Insurer mergers can help payers negotiate lower prices with providers, study suggests

Four of the nation's largest health insurers are entrenched in antitrust trials over concerns their proposed consolidations will impede competition. And with such insurer mergers, market concentration plays a key role when insurers and providers bargain over commercial healthcare prices, according to a study published in Health Affairs.

For the study, researchers analyzed 2014 data from a multipayer commercial health insurance claims database compiled by FAIR Health, a cost transparency and consumer education firm. Researchers limited their analyses to insurers' preferred provider organization and point-of-service plans and excluded $0 claims.

Using multipayer claims for physician services provided in office settings, they examined differences in the prices that a given provider group negotiated with insurers with different market shares.

Specifically, researchers found insurers with market shares of 15 percent or more negotiated prices for physician office visits at rates 21 percent lower than payers with market shares of less than 5 percent. Negotiations took place in the same provider group.

Additionally, analyses stratified by provider market share found insurers require greater market shares to negotiate lower prices from large provider groups than they do when negotiating with smaller provider groups. For example, the study found office visit prices for small practices were $88 for insurers with market shares of less than 5 percent, and $70 for insurers with 15 percent or greater market share. Whereas prices for large provider groups were $97 for less than 5 percent and $76 for greater than 15 percent, exhibiting a continued decrease across higher insurer-market-share categories.

Researchers concluded the results suggest "mergers of health insurers could lower the prices paid to providers, particularly providers large enough to obtain higher prices from insurers with modest market shares." Study authors prioritized continued monitoring to determine the net effects of payer and provider consolidation on healthcare affordability.  

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