Similar to Medicare, commercial insurers are seeing substantially higher prices when care is delivered in a hospital outpatient department as opposed to an ambulatory surgical center, according to a multipayer analysis published this week.
However, just how much those prices increase varies substantially between individual commercial payers, suggesting there’s more room for insurers to push down spending via selective provider contracting, Brown University researchers wrote in their Health Affairs study.
The researchers said their analysis is unique in focusing on site-based payment differentials across multiple payers in the commercial insurance market, which have largely been overshadowed by investigations and debate over site-neutral payment policies for Medicare.
“Although insurers can, and do, pursue strategies to limit payment differentials across settings, large payment differentials remain common and costly,” they wrote in the journal.
Among three major commercial payers covering 13 common procedures in 2024, researchers outlined prices 78% higher, or $1,489 higher, in HOPDs compared to ASCs. For reference, Medicare prices also differed between the settings by 97%, though the government program’s lower overall prices limited the absolute difference to an average of $633.
The differences in average prices differed greatly between the three studied payers. Cigna paid the lowest overall rates ($2,063) compared to UnitedHealthcare ($2,963) and BlueCross BlueShield ($2,622). That difference, researchers wrote, was largely driven by Cigna’s contracting with fewer, lower cost HOPDs compared to larger peers more capable of leveraging market power for reduced rates.
“If United and BlueCross BlueShield paid Cigna’s average HOPD rates for these procedures, together they would save approximately $1.4 billion a year,” the researchers wrote.
That said, the researchers acknowledged there could be a good reason two of the country’s largest commercial insurers haven’t already deployed such a strategy to the extent of Cigna. United and BlueCross BlueShield might be building broader coverage networks despite the higher costs to meet the demands of employer customers with wide footprints.
Site-neutral payment policies—which are flatly opposed by hospital groups that say higher payments are necessary to preserve HOPDs' expanded service offerings—have been estimated to save the government program tens to hundreds of billions of dollars over several years and reduce the financial incentive for provider consolidation.
This study’s findings suggest that implementing site-neutral policy in the commercial space would “require more nuanced approaches that account for competitive market dynamics in both the insurer and provider spaces,” the researchers wrote.
If some commercial insurers’ “broad networks, high prices and large site payment differentials are meeting the needs of employers and members, larger policy reforms might not be required”—though that raises considerations of whether employers and their member patients have the necessary information or coverage options to make such a decision without regulatory intervention.
“If policy reforms are deemed appropriate to address high prices that result from site-of- care payment differentials, the results of this study highlight both the magnitude of differentials and the potential savings from reducing them,” the researchers wrote.