December 15, 2022

2 min read

Source/Disclosures

Disclosures:
Rochlin reports no relevant financial disclosures. Please see the study for all other authors’ relevant financial disclosures.


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The commercial insurance costs for breast reconstruction vary greatly across the United States, with less competitive markets and large, for-profit and nonsafety-net hospitals seeing the highest rates.

Historically, commercial insurance rates have not been publicly available in the U.S. However, recent reforms from the CMS have required hospitals to “disclose discounted cash prices and commercial payer-specific negotiated rates for shoppable services,” according to study background.


There was wide variation in commercial insurance rates for breast reconstruction in the U.S. in 2021. Source: Shutterstock

“Commercial price transparency reforms are intended to enable a credible assessment of current health care market efficiency for shoppable surgical services,” Danielle H. Rochlin, MD, of the division of plastic and reconstructive surgery at Stanford University Medical Center in Palo Alto, California, and colleagues wrote. “In standard economic theory, market participants all have perfect information, and therefore, price transparency is complete. The absence of price transparency can lead to anticompetitive behavior and drive up the cost of health care.”

Study methods

Rochlin and colleagues analyzed 2021 pricing data from 978 hospitals in 335 U.S. metropolitan areas to evaluate the costs of 17 breast reconstruction procedures, which included procedures such as autologous and alloplastic reconstruction. They examined each procedure in the context of public payer and self-pay rates, list prices and commercial payer-specific rates.

The researchers collected descriptive hospital-level data — including data on hospital size, safety net status, profit status, teaching status and local population density — from the 2021 Lown Institute Hospitals Index. Safety net hospitals were those within the top 20% of hospitals with the highest proportion of patients eligible for both Medicaid and Medicare. They also determined health care market competition using the Herfindahl-Hirschman Index (HHI).

Commercial insurance rates

For each procedure, Rochlin and colleagues determined the within-hospital ratio — calculated by dividing the median of the maximum commercial rate by the minimum commercial rate at each hospital — and the across-hospital ratio — calculated by dividing the 90th percentile median commercial rate by the 10th percentile median commercial rate across all hospitals. Variation in commercial rates was wide, with within-hospital ratios ranging from 1.61 (interquartile range [IQR], 1-3.02) to 2.5 (IQR, 1.02-6.25) and across-hospital ratios ranging from 4.45 to 18.31.

Higher commercial rates were associated with higher Medicaid rates (coefficient, $0.14; 95% CI, 0.07-0.22), higher self-pay rates (coefficient, $0.65; 95% CI, 0.57-0.72) and higher list price (coefficient, $0.04; 95% CI, 0.01-0.07). Commercial rates were not associated with Medicare rates.

“Given the positive and insignificant correlations of Medicaid and Medicare rates with commercial rates for breast reconstruction, respectively, our data provide no evidence to suggest that hospitals shift costs across private and public payers,” Rochlin and colleagues wrote.

Commercial rates were higher in less competitive health care markets, as indicated by higher HHI score. Specifically, commercial rates were associated with an HHI of 1,501 to 2,500 (coefficient, $4,037.52; 95% CI, 700.12-7,374.92) and greater than 2,500 (coefficient, $3,290.21; 95% CI, 878.08- 5,702.34) compared with an HHI of 1,500 or less. The researchers said the increasing trend toward market consolidation may mean that privately insured patients with breast cancer may see higher premiums and deductibles.

Higher commercial rates were associated with hospitals that had at least 400 beds vs. those with six to 49 beds (coefficient, $1,036.07; 95% CI, 198.29-1,873.85). Commercial rates were lower at safety net hospitals (coefficient, –$3,269.58; 95% CI, –3,815.42 to –2,723.74) and nonprofit hospitals (coefficient, –$1,892.79; 95% CI, –2,519.61 to –1,265.97).

Commercial rates were not associated with teaching status or population density.

“Future studies should continue to investigate drivers of commercial prices in surgery, with the ultimate objective of facilitating cost-based competition and reducing the cost of health care,” Rochlin and colleagues wrote.

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