Prices for physician services in Medicare Advantage versus traditional Medicare

To compare the prices paid to physicians by employer-sponsored Medicare Advantage (MA) plans with those paid by traditional Medicare (TM) and to determine whether the relationship between MA and TM prices is affected by the generosity of MA benchmarks.

Descriptive analysis of medical claims data from the 2014-2015 MarketScan Medicare Claims Database.

We focus on claims for low-complexity office visits with an established patient (Current Procedural Terminology [CPT] code 99213) and electrocardiograms (CPT code 93000). For a given service, we identify the prices paid by MA plans and by TM in a metropolitan statistical area (MSA), which is our definition of a market. We then construct an MA-to-TM price ratio for each MSA and report the median price ratio. In a subanalysis, we disaggregate the result for office visits by MA benchmark generosity.

For both services, the estimated median price ratio is close to 1.00. We also find that even as MA benchmarks (relative to local fee-for-service spending) increase, the median price ratio for office visits remains close to 1.00.

After analyzing claims for common physician services, we find that employer-sponsored MA plans pay prices that are similar to TM rates. This holds even as the generosity of MA plan payment changes. Similarity between MA and TM prices appears to be stable over time, despite recent policy changes. Our findings emphasize the important role that TM plays in the MA market and that TM payment changes could have a spillover effect on MA prices and spending.