MSU Research: Health Insurance Companies Overpay For Some Hospital Radiology Services
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Health insurance companies may be overpaying for common radiology services, leading to higher costs for patients and providers, according to a new study by
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Health insurance companies may be overpaying for common radiology services, leading to higher costs for patients and providers, according to a new study by
"Many commercial plans are leaving money on the table when negotiating prices with hospitals, especially for expensive CT and MRI scans," said study co-author
Hospitals generally contract with multiple 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 their own various health plans.
The researchers studied commercial negotiated prices (not list prices or charges) from private payers for the 13 shoppable radiology services -- services that can be scheduled in advance -- that are designated by the
Services that require high-cost equipment, such as a CT scanner and MRI, had wider cost variations and higher prices relative to Medicare when compared to other radiology services. The greatest price gaps were found for brain CT services, in which 25% of hospital-insurance company pairs -- hospitals and insurance companies that have an established contract together --had set their maximum negotiated price at more than 2.4 times their minimum negotiated price.
The Hospital Price Transparency Final Rule requires
"With most goods and services, you know the price before you choose to purchase. Prior to the Hospital Transparency Rule's passing, a lot of medical services didn't make their pricing publicly available, so patients and payers would only find out after being billed," said
"Price transparency took the blindfold off the eyes of commercial payers, forcing them to recognize the fact that they are often paying too much," Bai added. "Equipped with pricing information, radiologists can change the landscape of care delivery to benefit patients and payers."
Increasingly, insurance companies are moving to negotiate prices based on a percentage of Medicare rates to improve pricing fairness and comprehensibility. The study results suggest, however, that some health plans might have negotiated prices less efficiently than others, including those managed by the same insurance company.
The study also found that higher prices (relative to Medicare) for higher-cost services imply higher hospital profitability. This could potentially motivate hospitals to direct investments away from low-cost to high-cost imaging without regard to incremental clinical value. As a result, such moves may lead to inefficient spending for both patients and payers.
The research suggests that the price variations in the commercial market create an opportunity for radiologists to deliver high-quality, low-cost care in non-hospital settings to benefit patients and commercial payers.
"We hope that this research will help patients realize that, holding quality constant, they can research and shop for radiology services that they can afford and insurance plans that best suit their needs," Jiang said.
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JOURNAL: Radiology https://pubs.rsna.org/journal/radiology
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Original text here: https://msutoday.msu.edu/news/2022/health-insurance-companies-overpay-for-some-hospital-radiology-services
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