Provider Pricing Behavior and Health Policy

University Of Maryland Baltimore County, Baltimore MD

Investigators

Abstract

Spending on health care comprises almost 20% of GDP in the United States, and spending on hospital care constitutes almost a third of that. Despite this cost, relatively little is known about the pricing behavior of hospitals: until recently, the rates negotiated between hospitals and insurers for items and services have been largely confidential, thus significantly limiting researchers’ abilities to understand the market dynamics for hospital care. This project will use new, publicly available hospital price transparency data from hospitals across the country to better understand how health policy affects hospital pricing: specifically, how Medicaid expansion is associated with altered hospital pricing practices. Hospitals typically contract with many different payers – both public and private – that have different degrees of negotiating power; Medicaid expansion changes the distribution of payer mix for a given hospital, and thus may have consequences for the prices that payers are able to negotiate. This project should not only deepen the collective understanding of hospital pricing practices, but also enable additional research into hospital pricing behavior and inform national policy discussions on the costs and benefits of public insurance expansion. This project will assemble a sample of novel, publicly available hospital pricing datasets from hospitals all over the country and clean, document, and synthesize this data. Then, using this analytic dataset, this project will conduct two studies on the determinants of hospital pricing. Using a quasi-experimental state-border research design, both studies will estimate the relationship between payer mix and hospital pricing behavior. The first study will examine the extent to which hospitals respond to Medicaid expansion by shifting costs between payers; the second study will examine the extent to which hospitals respond to Medicaid expansion by strategically altering prices across services within the hospital. Finally, this project will publicize and promote this research dataset among other researchers at minority-serving institutions (MSIs), and will provide proactive outreach to, and support for, other MSI researchers seeking to use this new, important data source. This award reflects NSF's statutory mission and has been deemed worthy of support through evaluation using the Foundation's intellectual merit and broader impacts review criteria.