we already know — that hospitals are chronically underpaid for Medicare services. Anything beyond that should be taken with a healthy measure of skepticism.”
This is the fifth version of the study published by the Rand Corp.
Peters also appears in a Becker’s Hospital review article published May 17 that shares the most important lesson hospital executives have learned throughout their career. Peters appears in the article as one of 90 executives speaking at the Becker’s Healthcare 12th Annual CEO+CFO Roundtable on Nov. 11-14.
Members with any questions regarding media requests should contact John Karasinski at the MHA.