Study Questions Payers’ Bargaining Chops Amid Big Variations in Primary Care Costs
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Jan 24, 2025
Commercial insurers pay significantly more for routine office visits conducted by primary care providers (PCPs) employed by hospitals or private equity firms than what they pay to PCPs working for independent practices, according to an analysis published on Jan. 17 in JAMA Health Forum. Yashaswini Singh, Ph.D., the study’s lead author, says the prices were similar regardless of the insurer, indicating that even major payers are “not exerting downward bargaining pressure in these price negotiations.”
Singh adds that one “plausible explanation” for the high prices paid to PCPs at hospital- or PE-owned facilities is that those provider groups have market power because there are fewer competitors in their geographic areas. She suggests that another potential reason for the discrepancy is that “insurers can just pass on any price increases that they themselves experience to consumers” via higher out-of-pocket expenses. As such, she says “there may be less of an incentive to negotiate favorable rates,” although she points out the authors did not “directly examine either of those explanations for price differentials in this study.”
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