Healthcare expenditure in the United States accounts for nearly one-fifth of the United States gross domestic product, yet healthcare costs remain ambiguous and confusing to patients and clinicians alike. This is due to several features of healthcare markets that make them decidedly different from markets for other types of goods and services, including asymmetry of information, moral hazard due to insurance mechanisms, barriers to entry and highly regulated products. Ultimately, lack of transparency in healthcare pricing makes it difficult for patients to make informed decisions when seeking high-value/low-cost care.

To address this challenge, the Centers for Medicare and Medicaid Services (CMS) introduced a regulation that requires hospitals to publicly post both searchable and machine-readable files of payments by individual, identifiable payers on their websites. This regulation is intended to enable patients, providers and health plans to understand the average net prices for specific types of care in order to reduce some of the informational asymmetry that is ultimately believed to be a driver of high healthcare costs. This new regulation also paves the way for researchers to generate crucial value/cost comparisons to demystify the healthcare market and enable individuals to make informed decisions about their healthcare.

In partnership with Yale University, this project team collected, collated and analyzed newly available healthcare pricing data in order to investigate the impacts of insurance and hospital market concentration, government or commercial payer, hospital type and more on the price of common general surgeries. Their findings will be used by care delivery organizations, patients and policymakers whose roles include antitrust legislation and healthcare system oversight.

Effect of Hospital and Insurance Market Concentration on Prices for Common Surgical Procedures

Poster by Paul Sabharwal, Yuqi Zhang and Marcelo Cerullo

Team members found that healthcare markets tend to be highly concentrated, and hospitals with a monopoly in their service area tend to charge more. They also found that reported Medicaid and Medicare prices are significantly lower and are less affected by changes in healthcare market concentration compared to commercial prices.

Hospital Characteristics Associated With Observed Transcatheter Aortic Valve Replacement Prices

Poster by Roni Ochakovski, Yuqi Zhang and Marcelo Cerullo

The team’s research suggests that regulations that stabilize prices for Transcatheter Aortic Valve Replacement surgery could increase transparency while having minimal effects on hospital profits. The team also found no correlation between higher prices for this surgery and higher reported quality.

Association Between CMS Price Transparency Compliance and Hospital Characteristics

Poster by Xinshi Ma, Yuqi Zhang and Marcelo Cerullo

Using CARES Act funding as a proxy, team members found that compliance with transparency requirements does not seem to affect the level of federal funding hospitals receive, suggesting that current penalties for noncompliance may be insufficient.