USE CASE: Understanding the Impact of Hospital and Payer Negotiations

The team for this project consisted of authors from Rice University, University of Texas Health Science Center at Houston School of Public Health (UTHealth), and RAND Corporation. All three organizations are committed to conducting high quality research that informs consumers, stakeholders and policymakers. The research in this area was conducted with the goal of providing economic insight into decision and policy making that ultimately effect consumer welfare.

Request Summary The main objective of the project proposed by UTHealth was to better understand how hospitals are paid by commercial health plans, the different types of billing contracts negotiated, their prevalence, and how the terms of these contracts vary between markets.

UTHealth aimed to test the hypothesis that hospitals with reputations for providing exceptionally high-quality care are more likely than other hospitals to negotiate discounted charge-based contracts. The CO APCD data enabled researchers to describe and summarize the frequency with which different contract terms are negotiated, without revealing any proprietary information relating to contracts between specific health plans and individual hospitals.

Specific Research Question(s):

  1. What is the prevalence of different contract terms (e.g. “discounted charges” versus “per diems”) between commercial health plans and hospitals in Colorado?
  2. How do contract terms differ among broad service categories (e.g. outpatient imaging versus inpatient maternity stays)?
  3. What hospital characteristics and market conditions tend to be associated with different contract terms?
  4. Are health outcomes, including total spending, associated with different contract terms?

Benefit to Colorado Understanding the negotiated terms of the contracts between health plans and hospitals could be instrumental in determining both provider behavior and outcomes, including spending. The results from this analysis could help policymakers better understand those contract terms and aid them in crafting policies that promote competition, lower costs, and higher quality care for Colorado residents.

Categories: CO APCDResearchers

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