The IDR process will use which of the following?:
A – 125% of Medicare
B – 200% of Medicare
C – Average PPO allowed amount
D – 80% of billed charges
RAND researchers examined the potential impact of four proposals for out-of-network payment limits: 125% of Medicare payment rates (a strict limit), 200% of Medicare payment rates (a moderate limit), the average of payments made by private health plans in a state (a moderate limit), and 80% of average billed charges in a state (a loose limit). The Price and Spending Impacts of Limits on Payments to Hospitals for Out-of-Network Care | RAND
They used information from the 2017 Centers for Medicare & Medicaid Services Hospital Cost Report Information System—compiled and processed through the RAND Hospital Data repository—to estimate status-quo hospital operating expenses, Medicare payments, payments by private plans and hospital charges.
The analysis found that limiting out-of-network payments to 125% of Medicare would create the biggest drop in hospital payments.
A more-moderate payment limit set at 200% of Medicare rates would reduce negotiated hospital payments by 8% or 23%, depending on the modeling assumptions, while using the average private payment prices in a state are estimated to reduce negotiated hospital prices by 16% or 30%.
A payment limit of 80% of average billed charges in a state would be expected to create a modest price increase of 4% or a decrease of 3%, depending on the estimation approach used.
