Study Finds Geographic Variation in Payer Prices for Office Visits

October 31, 2023 - Among a single health insurer, prices for office visits varied by geographic location, with the upper-Midwest and Southeast regions seeing higher costs, a study published in JAMA Health Forum indicated.

In the private payer space, where rates are negotiated rather than set administratively, the Transparency in Coverage rule aims to help curb high prices. Without price transparency, it is harder for regulators to monitor costs.

The Transparency in Coverage regulation requires payers to publicly publish cost-sharing information and in-network negotiated rates. Payers post new pricing data each month.

Researchers examined Transparency in Coverage price data for common healthcare services from Humana from October 2022 to understand if costs vary across geographic markets. The analysis included only in-network clinicians and facilities. When there were multiple contracted rates for the same procedure and clinician or facility within the same network, researchers used the mean posted price.

The seven common healthcare services included established patient office visit, high-severity emergency department visit, colonoscopy, lipid panel, lower-extremity MRI, hip arthroplasty, and CT of head or brain without contrast.

The number of clinicians and facilities with Humana prices ranged from 4,192 for hip arthroplasty to 189,471 for established patient office visits.

The mean county-level price for established patient office visits was $86, the study found. Prices ranged from $69 to $114.

Mean county-level prices for office visits tended to be lower in the central region of the country and Florida. Meanwhile, prices were higher in the upper-Midwest and Southeast. Higher-priced counties often bordered lower-price counties.

Geographic variation was similar for other procedures, the researchers noted.

The mean price for high-severity emergency department visits was $268, with a range of $169 to $320. The mean price for a colonoscopy was $470, with costs ranging from $848 to $528. On the more expensive end, hip arthroplasties had a mean price of $1,735, ranging from $1,231 to $1,930.

Although the study only looked at one health insurer and seven procedures, the findings suggest that further assessments using Transparency in Coverage data can inform policies to improve the healthcare system.

Additionally, future research should focus on the underlying causes of price variation in healthcare to determine if prices are associated with value or whether prices reflect imbalances in market power and negotiation leverage.

If prices reflect clinical quality, then policymakers must find a balance between receiving high-quality care and spending financial resources elsewhere, according to the researchers. On the other hand, if price variation results from consolidation or anticompetitive contracting, regulators should implement policies that promote competitive markets.