Managed Care Discounting: Evidence from the MarketScan Database
NBER Working Paper No. 10437
The paper examines price discounting by health maintenance organizations and preferred provider organizations in markets for hospital services. Our empirical analysis focuses on transaction prices for angioplasty, which is a relatively common procedure, with well defined 'product' characteristics. After controlling for patient and procedure heterogeneity and market power we find that on average prices for PPOs are 8% lower than fee-for-service plans, followed by point-of-service HMOs who capture a 24% discount. Our results are in general agreement with earlier work that shows that managed care discounts are 'real', after accounting for process of care.
Published: Dor, Avi, Siran M. Koroukian and Michael Grossman. "Managed Care Discounting: Evidence From The MarketScan Database," Inquiry - Excellus Health Plan, 2004, v41(2,Summer), 159-169.