Health Care Service Price Comparison Suggests That Employers Lack Leverage To Negotiate Lower Prices

Sen, Aditi P.; Chang, Jessica Y.; Hargraves, John

doi:10.1377/hlthaff.2023.00257

Cited by 4 publications

(1 citation statement)

References 5 publications

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“…Because of the expanded study sample, the results of this report may not be directly comparable to previous reports. In particular, the inclusion of additional data from state all-payer claims databases (APCDs) allows for inclusion of more data from individual and fully insured insurance plans, which tend to have slightly lower prices than self-funded plans (Craig, Ericson, and Starc, 2018;Sen, Chang, and Hargraves, 2023). We examine differences in prices paid by private health plans for hospital inpatient, hospital outpatient, and nonhospital services relative to how much Medicare would have paid for the same services at the same facilities.…”

Section: Scope and Contribution Of The Studymentioning

confidence: 99%

Prices Paid to Hospitals by Private Health Plans: Findings from Round 5 of an Employer-Led Transparency Initiative

2024

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Approximately 160 million Americans receive health insurance coverage through an employer or a union. Self-funded employers typically rely on insurance carriers and third-party administrators to negotiate prices and manage benefits but often have little insight into the prices negotiated on their behalf. Information on prices has not been traditionally available in a manner that allows employers and health care purchasers to easily compare provider prices.We used 2020 to 2022 medical claims data from all U.S. states (except Maryland, which has an all-payor rate setting program) covering hospital and other provider spending to document variation in negotiated prices for the commercially insured population. We found wide variation in hospital prices across and within states, even after adjusting for geographic cost of living differences. In 2022, case mix-adjusted hospital prices were below 200 percent of Medicare prices in Arkansas, Iowa, Massachusetts, Michigan, and Mississippi, and were above 300 percent of Medicare in California,

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Section: Scope and Contribution Of The Studymentioning

confidence: 99%

Prices Paid to Hospitals by Private Health Plans: Findings from Round 5 of an Employer-Led Transparency Initiative

2024

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Within-Hospital Price Gaps Across National Insurers

Wang,

Xu,

Anderson

2024

JAMA Netw Open

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ImportanceCommercial prices for hospital care are high and vary widely in the US. Employers and state policymakers are exploring reference-based pricing (RBP) to set their payment rates as multiples of Medicare prices; understanding the range of commercial price variation within a hospital is important for calculating the appropriate price targets that are effectively low to generate savings but also feasible and viable to local hospital markets.ObjectiveTo examine within-hospital maximum-to-minimum commercial hospital price gaps negotiated by 5 national insurers and estimate plan savings if the minimum prices within each hospital are used as new payment level.Design, Setting, and ParticipantsThis cross-sectional study used the insurer-disclosed Transparency in Coverage data as of March 2024. There were 40 382 commercial hospital facility prices extracted for 10 common services negotiated by CVS Health, Elevance Health, Blue Cross Blue Shield, Cigna, and United Healthcare, measured at the hospital-service-insurer level relative to the 2024 Medicare prices. For each hospital-service pair, the minimum, enrollment-weighted mean, and maximum prices were calculated, as well as the maximum-to-minimum price gaps. Plan savings were then estimated using the minimum within-hospital prices as the new payment levels.ExposureInsurer price disclosure under federal Transparency in Coverage rule.Main Outcomes and MeasuresMaximum-to-minimum commercial price gaps and estimated savings if using the minimum prices at hospital-service level.ResultsAmong 40 382 commercial hospital prices negotiated by 5 national insurers, the national means of minimum prices were 168% (95% CI, 167%-169%) of Medicare rates for inpatient services and 220% (95% CI, 215%-226%) of Medicare rates for outpatient services. National mean minimum-to-maximum price gaps were 86% (95% CI, 85%-87%) and 222% (95% CI, 215%-229%) of Medicare rates for inpatient and outpatient services, respectively. If using the minimum within-hospital prices, compared with current prices, payers could save 21% (95% CI, 20%-21%) for inpatient services and 29% (95% CI, 28%-30%) for outpatient services.Conclusions and RelevanceIn this cross-sectional study, commercial prices across different national insurers varied substantially for the same hospital and service. These results suggest that employers and policymakers interested in RBP benchmarking may use the lowest prices among major insurers in their local hospital market as references to negotiate lower prices.

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Financial Risk and the Decision of Small Employers to Self-Fund Health Insurance: Evidence from Stop Loss Regulation in California

Meiselbach,

Eisenberg

2023

American Journal of Health Economics

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Health Care Service Price Comparison Suggests That Employers Lack Leverage To Negotiate Lower Prices

Cited by 4 publications

References 5 publications

Prices Paid to Hospitals by Private Health Plans: Findings from Round 5 of an Employer-Led Transparency Initiative

Prices Paid to Hospitals by Private Health Plans: Findings from Round 5 of an Employer-Led Transparency Initiative

Within-Hospital Price Gaps Across National Insurers

Financial Risk and the Decision of Small Employers to Self-Fund Health Insurance: Evidence from Stop Loss Regulation in California

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