Private insurers' prices differ based on region

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Prices negotiated by health insurers show a wide amount of variation between geographic locations, with a new study in JAMA Health Forum showing that these price variations often occur with the same insurer, costing more in one locale than in another. 

Over half of the U.S. population receives health insurance from private insurers, and prices are negotiated rather than set administratively, such as through Medicare. This negotiation process contributes to a landscape in which private insurance prices are both higher than Medicare rates and highly variable, the numbers showed.

The private market lacked meaningful price transparency for patients and purchasers until the recent implementation of Hospital Price Transparency and Transparency in Coverage (TiC) rules, authors found. Lack of transparency limits the ability of regulators to monitor prices and of employers, patients, and purchasers to impose market discipline on prices, they said.

WHAT'S THE IMPACT?

Researchers obtained October 2022 TiC data from Humana's public-facing portal and downloaded data in batches. The Indiana University Institutional Review Board deemed this cross-sectional study exempt from ethics review and informed consent because it was not human-participant research.

Humana rates were chosen because of its largely national coverage of clinicians and facilities, and the ability to speedily parse the data files. While mostly a provider of Medicare Advantage benefits, Humana covers about one million people with commercial insurance. JAMA restricted the analyses to in-network clinicians and facilities, and used the mean posted price when the data included multiple contracted rates for the same procedure and clinician or facility within the same network.

Authors focused on seven procedures, including more shoppable codes (computed tomography scan of head or brain without contrast) and less shoppable codes (high-severity emergency department visit). A key challenge was that TiC data reported rates for clinicians and facilities regardless of whether they actually performed a given service.

To identify those that performed the selected services, researchers used both 2019 100% Medicare fee-for-service claims data and commercial claims data from the RAND hospital price transparency project to match clinicians and facilities who performed these services by their National Provider Identifiers. They analyzed distributional differences in prices (mean, median and percentiles) and coefficients of variation.

The number of clinicians and facilities with Humana prices ranged from 4,192 for hip arthroplasty to 189,471 for an established patient office visit. Coefficients of variation were similar for both more and less shoppable services (0.51 for CT of head or brain without contrast; 0.53 for high-severity ED visit).

The mean (IQR) county-level price was $86 ($69-$93). Generally, mean county-level prices were lowest in the central U.S. and Florida. Prices were higher in the upper-Midwest and Southeast, and importantly, many higher-priced counties bordered lower-priced counties. Similar geographic patterns were observed for other procedures.

THE LARGER TREND

Future work may examine the underlying causes of price variation in healthcare, authors said, as it's unclear whether prices are meaningfully associated with value as in nearly every market, or whether prices reflect imbalances in market power and negotiation leverage. 

If price variation reflects clinical or perceived quality variation, purchasers and policymakers need to find balance between receiving higher-quality care and spending financial resources elsewhere, they said. But if price variation is driven by consolidation or anticompetitive contracting, then regulators should design policies that ensure competitive healthcare markets. The factors determining price variation are likely in the middle of these two possibilities, the research found.
 

Twitter: @JELagasse
Email the writer: Jeff.Lagasse@himssmedia.com