How Do the Hospital Prices Paid by Medicare Advantage Plans and Commercial Plans Compare With Medicare Fee-for-Service Prices? (with L. Nelson)

An Analysis of Private-Sector Prices for Hospital Admissions (Working Paper)

The prices that private insurers pay hospitals have received considerable attention in recent years, but most of that literature has focused on the commercially insured population. Although nearly one-third of Medicare beneficiaries are enrolled in a Medicare Advantage (MA) plan, little is known about the prices paid to hospitals by the private insurers that administer such plans. More information on the hospital prices paid by MA plans would provide additional insights into whether MA prices are more closely tied to Medicare fee-for-service (FFS) prices or commercial prices. Moreover, information on whether the hospital prices paid by MA plans vary with market characteristics or other factors would be useful for evaluating the performance of the MA program and analyzing proposals to modify it. In this study, we compared the hospital prices paid by MA plans and commercial plans with Medicare FFS prices using 2013 claims from the Health Care Cost Institute (HCCI) database. The HCCI claims were used to calculate hospital prices for private insurers, and Medicare’s payment rules were used to estimate Medicare FFS prices. We focused on stays at acute care hospitals in metropolitan statistical areas (MSAs). We found MA prices to be roughly equal to Medicare FFS prices, on average, but commercial prices were 89% higher than FFS prices. In addition, commercial prices varied greatly across and within MSAs, but MA prices varied much less.

Are Integrated Plan Providers Associated With Lower Premiums on the Health Insurance Marketplaces? (with A. LaForgia and J. Banthin)

As the health insurance industry becomes more consolidated, hospitals and health systems have started to enter the insurance business. Insurers are also rapidly acquiring providers. Although these “vertically” integrated plan providers are small players in the insurance market, they are becoming more numerous. The health insurance marketplaces (HIMs) offer a unique setting to study integrated plan providers relative to other insurer types because the HIMs were designed to promote competition. In this descriptive study, the authors compared the premiums of the lowest priced silver plans of integrated plan providers with other insurer types on the 2015 and 2016 HIMs. Integrated plan providers were associated with modestly lower premiums relative to most other insurer types. This study provides early insights into premium competition on the HIMs. Examining integrated plan providers as a separate insurer type has important policy implications because they are a growing segment of the marketplaces and their pricing behavior may influence future premium trends.

Changes in Premiums of Cancelled Nongroup Plans Under the Affordable Care Act (with B. Plemmons and J. Chen)

This study examined how annual premiums for nongrandfathered, nongroup health plans in a large integrated delivery system changed after Affordable Care Act (ACA) implementation, by subscriber and health plan characteristics. The changes in premiums varied substantially across subgroups, primarily due to differences in the amount of coverage, changes in rating criteria, shifts in the age curve, and anticipated differences in risk selection and composition of the risk pool. On average, subscribers migrated to ACA-compliant plans with modestly higher costs, but had higher levels of insurance coverage and stronger consumer protections. This study provides insight into how nongroup market reforms affect premiums.

What Hospital Inpatient Services Contributed the Most to the 2001–2006 Growth in the Cost per Case? (with S. Raetzman and B. Friedman) Best of the 2012 AcademyHealth Annual Research Meeting

This study demonstrated a refined cost‐estimation method that converts detailed charges for inpatient stays into costs at the department level to enable analyses that can unravel the sources of rapid growth in inpatient costs.