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Insurers paying providers too much for radiology services, says study

by John R. Fischer, Senior Reporter | October 18, 2022
Business Affairs CT Insurance MRI X-Ray
Insurers may be paying more than they should for radiology services in the same hospital and even among different health plans that they themselves manage.
Insurance companies may be paying more than necessary for common radiology services, with variations found in pricing for the same services at the same hospital.

This trend was even seen among different health plans managed by the same insurer, said researchers at Johns Hopkins Carey Business School in a new study that looked at commercial negotiated prices from private payers for the 13 shoppable radiology services designated by CMS.

Wider price gaps were most notable among CT and MR exams, relative to Medicare, when compared to other radiology services. The largest were in brain CT, where 25% of hospital-insurance company pairs had a maximum that was more than 2.4 times their minimum negotiated price.
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Study co-author Ge Bai, a professor of accounting, says this is significant, given the passage of the Hospital Price Transparency Rule in 2021, and because it gives radiologists the opportunity to provide high-quality imaging at lower costs in nonhospital settings.

"Commercial prices for CT and MR scans on average varied four- to fivefold within the same hospital and as high as nine- to tenfold in a quarter of hospitals. Even within the same hospital and within the same insurance company, price variation can reach five- to sixfold across different plans," she said in a statement.

Under the law, hospitals must list certain service prices on their websites, including a consumer-friendly searchable list of 300 medical procedures, to help consumers choose the most affordable plan based on their needs.

The researchers found the maximum negotiated rate for shoppable radiology services was 3.8 times the minimum negotiated price in the same hospital and 1.2 times that in the same hospital-insurance company pair.

Since higher prices for higher-cost services allow hospitals to make a higher profit, this could motivate hospitals to shift direct investments away from low-cost to high-cost imaging, without accounting for the clinical value of lower-cost imaging and lead to unnecessary spending among patients and payers.

Because insurers are looking to negotiate fairer pricing based on Medicare rates, the study can provide them with insight to do so, including if their health plans negotiated prices less efficiently than those of competitors and compared to each other.

"Equipped with pricing information, radiologists can change the landscape of care delivery to benefit patients and payers,” said Bai.

The findings were published in Radiology.

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