Commercially insured rural patients have been responsible for paying a greater share of their healthcare costs than their more metropolitan counterparts, according to a study of 2012-2022 data.
The findings, published Monday in Health Affairs, suggest greater financial strain for those rural patients as well as their hospitals, which must devote more resources to patient collections and may never convert those funds into realized revenue.
“Discrepancies between allowed amounts and actual collections may lead hospitals to increase their prices to offset expected shortfalls, potentially driving up overall healthcare prices,” the study’s authors, who are affiliated with the University of Southern California, noted in the journal.
The researchers conducted their analysis using in-network commercial insurance claims from the Health Care Cost Institute, which reflect about a third of the country’s employer-sponsored insurance population. To determine hospital characteristics, they leaned on the American Hospital Association Annual Survey. The full sample included 16 million inpatient admissions and 334 million outpatient visits across thousands of, primarily metropolitan, care sites.
On the whole, the analysis found that hospitals’ average annual in-network allowed amounts (the maximum a plan will pay for a covered service) per enrollee rose by 54% to $1,616 in 2022, whereas annual average cost sharing per enrollee rose by 42% to $149. The latter’s slower growth means a commercially insured patients’ share of the bill dipped from 10% of allowed amounts in 2012 to 9.2% in 2022. Cost sharing was generally greater for outpatient care (13% to 15% of annual facility allowed amounts) than for inpatient care (4% to 6%).
Care utilization eased during this period, as inpatient admission incidence dipped but outpatient “remained more stable, with a notable uptick in 2021 corresponding to the COVID-19 pandemic."
“Despite declining or stable utilization rates during the period 2012–22, mean per enrollee spending and patient cost-sharing burdens grew substantially in more recent years,” researchers wrote while noting that both measures well surpassed an inflation rate of 27%.
Amid these changes, the study outlined a shift in coverage design that saw more in-network encounters with zero patient cost sharing. Specifically, inpatient episodes with zero cost sharing rose from 32% to 41%, while outpatient began at 45%, peaked at 55% in 2021 and eased to 51% in 2022. Those trends broadly reflect federal law that prohibit cost sharing for those with COVID-19, the researchers noted.
Meanwhile, there was a seven percentage point decline in the portion of patient bills between $1 and $1,000, across both settings, and a one percentage point increase in “very high” patient cost sharing amounts between $1,000 and $5,000.
The changes, researchers wrote, are “consistent with the adoption of high-deductible health plans on the one hand and out-of-pocket maximums and preventive or other services covered in full on the other.” But while these trends are “critical to understanding the real-world impact of pricing trends, benefit design, and service delivery shifts on both providers and patients,” it was the widening divide between rural and metro hospitals’ cost sharing exposure that appeared to draw the researchers’ concern.
Whereas the gap between these hospitals’ inpatient and outpatient share of the amount owed by patients started the study at a four-percentage-point divide, it expanded to a high of nine percentage points in 2019, just before the COVID-19 pandemic, before narrowing to seven percentage points in 2022. At the 2019 peak, cost sharing accounted for 34% of rural facility allowed amounts per encounter, as opposed to 25% at metropolitan facilities.
The difference, researchers found, was largely due to the greater allowed amounts urban hospitals were able to secure from insurers rather than the size of the bill commercially insured, in-network patients ultimately received.
“As a result, rural, commercially insured residents are paying a higher share of total health care costs than metropolitan residents, and rural hospitals are burdened by having to collect a higher share of revenue from patients,” the researchers wrote. “The collection of patient obligations may deepen financial strain for hospitals and consumers in these rural settings.”