Doctors Charge Substantially More to Commercial Insurers

CBO report documents that Medicare pays far less for the same care to beneficiaries.

While one report from the Congressional Budget Office received a great deal of national attention this week, another CBO report got far less though it may have a more practical, immediate impact on health plans and employers.

The first CBO report, of course, is the one that estimated that the number of people without health insurance would rise by 22 million by 2026 under the Better Care Reconciliation Act of 2017 proposed by Senate Republicans to replace the Patient Protection and Affordable Care Act.

The second CBO report, “An Analysis of Private-Sector Prices for Physician Services,” was presented at the Academy Health’s annual research meeting in New Orleans.

The second CBO report documented that physicians charge substantially higher prices to commercial health plans than they do to Medicare for the same services.

CBO researchers looked at physician claims paid by three major commercial health insurers—Aetna, Humana and UnitedHealthcare—in 2014 for 21 “frequently and costly” physician services. The CBO defined “frequently and costly” as services that occurred more than 50,000 times annually at an average cost of $450 or more per claim. The researchers then compared those claims with the claims paid by Medicare Part B (Medicare fee-for-service) and by Medicare Part D (Medicare Advantage plans) for the same 21 physician services. In total, the researchers reviewed about 50 million commercial claims and about 19 million Medicare claims.

The comparison revealed that the average commercial prices for routine services like a new patient visit were 6 percent to 30 percent higher than the prices charged to Medicare Part B for the same services. The average commercial prices for specialty services like a cardiac catheterization procedure were 30 percent to 140 percent higher than the prices charged to Medicare Part B for the same services. There was little difference in prices charged to Medicare Part B and Medicare Part D for routine or specialty physician services. The analysis also found that physicians charged much higher prices for services to commercial health plans when the doctors were out-of-network rather than in-network.

As for the policy implications for what it found, the CBO said, “Prices for physicians’ services affect premiums in commercial insurance plans, which are subsidized both by the preferential tax treatment of employer-based insurance and through direct subsidies in health insurance marketplaces.”