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Hospitals aren’t the only ones with price variation. New research shows payers have large discrepancies, too

November 01, 2018 / Rose Meltzer

The prices payers negotiate with hospitals can vary significantly between payers, between hospitals, among services, and among contract types, according to a new National Bureau of Economic Research (NBER) working paper. While critics frequently point to poor price transparency and variation among providers, payers appear to be playing a significant role as well. Using data from the Massachusetts All-Payer Claims Database, researchers from three universities examined negotiated payments for common services among six payers at 68 acute care hospitals. The insurers included the three biggest ones in Massachusetts (Blue Cross Blue Shield, Tufts Health Plan, and Harvard Pilgrim) as well as three with a large national footprint but a small market share in Massachusetts (UnitedHealth, Aetna and Cigna). They found PPOs pay 3-5% higher prices than HMOs, and self-insured, administrative services only contracts pay 2-4% more than fully insured products.