Study: Health insurance companies may overpay for common radiology services

Study: Health insurance companies may overpay for common radiology services

According to a study published in Radiologya journal of the Radiological Society of North America (RSNA).

Many commercial plans leave money on the table when negotiating prices with hospitals, especially for expensive scanners and MRIs. The high prices paid by business plans eventually come back to bite American employers and workers through high bonuses and payouts. »

Ge Bai, Ph.D., CPA, Study Co-Author, Professor of Accounting, Johns Hopkins Carey Business School in Baltimore, Maryland

Hospitals usually have several insurance plans, some of which are managed by the same insurance company. The study found that insurance companies negotiated different prices for the same services within the same hospital and even negotiated different prices across different health plans that they managed themselves. Services that use expensive equipment, such as CT scans and MRIs, had greater variation and higher prices in Medicare compared to other radiology services.

The researchers studied negotiated commercial prices (not list prices or fees) from private payers for the 13 purchasable radiology services designated by the US Centers for Medicare and Medicaid Services (CMS).

On average, the maximum negotiated price for purchasable radiology services was 3.8 times the minimum negotiated price in the same hospital and 1.2 times in the same hospital-insurer-company pair.

CT and MRI services had greater price differentials both within a hospital and within a hospital-insurance-company pair, as well as higher prices compared to Medicare compared to other radiology services. The largest price discrepancies were seen in brain scan, where 25% of hospital-insurer-company pairs had their maximum negotiated price greater than 2.4 times their minimum negotiated price.

“Commercial prices for CT and MRI scans varied on average four to five times within a single hospital and up to nine to ten times in a quarter of hospitals,” Dr Bai said. “Even within the same hospital and the same insurance company, the price variation can reach five to six times according to the different plans,” she added.

The Hospital Price Transparency Rule requires US hospitals to disclose price information.

Previous research on price transparency has found widely disparate negotiated commercial prices for purchasable radiology services in hospitals.

“Price transparency has removed the blindfold from commercial payers, forcing them to recognize the fact that they often pay too much,” Dr. Bai said. “Equipped with pricing information, radiologists can change the landscape of care delivery to the benefit of patients and payers.”

Insurance companies increasingly tend to negotiate prices based on a percentage of Medicare rates to improve price fairness and understandability. The study results, however, suggest that some health plans may have negotiated prices less effectively than others, including those run by the same insurance company.

The study also found that higher prices (compared to Medicare) for more expensive services imply higher hospital profitability. This can potentially motivate hospitals to shift investments from low-cost imaging to high-cost imaging without considering the additional clinical value. Therefore, such measures can result in inefficient spending for both patients and payers.

“Radiologists are in the best position to determine and provide clinically appropriate and cost-effective patient care,” noted Dr. Bai.

The researchers suggest that price variations in the commercial market create an opportunity for radiologists to provide high-quality, low-cost care in non-hospital settings for the benefit of patients and commercial payers.

“Radiology practices have an obligation to make imaging more affordable for our patients,” said study co-author Howard P. Forman, MD, MBA, professor of radiology and biomedical imaging at Yale University, New Haven, Connecticut. “We can either be part of the problem of high health care costs or be part of the solution.”


North American Radiological Society

Journal reference:

Jiang, J. et al. (2022) Price variability for common radiology services in US hospitals. Radiology.

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