On average, insurers pay 4.7% higher commercial prices to hospitals that are a part of their Medicare Advantage networks compared to those not in network, according to a study published May 8 in Health Services Research.
The study analyzed 5,654 insurer-hospital contracts across seven large insurers that offer both commercial (employer-sponsored and ACA) and MA health plans. The researchers used data from Turquoise Health, the American Hospital Association, and Clarivate, focusing on five commonly used services.
“We compared inpatient negotiated commercial prices between insurers at the same hospital that do not include the hospital in their MA network and those that do,” the researchers wrote. “We used Poisson regression with hospital fixed effects, adjusting for insurer fixed effects and insurer-market covariates.”
For major joint replacements, the average adjusted negotiated price was $28,889.91 when the hospital was not in an insurer’s MA network, compared to $30,249.16 when it was in network. The study found similar price increases for the other four services (major cardiothoracic procedures, spinal fusion, cervical spinal fusion, and uterine and adnexal procedures), suggesting that hospitals included in MA networks are using their position to negotiate higher commercial prices. Insurers, in turn, may be willing to accept these higher prices in exchange for access to those hospitals for their MA members.
“We find suggestive evidence consistent with this ‘price-shifting’ hypothesis, where prices in the commercial market may be adjusted to secure agreement over MA networks. We find that insurers pay higher commercial prices to hospitals that are in their MA networks,” the researchers concluded.
