Managed Care Discounting: Evidence from the Marketscan Database

22 Pages Posted: 4 May 2004 Last revised: 10 Jul 2010

See all articles by Avi Dor

Avi Dor

Case Western Reserve University - Department of Economics; National Bureau of Economic Research (NBER)

Siran M. Koroukian-Hajinazarian

Case Western Reserve University - Department of Epidemiology and Biostatistics

Michael Grossman

National Bureau of Economic Research (NBER), NY Office; CUNY The Graduate Center - Department of Economics

Date Written: April 2004

Abstract

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.

Suggested Citation

Dor, Avi and Koroukian-Hajinazarian, Siran M. and Grossman, Michael, Managed Care Discounting: Evidence from the Marketscan Database (April 2004). NBER Working Paper No. w10437. Available at SSRN: https://ssrn.com/abstract=532996

Avi Dor (Contact Author)

Case Western Reserve University - Department of Economics ( email )

Cleveland, OH 44106
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216-368-4110 (Phone)

National Bureau of Economic Research (NBER)

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Siran M. Koroukian-Hajinazarian

Case Western Reserve University - Department of Epidemiology and Biostatistics ( email )

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Cleveland, OH 44106-4945
United States

Michael Grossman

National Bureau of Economic Research (NBER), NY Office ( email )

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HOME PAGE: http://mgrossman.ws.gc.cuny.edu

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