Same hospital, same insurer, but imaging prices twice as high for commercial vs. Medicare Advantage plans
Imaging prices at the same hospital are more than twice as high for patients with commercial plans compared to those covered by Medicare Advantage, despite being negotiated by the same insurer.
That’s according to a new analysis by researchers at Johns Hopkins University, published in the latest issue of Health Affairs [1]. Most major insurance companies operate both types of health plans, grappling with different incentives on the commercial side compared to privately managed Medicare.
Health economist Mark Meiselbach, PhD, and colleagues set out to gauge the impact of these dynamics amid rapidly rising costs for commercial insurance. They found that the median commercial-to-Medicare Advantage price ratio was 2.4 for imaging, higher than the figures for surgery and medicine services (1.8) or laboratory tests (2.2).
“The large price gap between commercial and MA prices within an insurer reveals the pricing consequences of differing incentives across markets,” Meiselbach, also an assistant professor at the Johns Hopkins Bloomberg School of Public Health, and co-authors concluded. “Out-of-network price benchmarking through government regulation, competition with Medicare fee-for-service, and the fact that insurers actually bear risk in the MA market may drive down prices in MA. In contrast, in the commercial market, self-insured employers are largely the ones bearing risk and paying the higher prices.”
For the study, researchers utilized 2022 hospital price transparency information, compiled by data firm Turquoise Health. They extracted negotiated commercial and MA prices from general acute care hospitals for 70 shoppable services and five ED visit codes. Meiselbach et al. included 46 services in the final sample, for which hospital disclosure rates were above 50%, and excluded the state of Maryland, where the state sets hospital prices paid by plans.
The final sample spanned 118 total insurers and 2,434 total hospitals. Across all service categories, median commercial prices were between 1.8 and 2.7 times more expensive than Medicare Advantage. When stated in dollar terms, the largest gap was within surgery and medicine (with a median of $1,702 for commercial plans vs. $925 in MA), followed by imaging ($490 vs. $191), lab tests ($32 vs. $12), and ED visits ($519 vs. $262). Regression-adjusted analysis revealed that commercial prices were between $660 and $707 more expensive than Medicare Advantage (or 2.1 to 2.2 times).
Meanwhile, commercial and MA prices were exactly the same 3.7%-6.6% of the time, including about 5.3% for imaging. Commercial pricing was more than five times higher than MA between 6.5%-27.2% of the time, including 23.1% in imaging. All major health insurers had median price ratios above 2 for most or all services categories, except for Centene, the authors noted. Kaiser Permanente, in particular, had the highest median ratios, including 3.7 for imaging.
“Future research should investigate the relative contributions of these various factors in affecting the price gap between commercial and MA prices,” the authors remarked. “Because insurers respond to differing incentives by negotiating substantially different prices across markets, policy and practice efforts that alter incentives for insurers may have the potential to lower commercial pricing.”
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Marty Stempniak has covered healthcare since 2012, with his byline appearing in the American Hospital Association's member magazine, Modern Healthcare and McKnight's. Prior to that, he wrote about village government and local business for his hometown newspaper in Oak Park, Illinois. He won a Peter Lisagor and Gold EXCEL awards in 2017 for his coverage of the opioid epidemic.