Comparing Medicare Advantage and Traditional Medicare Prices for Hospital Outpatient Services With Hospital Price Transparency Data

Abstract

As Medicare Advantage (MA) plans enroll an increasingly large share of Medicare beneficiaries, how much providers charge MA plans relative to Traditional Medicare (TM) has important policy implications. We used new price transparency data from hospitals—which contain the most up-to-date negotiated prices—to evaluate whether and how MA prices differed from TM for hospital outpatient services. We found that among the 1,135 hospitals in our sample, MA prices were close to TM at about half of them, but the other half reported MA prices that deviated considerably from TM, predominantly in the direction of higher rather than lower, and rural hospitals were more likely than urban ones to charge high MA markups. Our findings also suggest that hospital price transparency data hold promise for promoting price shopping among MA beneficiaries. But greater hospital compliance and more standardized reporting are necessary for the data to be a more useful tool.

Hospital Prices in Medicaid Managed Care

“…We calculated the traditional Medicare rate for each hospital and each service in 37 states and the District of Columbia with a significant presence of MMC, expressing median MMC prices among insurers at that hospital as a percentage of the Medicare rate. We summarized prices as a percentage of the Medicare rate following prior research on health care prices . We analyzed median prices as a percentage of the Medicare rate across 3 procedure categories (surgery and medicine, imaging, and ED) both nationally and at the state level.…”

“…We summarized prices as a percentage of the Medicare rate following prior research on health care prices. 5 We analyzed median prices as a percentage of the Medicare rate across 3 procedure categories (surgery and medicine, imaging, and ED) both nationally and at the state level. Details on sample selection, including the set of procedures and states, are included in the eMethods and eTable in Supplement 1 .…”