Hospital Price Study Reveals Kentucky Lower than National Rates but Disconnect Between Quality and Cost in Kentucky’s Hospitals

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Prices paid by employers to Kentucky hospitals continue to be less than the national average but more than twice the rate paid to Medicare, while quality still lags behind the rest of the country, according to a national study released this month.

RAND 3.0, the third in a series of Hospital Price Transparency Studies focused on claims data from 2016 to 2018, was released on September 19. This year’s study adds inpatient and outpatient professional fees and expands the analysis to 49 states and the District of Columbia, the volume of data collected from the original 25 states, and an analysis of hospital quality and safety data.

Of the 46 states with enough data to report an overall commercial price relative to Medicare, Kentucky ranked sixth lowest at 214%, compared to the national average of 247%. The report shows prices as a percent of what Medicare paid for the same services, thus making these relative prices comparable across the country.

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But similar to what the study illuminates nationally, Kentucky’s residents will find a large variation in price depending on which facility they visit. For example, prices paid at Kentucky facilities range from a low of 107% of what Medicare would have paid to a high of 354%.

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The price paid to Kentucky’s hospitals varied from 107% of Medicare to 354%.

Additionally, the variation in price does not correspond with the quality of service received, according to the study. The RAND study looked at the CMS Hospital Compare five-star rating to highlight variation on quality, which showed that more Kentucky facilities named in the RAND study have poor to average ratings compared to the nation as a whole – 72% of facilities in Kentucky had poor to average ratings, compared to 63% of all hospitals in the study. This means that just 28% of Kentucky’s above average by CMS Hospital Compare, and none of Kentucky’s hospitals are considered excellent.

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Just a handful of Kentucky’s hospitals fall under the Higher Quality, Lower Cost category – below average costs and above average quality, as illustrated in the graph below. The graph, which plots CMS hospital quality rating and overall price relative to Medicare, shows that price doesn’t correspond with quality.

The Kentuckiana Health Collaborative sister coalition Employers’ Forum of Indiana collaborated with the RAND Corporation to produce the reports. RAND researchers independently conducted all study analyses and wrote the final report. The study was funded by the Robert Wood Johnson Foundation and self-funded employers. The KHC partnered with the Employers’ Forum of Indiana to recruit KHC employers to contribute data to the study.


These variations in price and quality in Kentucky’s hospitals will be the focus of the Kentuckiana Health Collaborative’s December 1 Community Health Forum, which will bring in national and local leaders to dive into the results and what this means for Kentucky.

“Driving Affordability Through Hospital Price Transparency” will feature Bob Smith, Executive Director for the Colorado Business Group on health. Smith, a leader in piloting payment reform and promoting value-based purchasing in Colorado, will share his vision and plans for utilizing the RAND study data in his state.

Additionally, KHC data scientist Stephanie Clouser will do a deep dive into the results of the study in the region. More speakers will be announced, so check the event page for updates.

Although hospital pricing is important to all stakeholders, this event will be particularly relevant to those interested in employee health benefits, health plan design, and value-based payments. RAND is now recruiting more participants for the next iteration of the study, so any employer or health plan that is interested in participating is encouraged to attend for more information on next steps.

Register today to join the conversation at the virtual event. As with all KHC Community Health Forums, attendance is free for KHC members and $35 for non-members. If you are unsure if your organization is a member of the KHC, see the full list here. Scholarships are available for nonprofits working to improve health and healthcare delivery; please email Emily Divino at to inquire about hardship scholarships.

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