Factors Associated With Hospital Commercial Negotiated Price for MRI of Brain (2024)

Introduction

US hospitals are required by the Hospital Price Transparency rule to disclose pricing information for facility fees.¹ Prior research documented widely dispersed commercial negotiated prices across hospitals for common shoppable radiology services (technical component only),² which raised the question of what factors are associated with such price variations. In this study, we focused on a common and expensive radiology service: magnetic resonance imaging (MRI) of brain before and after contrast (Current Procedural Terminology code 70553; hereafter, brain MRI). We investigated hospital characteristics associated with commercial negotiated price nationwide and within the same state, hospital referral region, and health system.

Methods

This cross-sectional study follows the STROBE reporting guideline for cross-sectional studies. This study did not fulfill criteria for human participants research in accordance with 45 CFR §46; therefore, institutional review board approval and informed consent were not required.

We obtained commercial negotiated prices and number of contracted plans for brain MRI for hospitals that complied with the Hospital Price Transparency rule as of June 13, 2022, from Turquoise Health,³ a data-platforming company whose compiled nationwide hospital price disclosure data were used in prior research.²^,4^,5 We excluded hospitals with missing values for these hospital characteristics (obtained from 2019 Medicare cost reports): ownership type, health system affiliation, rural location, teaching status, presence of salary expense for MRI department, number of beds, profit margin, charge markup, and payer mix, plus county poverty level (obtained from the 2020 Census Bureau).⁶ Variable definitions are listed in Table 1. The sample contained 2630 hospitals.

We first compared characteristics between disclosing hospitals and nondisclosing hospitals. Next, consistent with prior literature, each hospital commercial price was measured as the median value of commercially negotiated prices.²^,4 We used multivariable regression analyses including no fixed effects or state, hospital referral region, or health system fixed effects to identify factors associated with price variations at each level. Statistical analyses were conducted using SAS version 9.4 (SAS Institute) and Stata version 16 (StataCorp).

Results

Price-disclosing hospitals were larger and more profitable and more likely to be nonprofit, system-affiliated, teaching hospitals, and located in urban areas and more affluent counties than nondisclosing hospitals. They had a higher charge markup, lower proportion of Medicare patients, and higher likelihood of employing clinicians in MRI departments (Table 1). These hospitals had a commercial price of $2268 (median [IQR], $1900 [$1024-$3197]) and contracted with 16 commercial plans (median [IQR], 11 [6-20] plans) for brain MRI. R² information (Table 2) suggested that aside from variables included in the model, state, referral region, and health system characteristics explained price variation across hospitals by an additional 16%, 23%, and 36%, respectively.

After controlling for various factors, nonprofit and government hospital commercial prices for brain MRI were higher than those of for-profit hospitals nationwide and within the same state or region (range across models, $277.8 [95% CI, $85.5-$470.1] to $386.5 [95% CI, $195.8-$577.2] and $300.3 [95% CI, $53.1-$547.4] to $536.5 [95% CI, $276.4-$796.6], respectively). Rural location, number of contracted insurance plans, and Medicare patient proportion were positively associated with commercial prices nationwide and within the same state, region, or health system (Table 2).

Discussion

To our knowledge, this cross-sectional study is among the earliest studies that examined factors associated with hospital commercial negotiated price using self-disclosed price information in compliance with the Hospital Price Transparency rule. Nonprofit and government hospitals had higher commercial negotiated prices for brain MRI than for-profit hospitals. Across the nation and within the same state, referral region, or health system, hospitals located in rural areas, contracting with more health plans, or treating more Medicare patients had higher prices, potentially reflecting these hospitals’ stronger bargaining power compared with insurers in their local markets.

This study has several limitations. Results were confined to brain MRI and subject to omitted variable bias, estimation errors (time gaps among measuring variables), and data reporting and compilation inaccuracies. Moreover, due to the lack of information on the applicable time period of each hospital price, it is possible that some prices did not reflect actual prices at the time when data were collected. Importantly, this study was exposed to potential sample-selection biases because there was no pricing information from nondisclosing hospitals and hospitals with missing information on any variable included in the regression model analysis were excluded. These biases potentially affect the generalizability of results.

Article Information

Accepted for Publication: February 2, 2023.

Published: March 21, 2023. doi:10.1001/jamanetworkopen.2023.3875

Corresponding Author: Ge Bai, PhD, CPA, Johns Hopkins Carey Business School, 100 International Drive, Baltimore, MD 21202 (gbai@jhu.edu).

Author Contributions: Dr Jiang had full access to all of the data in the study and takes responsibility for the integrity of the data and the accuracy of the data analysis.

Concept and design: All authors.

Acquisition, analysis, or interpretation of data: Jiang, Bai.

Drafting of the manuscript: Jiang, Bai.

Critical revision of the manuscript for important intellectual content: All authors.

Statistical analysis: Jiang.

Factors Associated With Hospital Commercial Negotiated Price for MRI of Brain (2024)

References