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JAMA Health Forum
JAMA Health Forum
JAMA Health Forum
2689-0186
American Medical Association

39302670
10.1001/jamahealthforum.2024.3020
ald240020
Research
Research
Research Letter
Online Only
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Understanding Variation in Negotiated Rates Using Novel Health Plan Price Transparency Data
Understanding Variation in Rates Using Health Plan Price Data
Understanding Variation in Rates Using Health Plan Price Data
Oakes Allison H. PhD 1
Ikard Matthew BS 1
Patton Catherine BS 1
Browne Jim MA MBA 1
Organ Nancy BA 1
O’Neill Matthew MS MBA 1
Jain Sanjula PhD 1 2
1 Trilliant Health, Brentwood, Tennessee
2 Division of General Internal Medicine, Johns Hopkins University School of Medicine, Baltimore, Maryland
Article Information

Accepted for Publication: July 16, 2024.

Published: September 20, 2024. doi:10.1001/jamahealthforum.2024.3020

Open Access: This is an open access article distributed under the terms of the CC-BY-NC-ND License. © 2024 Oakes AH et al. JAMA Health Forum.

Corresponding Author: Allison H. Oakes, PhD, Trilliant Health, 2 Maryland Farms, Ste 200, Brentwood, TN 37027 (allison.oakes@trillianthealth.com).
Author Contributions: Dr Oakes had full access to all of the data in the study and takes responsibility for the integrity of the data and the accuracy of the data analysis.

Concept and design: Oakes, Patton, Organ, Jain.

Acquisition, analysis, or interpretation of data: Oakes, Ikard, Patton, Browne, O’Neill.

Drafting of the manuscript: Oakes, Jain.

Critical review of the manuscript for important intellectual content: All authors.

Statistical analysis: Oakes, Browne.

Administrative, technical, or material support: Ikard, Patton, Browne, O’Neill, Jain.

Supervision: Jain.

Other - data visualization: Organ.

Conflict of Interest Disclosures: None reported.

Data Sharing Statement: See the Supplement.

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https://creativecommons.org/licenses/by-nc-nd/4.0/ This is an open access article distributed under the terms of the CC-BY-NC-ND License.
jamahealthforum-e243020.pdf

This study uses health plan price transparency data to examine how negotiated rates for the same service vary within and across US payers and hospitals.
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pmcIntroduction

The US spends significantly more on health care but has worse population health outcomes than most peer countries.1,2 High prices are a known contributor to this phenomenon; however, the extent is incompletely understood due to a historical dearth of data on private negotiated rates.3 This information asymmetry changed with Executive Order 13877, which resulted in the Centers for Medicare & Medicaid Services issuing the Transparency in Coverage final rule on July 1, 2022.4,5 Known as health plan price transparency, this rule requires commercial health plans to publish negotiated rates for all covered services for in-network and allowed amounts for out-of-network professionals, institutions, and organizations. Using this novel data, this study sought to examine how negotiated rates for the same service differ within and across payers and hospitals.

Methods

The health plan price transparency dataset from Trilliant Health was used to identify UnitedHealthcare and Blue Cross Blue Shield of Illinois (BCBSIL) negotiated rates. The February, June, and September 2023 health plan price transparency machine-readable files were downloaded from the UnitedHealthcare and BCBSIL Transparency in Coverage websites. After ingestion, these data were cleaned to ensure relevancy and accuracy—this included removing percent of charge and per diem rates, excluding rates below the Medicare reimbursement rate, and using the Trilliant Health national all-payer claims database to eliminate rates that are reported for professionals, institutions, and organizations who have never, and will never, provide certain services, known as a “zombie rate.”

To examine national variation in negotiated rates within payers, we isolated UnitedHealthcare rates for MS-DRG 470 (ie, major hip and knee joint replacement or reattachment of lower extremity without major complication or comorbidity) across acute care hospitals. For intramarket comparisons, we limited our analysis to the Chicago-Naperville-Elgin, Illinois-Indiana-Wisconsin core-based statistical area. We examined how rates varied across payers and hospitals, comparing UnitedHealthcare and BCBSIL negotiated rates for MS-DRG 470 across 28 acute care hospitals. The study follows the STROBE reporting guideline. In accordance with the National Human Research Protections Advisory Committee guidelines, this study was exempt from review and informed consent.

Results

Nationally, there were 1756 UnitedHealthcare rates for MS-DRG 470 across 1124 unique acute care hospitals. There is substantial variation in the negotiated institutional rates paid by UnitedHealthcare to acute care hospitals for MS-DRG 470 (Figure 1). The negotiated rates varied by a factor of almost 10, ranging from $11 203 to $106 427. Although the median (IQR) rate was $29 536 ($22 780-$38 420), the most common rate was $42 436 (n = 18).

Figure 1. UnitedHealthcare Negotiated Institutional Rates for Major Hip and Knee Joint Replacement or Reattachment of Lower Extremity Without Major Complication or Comorbidity (MS-DRG 470) at Select US Acute Care Hospitals in Chicago-Naperville-Elgin, Illinois-Indiana-Wisconsin

At the market level, the negotiated rates for MS-DRG 470 varied substantially by payer and hospital, ranging from a minimum of $15 244 for BCBSIL at Ingalls Memorial Hospital to a maximum of $38 328 for UnitedHealthcare at Northwestern Medicine Central DuPage Hospital (Figure 2). Within the same hospital, the rates paid by BCBSIL and UnitedHealthcare differed by a mean (SD) of $5178 ($4097), equivalent to 20.4% of the mean (SD) negotiated rate of $25 425 ($6193). There was no discernable pattern when comparing rates across payers, with UnitedHealthcare negotiating higher rates to 17 of the 28 hospitals examined and BCBSIL to 11 hospitals.

Figure 2. In-Network Rates for Major Hip and Knee Joint Replacement or Reattachment of Lower Extremity Without Major Complication or Comorbidity (MS-DRG 470) in Chicago-Naperville-Elgin, Illinois-Indiana-Wisconsin, UnitedHealthcare (UHC) vs Blue Cross Blue Shield of Illinois (BCBSIL)

Conclusions

This research demonstrates what is possible with the novel health plan price transparency data and reveals significant variation in rates within and between payers. This variation exists both nationally and within markets, even within the same hospital across different payers. Due to the novelty of this dataset, this analysis is exploratory and limited in scope. Future work might examine these patterns across markets and procedures and describe the extent to which the observed variation is (or is not) driven by meaningful factors, such as hospital quality, academic affiliation, ownership, or market concentration. Whereas much of payment reform initiatives have focused on “value-based care,” national efforts to hold commercial payers accountable to a reasonable “market rate” could meaningfully reduce wasteful spending.6

Supplement. Data Sharing Statement
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