All-payer rate setting
Open-knowledge reference entry
All-payer rate setting is a price setting mechanism in which all third parties pay the same price for services at a given hospital. It can be used to increase the market power of payers (such as private and/or public insurance companies) versus providers, such as hospital systems, in order to control costs. All-payer characteristics are found in most developed economies with multi-payer healthcare systems, including France, Germany, Japan, and the Netherlands. The U.S. state of Maryland also uses such a model.
The All-payer rate setting have been proposed in the United States as a healthcare reform measure. The proposal for a public option (a voluntary, publicly sponsored insurance plan similar to Medicare) has been cited as indirectly sharing some of the same goals as all-payer rate-setting systems.
Maryland
Since the late 1970s, Maryland has operated an all-payer system for hospital services. An independent commission establishes the rate structure for each hospital. That eliminated hospital cost shifting across payers, and spread more equitably the costs of uncompensated care and medical education and limited cost growth, but per capita Medicare hospital costs are among the country's highest.
Medicare's participation in the system is authorized by the Social Security Act, is tied to a growth limit in payment per admission, and entitles the state's hospitals to $2 billion per year in additional revenues from the federal government.
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