UMBC's Hilltop Institute Launches Hospital Pricing Transparency Research with $282,000 NSF Grant - State of Reform

UMBC’s Hilltop Institute Launches Hospital Pricing Transparency Research with $282,000 NSF Grant – State of Reform

Researchers from The Hilltop Institute at the University of Maryland, Baltimore County (UMBC) are set to launch a 3-year analysis of hospital pricing behavior following a 2021 federal price transparency rule. Hilltop Principal Data Scientist Morgan Henderson, PhD, and Policy Analyst Morgane Mouslim, DVM, ScM, received an award of $282,412 to agree from the National Science Foundation (NSF) for the project entitled Provider Pricing Behavior and Health Policy.

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The price transparency law, first released under the Affordable Care Act in 2019, requires hospitals to provide a standard billing file for their services. An updated version in 2021 also required hospitals to provide discounted cash prices and negotiated prices for all payers and plans that enter into a contract with the hospital.

By gathering and evaluating this new data from a national sample of hospitals, Henderson and Mouslim hope to open up a new field of research on hospital pricing and payer negotiation.

Phase 1 of the project will involve collecting price data from individual hospitals and organizing it into a single dataset that will be made available to other researchers. Phase 2 will involve using the dataset to inform 2 studies of price behavior across different payers.

“The goal is to do some really good studies, looking at how Medicaid expansion seems to be changing and influencing our hospital pricing,” Henderson said. “We’re going to focus on state borders, where one state has expanded Medicaid and the other state hasn’t expanded Medicaid. We will look for systematic differences between hospitals across these boundaries.

The project will also be an opportunity for undergraduate economics researchers to participate, Muslim added.

“We’re trying to diversify the economy, which is an area that doesn’t have a lot of gender, racial and ethnic diversity,” Muslim said. “It’s about giving undergraduate researchers a good background in economics with a fascinating topic, getting them to work with data, and then hopefully inspiring them to pursue further research in economics.”

Although research is still ongoing, hospitals may begin to change their prices once data on nearby competitors becomes public. However, some patient groups, such as those with employer-sponsored insurance, may see more impact than others, such as those enrolled in Medicare or Medicaid.

“The actual prices paid to hospitals by Medicare and Medicaid are generally much lower than the prices paid by commercial or employer-sponsored insurance,” Henderson said. “Additionally, those with commercial or employer-sponsored insurance are also generally responsible for some cost sharing.”

Employers who self-fund their employees’ health insurance and contract with third-party administrators to negotiate their rates will now be able to view and compare those rates through the dataset, and potentially increase competition in the marketplace.

Although the data will provide new insights into previously inaccessible hospital pricing information, the researchers note that Maryland’s All Payer Model ensures that all payers pay the same rate for a service in a hospital. However, Maryland could provide a unique benchmark against which to compare the price behavior of other states.

“We feel like being in Maryland (with its all payers model) gives us this very unique and objective perspective because in pretty much every other state we’ve seen tremendous price variability for the same procedure between payers within a hospital,” Henderson said. “…there is a lot of interesting research to be done on hospitals across Maryland and other state lines. This in itself will be a fantastic study [on the Maryland All-Payer model].”

The grant is scheduled to begin October 1 and end September 30, 2025.

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