Purpose: To evaluate the extent to which in-network negotiated rates vary within urban areas in the US .
Methods: We analyzed the 2010 in-network claims of employees of two self-insured companies with high deductible health plans from the same network in a single health plan and health plan network. We restricted our analysis to four geographies as defined by the market service area (MSA). We selected claims for the following office visits and imaging tests: Medium complexity office visit with a family practice doctor, a pediatrician, and a dermatologist, chest x-ray, mammogram, CT scan of the abdomen with contrast, and CT scan of the head without contrast. We excluded all inpatient claims and outliers (i.e., providers with the top and bottom 10% of negotiated rates). We calculated the variance/median negotiated rate to estimate the magnitude of the variance standardized by cost. We performed multinomial logistic regression of the variance/median negotiated rate to determine the expected price variance and statistical significance for a single service between MSAs and for all services within a MSA.
Results: 825,819 claims met our inclusion criteria. The service with the greatest variance/median price among MSAs was CT of the abdomen. The MSA with the greatest variance/median price for all services was San Jose. There was statistically significant expected price variance for a medium complexity office visit with a family practitioner between MSAs ($30.02, $8.71-$41.56; p=0.04) and chest x-ray ($73.07, $46.74-$92.17; p=0.013). The expected price variances for all services for a given MSA were as follows: San Diego: $62.68 (p=0.089), San Francisco: $90.89 (p=0.12), San Jose: $150.96 (p=0.15), and Minneapolis-St. Paul: $47.56 (p=0.079).
Conclusions: Within a given geography, within the same year, there is a considerable range of variance/median price for in-network prices. The variance is more pronounced for imaging services. Further, there are geographic differences in variance/median price, notably higher in California than in Minnesota. The extent to which this in-network price variance persists across other commercial carriers, in other geographies, for other services remains to be established.
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