The gap between government and commercial payers remains large.
Payer deductions as a percentage of hospital charges submitted increased in 2016 across all hospital classes and payers, continuing a long-standing trend. The gap between government and commercial payers remains large: 77.8 percent for Medicare compared to 39.2 percent for private payers and 56.7 percent for managed care.
Deductions as a percentage of outpatient charges exceed the level for inpatient discharges only slightly, despite typically higher markups for outpatient services. Uncompensated care deductions, especially charity care, decreased substantially for all hospital classes. This could potentially be due to Medicaid expansion under the Affordable Care Act.
Small community hospitals appear to have had the least deducted, but the gap has been closing. Deductions have increased the most for all community hospitals. Payer and inpatient/outpatient mix only partially account for the differences. The mix differs significantly only for major teaching hospitals, which are more Medicaid-dependent and less dependent on Medicare, and have a smaller portion of outpatient revenues.