Many Health Insurance Companies Are Being Overcharged for Some Radiology Services

Health insurance companies are overpaying for some common radiology services, leading to higher costs for patients and providers, according information shared from a study by Michigan State University (MSU).

Published in the journal Radiology, researchers found that the maximum negotiated price for shoppable radiology services, on average, was 3.8 times the minimum negotiated price in the same hospital among various insurance companies and 1.2 times the minimum negotiated price in the same hospital among the same insurance company’s multiple health plans.

“Many commercial plans are leaving money on the table when negotiating prices with hospitals, especially for expensive CT and MRI scans,” said study co-author Ge Bai, a former doctoral student in MSU's Eli Broad College of Business and current professor of accounting, and health policy and management at Johns Hopkins University, in a release. “High prices paid by commercial plans eventually come back to bite patients and providers through high premiums and out-of-pocket costs.” 

The study found that the multiple insurance plans in contract with hospitals negotiated different prices for the same services within the same hospital, and even negotiated different prices across their own various health plans.

Researchers studied commercial negotiated prices from private payers for the 13 radiology services. Services that require high-cost equipment like a CT scanner and MRI, had more wide cost variations and higher prices relative to Medicare when compared to other radiology services, according to the information shared.

Out of the reviewed services, brain CT scans had the greatest price gap, in which 25% of hospital-insurance company pairs had set their maximum negotiated price at more than 2.4 times their minumum price.

Bai said, because of the Price Transparency Rule disclosing U.S. hospital pricing information, it "took the blindfold off the eyes of commercial payers, forcing them to recognize the fact that they are often paying too much."

“Equipped with pricing information, radiologists can change the landscape of care delivery to benefit patients and payers.”