CBO researchers looked at physician claims paid by three major commercial health insurers—Aetna, Humana and UnitedHealthcare—in 2014 for 21 “frequently and costly” physician services. The CBO defined “frequently and costly” as services that occurred more than 50,000 times annually at an average cost of $450 or more per claim. The researchers then compared those claims with the claims paid by Medicare Part B (Medicare fee-for-service) and by Medicare Part D (Medicare Advantage plans) for the same 21 physician services. In total, the researchers reviewed about 50 million commercial claims and about 19 million Medicare claims.  The report does not explain fully the difference between "claims paid" and "amounts paid".  Claims paid can be paid at other than billed charges depending on the discount negotiated which would not have been available to reviewers because the discounts are private and confidential. Therefore, the story gets skewed.

The comparison revealed that the average commercial prices for routine services like a new patient visit were "6 percent to 30 percent higher than the prices charged to Medicare Part B" for the same services.  Again, this apples and oranges comparison is unfair. For one thing, providers bill at rates that are often uniform across the board. Medicare fee schedules entitle Medicare Part B to pay less for most services.  Average commercial prices are also uniform, but negotiated discounts are what changes the amount paid (higher or lower) than Medicare Part B. 

The average commercial prices for specialty services like a cardiac catheterization procedure were 30 percent to 140 percent higher than the prices charged to Medicare Part B for the same services. There was little difference in prices charged to Medicare Part B and Medicare Part D for routine or specialty physician services. The analysis also found that physicians charged much higher prices for services to commercial health plans when the doctors were out-of-network rather than in-network.  None of these amounts actually result in 30-140 percent higher payments. To add insult to the integrity of the report and its media interpretation, the contracts are fraught with ambiguity and opacity that does not exist in Medicare Part B reimbursement and transactional rules. The opacity and ambiguity often result in zero dollars paid or claims denials.

As for the policy implications for what it found, the CBO said, “Prices for physicians’ services affect premiums in commercial insurance plans, which are subsidized both by the preferential tax treatment of employer-based insurance and through direct subsidies in health insurance marketplaces.”  Here again, prices (charges) can be blamed for the temperature at the core of the moon if they so desire.  The payments are what is at issue not the prices charged to insurers and employer-sponsored health benefit programs operated under ERISA.