Search Results

Publisher/Organization: N/A

Payer: Commercial Insurance

Summary: Using April 2025 Transparency in Coverage data, the researchers examine how negotiated allowed amounts for common cardiology services vary across four major commercial insurers. They find greater variation in facility fees than in professional fees for cardiology services, as well as significant differences in negotiated facility prices across payers. The researchers also find substantial variation in median professional and facility fee rates across states for coronary angiography.

Topic Areas: Payment Differentials, Vertical Integration, Facility Fees

Publisher/Organization: Yale Health Care Affordability Lab

Payer: N/A

Summary: The review explores literature on hospital acquisition of physician practices, largely finding that consolidation leads to higher health care prices and spending. On average, acquiring hospitals increase their prices by 3–5%, while acquired physician practices increase their prices by 14–15%. The researchers identify site-of-service payment differentials, in addition to reduced competition, as key drivers of these price increases. The evidence also does not show that hospital-physician integration leads to improvements in quality.

Topic Areas: Vertical Integration, Payment Differentials

Publisher/Organization: Health Care Cost Institute

Payer: Commercial Insurance

Summary: Using commercial claims data for individuals with employer-sponsored insurance from 2018 to 2022, the researchers analyzed changes in clinician billing patterns following a health system's acquisition of an independent practice. They found that clinicians billed for higher-intensity evaluation and management visits and were more likely to order hospital-based diagnostic tests after the acquisition. However, the likelihood of billing a facility fee with an office visit did not increase following the acquisition.

Topic Areas: Vertical Integration, Facility Fees

Publisher/Organization: Center on Health Insurance Reforms

Payer: Commercial Insurance

Summary: The resource highlights that the same services are often more expensive in hospital outpatient departments (HOPDs) than independent provider offices. Outpatient facility fees and rising hospital prices driven by the increasing market power of consolidated health systems contribute to higher payments for HOPDs. To address this, the resource covers 16 decision points across four domains to help policymakers develop a policy solution that best fits their local needs, circumstances, and priorities.

Topic Areas: Vertical Integration, Payment Differentials, Policy Reforms, Site-Neutrality, Facility Fees

Publisher/Organization: Paragon Health Institute

Payer: Medicare, Medicaid

Summary: This paper argues that site-of-service payment differentials between hospital outpatient departments and lower-cost settings have encouraged hospitals to acquire physician practices. According to the paper, these acquisitions have contributed to rising hospital costs. To promote competition and reduce unnecessary spending, the paper recommends site-neutral payment reform for Medicare and Medicaid.

Topic Areas: Facility Fees, Vertical Integration, Site-Neutrality, Policy Reforms

Publisher/Organization: N/A

Payer: Medicare, Commercial Insurance

Summary: Using 2013-2021 Medicare claims and 2015-2018 commercial claims, the study evaluates Optum’s acquisition of physician practices and ambulatory surgery centers (ASCs). It finds no meaningful change in referrals from hospital outpatient departments to ASCs in Medicare after acquisitions. Instead, Optum acquired practices that already had high ASC use, consistent with strategic selection. In commercial markets, prices at acquired ASCs rose by 11%, driven by higher facility fees and increased professional fees for Optum-employed physicians.

Topic Areas: Facility Fees, Vertical Integration, Payment Differentials

Publisher/Organization: U.S. Public Interest Research Group

Payer: Commercial Insurance

Summary: This report analyzes the growing use of facility fees for hospital outpatient care in the commercial market. It shows that they are applied in settings without hospital-specific resources and can substantially increase charges for preventive care, diagnostic tests, and routine visits without improving quality. These fees raise out-of-pocket costs and insurance premiums. The report highlights how integration has increased physician employment by hospitals, making it harder for patients to avoid settings with facility fees. The report also reviews state legislative actions and proposes policies such as site-neutral payments, unique National Provider Identifiers, facility fee bans for routine outpatient services, and public reporting of facility fee charges and payments.

Topic Areas: Facility Fees, Site-Neutrality, Vertical Integration, Policy Reforms, Billing Transparency

Publisher/Organization: Progressive Policy Institute

Payer: Commercial Insurance, Medicare

Summary: This report reviews the impact of hospital-physician integration on prices across Medicare and commercial markets. Examining 70 economic studies, the authors find hospital acquisitions of physician practices are consistently associated with higher prices and increased spending, with average price increases of about 14%. Approximately 45% of the price increases are linked to site-of-service payment differentials, as hospitals can bill higher rates in outpatient settings than in physician practices. Evidence on utilization and quality are mixed. The report identifies site-neutral payment reform as a key strategy to reduce financial incentives for vertical integration, limit price inflation, and curb shifts toward higher-cost care settings.

Topic Areas: Vertical Integration, Site-Neutrality, Payment Differentials

Publisher/Organization: Bipartisan Policy Center

Payer: Medicare

Summary: This issue brief describes current Medicare payment law and the debate over expanding site-neutral payment reforms in Medicare. It notes that Medicare often pays more for outpatient services in hospital outpatient departments than in physician offices, creating incentives for consolidation and higher spending. Proponents of site-neutral reforms say aligning payments across sites of care could save Medicare money, reduce beneficiary cost sharing, and lessen incentives for hospitals to acquire physician practices. Opponents argue that hospitals face higher overhead and regulatory costs. Thus, lowering payments in hospital outpatient settings could strain budgets and access, especially in rural and underserved areas.

Topic Areas: Site-Neutrality, Vertical Integration, Policy Reforms

Publisher/Organization: N/A

Payer: Commercial Insurance

Summary: Using 2023 Transparency in Coverage data on commercial negotiated rates, researchers examine specialist practice affiliation and its relationship to prices for cardiology and gastroenterology services. They find that hospitals employed about 72% of cardiologists and 57% of gastroenterologists, while private equity entities employed a smaller share of specialists who tended to be concentrated in certain regions. Hospital-affiliated specialists negotiated prices that were 16.3% higher for cardiology procedures and 20.7% higher for gastroenterology procedures than specialists in independent practices. Private equity-affiliated specialists also negotiated higher prices, though to a lesser extent. The authors estimate that if hospital- and private equity-affiliated specialists charged the same prices as independent practices, annual commercial health care spending would decrease by about $2.9 billion and $156 million, respectively.

Topic Areas: Vertical Integration, Payment Differentials

Publisher/Organization: Government Accountability Office

Payer: Commercial Insurance, Medicare

Summary: This report synthesizes published research on the trends and effects of physician consolidation through 2024. It notes that hospitals employ or affiliate with a growing share of physicians. While less common, provider affiliations with private equity are also increasing in certain specialties and markets. The literature indicates that vertical integration between hospitals and physician practices is associated with higher health care spending and prices for both Medicare and the commercial payers. The shift of delivering services in more expensive hospital-based settings contribute to increased prices and costs. Evidence on the quality effects of hospital-physician vertical integration is mixed and limited. The literature on how consolidation affects access to care is also sparse. The report highlights evidence gaps on consolidation involving private equity or insurers and reinforces concerns that reduced competition may contribute to cost pressures in health care markets.

Topic Areas: Vertical Integration, Payment Differentials

Publisher/Organization: Yale Tobin Center for Economic Policy

Payer: Commercial Insurance

Summary: The study looks at hospital merger data and commercial claims data for labor and delivery from 2011-2016. In the two years after integration, hospital prices for labor and delivery increased on average by 3.3% ($475), while physician prices rose by 15.1% ($502). The researchers find no significant improvements in quality that might justify the price increases, In fact, they observed an increase of 4.5-8.0% in cesarean section rates, which are often considered a sign of physician-induced demand rather than improved care. Across specialties, the share of physicians integrated with a hospital also increased by 71.5% from 2008 to 2016.

Topic Areas: Vertical Integration, Patients & Quality

Publisher/Organization: N/A

Payer: Commercial Insurance

Summary: This study analyzes 198,097 primary care physicians and 226.6 million negotiated prices for office visits across three large commercial insurers. Researchers examine trends in hospital and private equity affiliation and assessed how affiliation relates to commercial prices. From 2009-2022, hospital-affiliated primary care physicians increased from 25.2% to 47.9%. During the same period, the share of primary care physicians affiliated with private equity firms increased from 0% to 1.5%. Relative to independent primary care physicians, negotiated prices for office visits were $14.91 (10.7%) higher for hospital-affiliated primary care physicians and $9.56 (7.8%) higher for private equity-affiliated primary care physicians.

Topic Areas: Vertical Integration, Payment Differentials

Publisher/Organization: RAND

Payer: Commercial Insurance

Summary: This study uses 2020-2022 commercial claims data from self-insured employers, state all-payer claims databases, and private health plans to analyze hospital prices. It finds that average private insurer prices were 254% of Medicare rates in 2022, with prices exceeding 300% of Medicare in some states. Hospital outpatient procedure prices averaged 263% of Medicare rates, and facility fees accounted for about 87% of outpatient spending. The researchers also find that prices at ambulatory surgery centers averaged 171% of Medicare rates. In addition, prices for private insurers averaged 281% of average sales price for hospital administered drugs, compared with Medicare's payment rate of 106% of average sales price.

Topic Areas: Payment Differentials, Vertical Integration, Facility Fees

Publisher/Organization: N/A

Payer: Medicare

Summary: Using 2013-2019 Medicare fee-for-service data, the study examines how hospital-physician integration impacts where patients receive arthroscopy and colonoscopy procedures. It finds that integration increases referrals for these services to hospital outpatient departments rather than ambulatory surgery centers by about 10%. Authors surmise that if all primary care physicians become integrated with hospitals, total Medicare spending would increase by $315 million annually. Additionally, they did not find any quality improvement for the two procedures after integration.

Topic Areas: Vertical Integration

Publisher/Organization: Physicians Advocacy Institute

Payer: N/A

Summary: From July 2019 to January 2024, physician employment by hospitals or corporate entities increased from 62.2% to 77.6%, with hospital employment rising from 46.9% to 55.1% and corporate employment from 15.3% to 22.5%. Over the same period, the share of physician practices owned by these entities grew from 38.8% to 58.5%. While it is unclear whether these changes are driven primarily by site-based payment incentives, physician preference, or both, they are likely to contribute to increased use of hospital outpatient departments.

Topic Areas: Vertical Integration

Publisher/Organization: Yale Tobin Center for Economic Policy

Payer: Medicare

Summary: The review synthesizes literature on Medicare’s site-neutral payment policies. It shows that payment differences for the same outpatient services across hospitals, ambulatory surgical centers, and physician offices increase spending and beneficiary costs. Eliminating these differences could lower costs without harming quality. The authors find that payment differentials have encouraged hospital-physician vertical integration, but peer-reviewed evidence has shown that hospital-based care does not yield better patient outcomes for comparable services. Because commercial payers often follow Medicare’s lead, these payment disparities extend into the commercial insurance market. The review also discusses site-neutral policies and proposals as of 2023.

Topic Areas: Payment Differentials, Vertical Integration, Policy Reforms, Site-Neutrality, Patients & Quality

Publisher/Organization: Center on Health Insurance Reforms

Payer: Commercial Insurance

Summary: This article provides an overview of outpatient facility fees, including when hospitals charge them. The article explains that facility fees have become more common as hospitals acquire more physician practices. This trend is driving up overall costs for commercial insurers and increasing out-of-pocket expenses for consumers. The article outlines policy options to reduce site-of-service price differentials and protect consumers in the commercial market, including facility fee prohibitions and site-neutral payment reforms.

Topic Areas: Facility Fees, Vertical Integration

Publisher/Organization: American Hospital Association

Payer: Commercial Insurance, Medicare, Medicaid

Summary: This fact sheet explains factors driving hospital acquisition of physician practices. It notes that 94% of physicians say operating an independent practice has become financially and administratively difficult, and 84% say the administrative burden from commercial health insurers and government insurance programs had affected their employment decision. The fact sheet also highlights that commercial insurers and private equity firms, not hospitals, represent the majority of physician practice acquisitions.

Topic Areas: Vertical Integration

Publisher/Organization: N/A

Payer: Commercial Insurance, Medicare

Summary: Using 2009-2015 Florida outpatient discharge and physician ownership data, the study investigates how hospital acquisition of physician practices affects treatment setting and related charges. After integrating with hospitals, physicians were significantly less likely to use ambulatory surgery centers (ASCs), reducing their likelihood of any ASC procedures by up to 18%. Nearly 10% of procedures also shifted from ASCs to hospital outpatient departments. Despite no increase in overall procedure volume, vertically integrated physicians reported substantially higher outpatient procedure charges over time. The findings were consistent across Medicare and commercial payers.

Topic Areas: Vertical Integration

Publisher/Organization: RAND

Payer: Commercial Insurance, Medicare, Medicaid

Summary: The authors reviewed ten studies examining the price impact of vertical integration between hospitals or health systems and physicians. Eight studies reported price increases, one found no significant effect, and one reported mixed results. A major factor driving higher prices in vertically integrated entities is the shift of services to higher-cost settings where systems can bill both professional and facility fees. Similar to most of the studies on the price effects of vertical integration, nine studies found increases in medical spending associated with vertical integration.

Topic Areas: Vertical Integration, Facility Fees, Payment Differentials

Publisher/Organization: Congressional Budget Office

Payer: Commercial Insurance

Summary: The report explains that hospital and physician service prices are higher and more variable in the commercial market than in Medicare. Both provider market power limiting insurer bargaining power and limited consumer and employer price sensitivity contribute to these trends. These high prices, in turn, raise insurance premiums, patient cost sharing, and federal subsidies for commercial coverage. The Congressional Budget Office outlines policy approaches Congress could consider to reduce commercial prices, including promoting provider competition, increasing price transparency, and capping or limiting prices (including site-neutral reform).

Topic Areas: Vertical Integration, Site-Neutrality, Policy Reforms

Publisher/Organization: N/A

Payer: Commercial Insurance

Summary: This study examines trends in physician integration through joint contracting in clinically integrated networks and hospital acquisitions in Massachusetts. Vertical integration and joint contracting with small and medium health systems rose from 19.5% to 32.8% for primary care physicians and from 26.1% to 37.8% for specialists, while integration with large systems slightly declined. Vertical integration and joint contracting led to price increases in the commercial market from 2.1-12.0% for primary care and 0.7-6.0% for specialists, with the largest increases observed in large health systems.

Topic Areas: Vertical Integration

Publisher/Organization: RAND

Payer: Commercial Insurance

Summary: This report uses 2018-2020 commercial claims data from self-insured employers, state all-payer claims databases, and private health plans to analyze amounts paid to hospitals by private insurers across the United States. It finds that, on average, private insurance payments to hospitals were much higher than the amounts Medicare would have paid for the same inpatient and outpatient services, with variations across states and hospitals. Specifically, average private insurer payments were 224% of Medicare rates in 2020, with certain states above 300% of Medicare rates. The study highlights significant geographic and facility-level price variation that is not explained by patient mix or payer mix, pointing instead to hospital market power and negotiated pricing dynamics. It also finds that ambulatory surgery centers tend to have lower relative prices than hospital outpatient departments. Private insurance payments for administered drugs in hospital settings are also much higher than Medicare rates.

Topic Areas: Payment Differentials, Vertical Integration

Publisher/Organization: RAND

Payer: Medicare

Summary: This report summarizes findings on vertical integration from a series of RAND studies. Studies have found that hospital-physician vertical integration shifted care from lower-cost settings to hospital outpatient departments, raising Medicare spending and prices. Increased hospital-based imaging and lab use added $73.1 million in Medicare costs for selected services over the study period. Hospital-integrated physicians were less likely to use ambulatory surgery centers, directing patients to higher-reimbursed hospital settings. The volume of outpatient services stayed roughly the same, but prices rose by up to 29%, reflecting site-of-care differences.

Topic Areas: Vertical Integration, Payment Differentials

Publisher/Organization: N/A

Payer: Medicare

Summary: Using Medicare fee-for-service claims between 2013 and 2016, the study examines how hospital integration with primary care physician groups affects Medicare spending on ten common diagnostic imaging and laboratory services. After integration, care shifted from non-hospital to hospital settings for both imaging and lab services. As a result, average Medicare reimbursements increased by $6.38 for imaging and $0.57 for lab tests, resulting in approximately $40.2 million and $32.9 million higher Medicare spending, respectively.

Topic Areas: Vertical Integration

Publisher/Organization: N/A

Payer: Commercial Insurance

Summary: This study analyzes over 30 million office visit claims from commercial insurers between 2012-2016 to examine the relationship between hospital-physician vertical integration and prices and facility fees. It finds that higher levels of vertical integration were associated with increases in physician prices for select specialties. For example, a 10% increase in hospital-physician integration was linked to 0.5%-1.0% price increases for primary care, orthopedics, and cardiology office visits. The geographic areas with the greatest growth in vertical integration also had the greatest price increases over the study period. The study finds no association between vertical integration and facility fee billing practices for office visits.

Topic Areas: Vertical Integration, Facility Fees

Publisher/Organization: N/A

Payer: Medicare

Summary: Using 2010-2016 Medicare payment data, the study estimates that the average physician working in an independent physician office would have earned about $114,000 more in 2016 by billing services through a hospital outpatient department (HOPD) than an independent practice, with substantial variation by specialty. The analysis also finds that payment incentives from annual Medicare payment updates for HOPD services may have contributed to greater physician-hospital integration over time. The authors suggest that Medicare site-neutral payment reforms could reduce incentives to shift care toward more expensive sites of care and have a “cooling effect” on vertical integration. However, hospitals’ motivation to acquire physician practices may persist due to the advantage integration provides in negotiating higher prices with commercial payers.

Topic Areas: Vertical Integration, Policy Reforms, Payment Differentials, Site-Neutrality

Publisher/Organization: KFF

Payer: Commercial Insurance, Medicare

Summary: This brief reviews research on provider consolidation, including hospital mergers (horizontal consolidation) and hospital acquisition of physician practices (vertical consolidation), and examines its effects on prices and quality. The evidence consistently shows that consolidation leads to higher prices for commercially insured services. Additionally, vertical integration between hospitals and physicians is associated with higher outpatient prices and increased premiums. In Medicare, prices are generally set administratively, although vertical integration can raise spending by increasing hospital outpatient billing. At the same time, the brief finds little evidence that consolidation improves quality. It also finds that ongoing financial pressures may further accelerate consolidation trends.

Topic Areas: Vertical Integration

Publisher/Organization: N/A

Payer: Medicare

Summary: This study examines the effect of a “price shock” from the 2010 update to Medicare’s physician practice cost survey, which generally reduced the indirect practice expense component of the Physician Fee Schedule. The researchers find that physicians’ responses to this reduction accounted for roughly 20% of the overall growth in hospital-employed physicians and 75% of the increase in hospital-billed outpatient procedures to Medicare between 2009 and 2013.

Topic Areas: Vertical Integration

Publisher/Organization: Physicians Advocacy Institute

Payer: N/A

Summary: Between July 2012 and January 2018, physician employment by hospitals increased by 70%, while hospital-owned practices grew regionally by 91-303%, with the highest increases observed in Alaska and Hawaii (though small overall numbers in those states may affect this estimate). The underlying causes of integration are unclear, but these trends are expected to accelerate utilization of hospital outpatient departments.

Topic Areas: Vertical Integration

Publisher/Organization: N/A

Payer: N/A

Summary: By analyzing 29 hospital quality measures from the Centers for Medicare & Medicaid Services Hospital Compare data from 2008 to 2015, the study assesses the effects of vertical integration and market concentration on quality of care. It finds that integration between hospitals and physicians has limited or no consistent impact on most quality measures. In contrast, greater hospital market concentration is associated with declines in all ten patient satisfaction measures.

Topic Areas: Vertical Integration, Patients & Quality

Publisher/Organization: N/A

Payer: Commercial Insurance

Summary: Researchers assess the effect of hospital-physician integration on Marketplace premiums and prices of physician outpatient services in California. The percentage of physicians in hospital-owned practices increased from about 25% in 2010 to more than 40% in 2016. Increased vertical integration from 2013 to 2016 in highly concentrated hospital markets was associated with a 12% increase in Marketplace premiums. For physician outpatient services, the increase in vertical integration was also associated with a 9% increase in specialist prices and a 5% increase in primary care prices. The authors suggest legislative proposals, state attorney general actions, and regulatory changes.

Topic Areas: Vertical Integration

Publisher/Organization: N/A

Payer: Commercial Insurance

Summary: This study analyzes commercial insurance claims from 2007 to 2013 for patients treated by physician practices before and after hospitals acquired them. After adjusting for patient characteristics and market factors, hospitals increased prices for services at acquired physician practices by 14.1% and raised total enrollee spending by 4.9%. Price increases were largest in markets where hospitals had greater market share, reflecting increased bargaining power for negotiated reimbursement and the new application of facility fees. New facility fees accounted for about 45% of the increase in prices.

Topic Areas: Vertical Integration, Facility Fees