Price-Shifting? Spillovers of Medicare Advantage Network Inclusion on Hospital Prices Paid by Commercial Insurers

To compare inpatient hospital prices in the commercial insurance market between insurers that do and do not include hospitals in their Medicare Advantage (MA) networks.

We compared inpatient negotiated commercial prices between insurers at the same hospital that do not include the hospital in their MA network and those that do. We used Poisson regression with hospital fixed effects, adjusting for insurer fixed effects and insurer-market covariates.

Using data from Turquoise Health, the American Hospital Association survey, and Clarivate DRG, we identified 5654 insurer-hospital pairs for seven large insurers that participate in both the commercial and MA markets.

Insurers pay 4.7% higher commercial prices for major joint replacements when the hospital is in their MA network (95% confidence interval: 2.0, 7.5%). The average adjusted negotiated commercial price in our sample was $28,889.91 when the insurer did not have the hospital in its MA network but $30,249.16 when it did. We find similar magnitudes for the four other "shoppable service" diagnosis related groups commonly reported in the transparency data.

On average, insurers pay higher commercial prices to hospitals that are in their MA network.