Avalere: COVID-19 hospitalizations could cost up to $17B this year

A new Avalere study pegs the cost of COVID-19 hospitalizations as high as $17 billion for 2020. (Getty Images)

The cost of COVID-19-related hospitalizations could range between $9.6 billion and nearly $17 billion this year, with Medicare and commercial plans bearing much of the cost, according to a new analysis from consulting firm Avalere.

The analysis, released Friday, examines how the pandemic could impact the healthcare system financially as hospitalizations and cases start to rise in other parts of the country. The analysis comes as insurers must figure out their expected medical costs in 2021 and how COVID-19 could impact them financially.

“As policymakers and stakeholders continue to identify ways to address the spread of COVID-19 in the US, hospitalization cost and provider payment remain a key point of concern, particularly in geographies with high incidence rates,” Avalere said.

Avalere developed three scenarios to estimate the total cost of hospitalizations throughout the entire year for COVID-19.

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The scenarios are based on weekly hospitalization trends and vary based on whether there is a continued decline of cases, a slow decline or a rebound of hospitalizations due to a second wave in the fall. Under the first scenario of a continued decline, hospitalizations would cost $9.6 billion, compared with $13 billion for the second scenario of a slow decline and nearly $17 billion for a second surge.

Researchers also looked at diagnosis codes for confirmed COVID-19 cases starting April 1 and examined claims data to determine the cost of hospitalizations. The analysis does not factor in other provider costs associated with COVID-19 such as staffing or supplies.

Avalere found Medicare and commercial payers face the most costs because they would have the most beneficiaries hospitalized due to COVID-19.

Under the scenario where there is a second surge in the fall, Avalere estimates there would be 327,000 hospitalizations in Medicare and 259,700 for commercial plans.

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However, commercial hospitalizations would cost more ($9.9 billion) compared to Medicare ($5.2 billion), because hospitals charge commercial plans higher rates than Medicare.

On the other hand, there would be 69,000 hospitalizations for Medicaid patients and another 63,000 for uninsured patients, the analysis found.

The hospitalization costs under every scenario are much higher than the annual hospitalization costs for type A and B influenza, which are estimated at $1.3 billion a year, Avalere said.

“The results of the analysis indicate that inpatient hospitalizations related to COVID-19 represent significant cost to the healthcare system in 2020, regardless of payer market,” the analysis added.