Comparing Medicare Advantage and Traditional Medicare Prices for Hospital Outpatient Services With Hospital Price Transparency Data

Abstract

As Medicare Advantage (MA) plans enroll an increasingly large share of Medicare beneficiaries, how much providers charge MA plans relative to Traditional Medicare (TM) has important policy implications. We used new price transparency data from hospitals—which contain the most up-to-date negotiated prices—to evaluate whether and how MA prices differed from TM for hospital outpatient services. We found that among the 1,135 hospitals in our sample, MA prices were close to TM at about half of them, but the other half reported MA prices that deviated considerably from TM, predominantly in the direction of higher rather than lower, and rural hospitals were more likely than urban ones to charge high MA markups. Our findings also suggest that hospital price transparency data hold promise for promoting price shopping among MA beneficiaries. But greater hospital compliance and more standardized reporting are necessary for the data to be a more useful tool.