Insurer market competition and negotiated prices for elective hospital-based procedures

Rapid consolidation of insurers and decreasing competitiveness of insurance markets has raised concerns for potential impacts on the prices for surgery.

This was a 2024 cross-sectional study using mandatory reported data for 9 hospital-based procedures under the Hospital Price Transparency Rule, which documents negotiated prices for procedures between a hospital and insurer. These data were linked to the Kaiser Family Foundation Insurer Market Share data set, which documents insurer market competition. The primary outcomes were risk-adjusted (1) insurer price variation and (2) price differences across insurer market competition.

Prices varied significantly for hospital-based procedures within and across insurers. For example, negotiated prices for joint replacement (hip or knee) varied by insurer: Aetna (interquartile range: $11,161-$16,975; 1.52-fold variation), Anthem (interquartile range: $13,003-$19,346; 1.49-fold variation), BCBS (interquartile range: $13,170-$20,358; 1.55-fold variation), Kaiser (interquartile range: $22,318-$24,874; 1.11-fold variation), and United (interquartile range: $13,003-$18,693; 1.44-fold variation). As an insurer dominated a market, it negotiated lower prices for procedures. For example, in low-competition markets, the average negotiated price for procedures were $6,683 (21.1%) less when negotiated by the leading insurer versus nonleading insurers ($24,882 vs $31,565; P < .001). In contrast, high-competition insurer markets demonstrated a relatively smaller difference in negotiated prices between leading and nonleading insurers ($26,155 vs $25,368; P < .001).

In high-competition insurer markets, insurers negotiated similar prices for procedures. However, in low-competition markets, the dominant insurer negotiated significantly lower prices. These findings suggest increasing insurer market competition may decrease price variability and lower prices in particular markets.