Researchers at The Hilltop Institute at the University of Maryland, Baltimore County (UMBC) are set to launch a 3-year analysis of hospital pricing behavior in the wake of a 2021 federal price transparency rule. Hilltop Principal Data Scientist Morgan Henderson, PhD, and Policy Analyst Morgane Mouslim, DVM, ScM, have been awarded a $282,412 grant from the National Science Foundation (NSF) for the project, titled Provider Pricing Behavior and Health Policy.
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Tea price transparency law, first issued under the authority of the Affordable Care Act in 2019, requires hospitals to provide a standard charge file for their services. An updated version in 2021 also required hospitals to provide cash-discounted prices and negotiated prices for all payers and plans that contract with the hospital.
By gathering and assessing this new data from a sample of hospitals nationwide, Henderson and Muslim hope to open up a new field of research on hospital pricing and payer negotiation.
Phase 1 of the project will include collecting pricing data from individual hospitals and organizing them into a single data set that will be made available to other researchers. Phase 2 will involve using the data set to inform 2 studies on pricing behavior across different payers.
“The goal is to do a couple of really good studies, looking at how Medicaid expansion seems to be shifting and influencing our hospital pricing,” Henderson said. “We’re going to be focusing on state borders—where one state has expanded Medicaid and the other state hasn’t expanded Medicaid. We’ll be looking for systematic differences across hospitals across these borders.”
The project will also be an opportunity for undergraduate economic researchers to participate, Muslim added.
“We’re trying to diversify economics, which is a field that does not have a lot of gender, racial, and ethnic diversity,” Muslim said. “It’s about giving undergrad researchers a good experience in economics with a fascinating subject, getting them to work with data, and then hopefully inspiring them to go on to do more economics research.”
Although research is still underway, hospitals may begin to change their prices once the data on nearby competitors is made publicly available. However, some patient groups, such as those with employer-sponsored insurance, may see more of an impact than others, such as Medicare or Medicaid enrollees.
“The actual prices paid to hospitals by Medicare and Medicaid are typically far lower than prices paid by commercial or employer-sponsored insurance,” Henderson said. “Additionally, individuals with commercial or employer-sponsored insurance are also usually responsible for some amount of cost-sharing.”
Employers that self-fund their employee health insurance and contract with third-party administrators to negotiate their rates will now be able to see and compare those rates through the dataset, and potentially increase market competition.
Although the data will provide new insights on previously inaccessible hospital pricing information, the researchers note that Maryland’s All-Payer Model ensures all payers pay the same rate for a service within a hospital. However, Maryland could provide a unique reference for comparing other states’ pricing behavior.
“We feel like being in Maryland (with its all-payer model) gives us this quite unique and objective vantage point, because in virtually every other state, we’ve seen tremendous variability in pricing for the same procedure across payers within a hospital, ” Henderson said. “…there’s a lot of interesting research to be done looking at hospitals on either side of Maryland and other state borders. That itself will be a fantastic study [on the Maryland All-Payer model].”
The grant is set to begin Oct. 1st and will run through Sept. 30th, 2025.