Negotiated Prices for Surgical Procedures Higher in Hospital Networks

Negotiated prices for surgical procedures were higher at facilities within hospital networks compared to independent hospitals, according to a study published in JAMA Network Open.

The hospital price transparency rule requires hospitals to publicly post negotiated prices for certain healthcare services, including 16 surgical procedures. The rule requirements have helped federal regulators examine the impacts of hospital mergers.

Negotiated prices may differ depending on the facility type. Facilities within hospital networks may have a greater market share, allowing them to negotiate higher rates with payers. Conversely, participating in a network may allow for economies of scale, where large networks provide services at lower prices.

Researchers assessed negotiated prices for healthcare services from the Turquoise Health Database to determine the variation in prices for surgical procedures under the hospital price transparency rule at facilities within a hospital network versus independent hospitals.

They used CPT codes to identify the 16 surgical procedures and their prices and used American Hospital Association Annual Survey data to determine hospital participation in a network.

The final study sample included 3,195 hospitals reporting negotiated surgical procedure prices. The median negotiated price was higher at facilities within networks compared to independent hospitals for 15 of the 16 procedures.

For example, the median price for shoulder arthroscopy was 1.68 times higher at facilities within networks ($4,432) compared with independent hospitals ($2,643).

Negotiated prices varied significantly across procedures. Prices for some procedures, including colonoscopy, laser cataract removal, and prostate biopsy, were below $5,000 at network hospitals and independent hospitals.

Meanwhile, prices for cholecystectomy and prostatectomy were over $5,000 at both facility types. The median price for prostatectomy at facilities in hospital networks was $9,567, while the price at independent hospitals was $8,601.

Researchers pointed out that price variation may be due to reasons not identified with raw price data. However, they applied the CMS area wage index in an attempt to account for the factors that help determine appropriate pricing for services.

Although the hospital price transparency rule is a federal mandate, the study noted that not all hospitals comply with the regulations. Between December 2022 and January 2023, over 1,500 hospitals were noncompliant with at least one requirement of the rule, a report from PatientRightsAdvocate.org found.

In February 2023, CMS announced plans to take “aggressive additional steps” to identify noncompliant hospitals. The agency said it might expedite the timeframe by which hospitals must come into full compliance upon submitting a corrective action plan. In addition, the agency plans to prioritize action against hospitals that have failed to post prices.

“As more hospitals become compliant with this policy, it will be important to better understand the mechanisms behind these significant variations in negotiated prices for surgical care to identify areas of unwarranted variation that may be mitigated,” the study concluded.