Cost Plus Hospital Reimbursement VS PPO Discounts

Now that we have empirical data, here is the math:

Typical PPO hospital discount – 57%

Typical Cost Plus Discount Equivalent – 87%

$100,000 in billed charges means the typical PPO allowed is $43,000 while the Cost Plus Discount Equivalent is $13,000. 

Under the PPO alllowable in the example above, hospital profit margin, according to filed CMS reports are approximately $31,000. Under the Cost-Plus method, the hospital’s estimated profit margin is $1,400.