Hospital Pricing Revealed – What Hospitals Do Not Want You To Know


“Most hospitals will tell you that Medicare pays too little causing the hospital to lose money on Medicare patients.That is not true.

The law requires Medicare to pay on average 1% more than cost at an efficient hospital.

What Medicare pays should be a starting point in determining a reasonable charge for you.

In the deal the Minnesota Attorney General made with the seven-hospital Fairview Health Services, the hospitals would be required to charge self-pay patients no more than 5% above Medicare or Medicaid rates, whichever is greater.If you follow the guidelines set by the Minnesota Attorney General, you would be paying your hospital Medicare plus 5%.”

“We believe in general you should pay no more than Medicare plus 25%. That is a generous payment from you. Minnesota has required hospitals accept Medicare plus 5%. We suggest you offer Medicare plus 25%. “

Editor’s Note: Here is a sample page of the above mentioned website:


Well said.
An argument I have been using of late is relative to a hospital’s payer mix.  As you probably know, payer mix is an internal term at a hospital. It segregates where their money comes from by percentage and what they pay.  
An average hospital has a payer mix that looks something like this:
Medicaid:  15%
Medicare:  38%
Blue Cross: 30% (more in many markets) and where more almost always with favored nations contracts
Sub Total    83%
Medicaid pays poorly, Mediare pays very well, and the average BC/BS pays anywhere from 10% to 25% greater than Medicare
United, Aetna, Cigna, Humana, etc then pay a few points higher then BC/BS on average.
Then comes the rental networks and non-Bucas.  This group pays in at least the 95th percentile of a hospital’s payer mix.  There is no way a hospital can defend balance billing a patient for more money when they are paying at such a hefty level of their payer mix.
PS   Many rural hospitals have a payer mix of 85% Government pay (Medicaid + Medicare)
Good stuff Bill. The environment is ripe for a transparent priced, competitive marketplace for providers. Just need to keep the pressure on in revealing the indefensible model now in place.