Burn Care Funding in the Era of Price Transparency—Does Verification Signal Bargaining Power?

Abstract

The Price Transparency Rule of 2021 forced payors and hospitals to publicly disclose negotiated prices to foster competition and reduce cost. Burn care is costly and concentrated at less than 130 centers in the US. We aimed to analyze geographic price variations for inpatient burn care and measure the effects of American Burn Association (ABA) verification status and market concentration on prices. All available commercial rates for 2021-2022 for burn-related Diagnosis Related Groups (DRG) 927, 928, 929, 933, 934, and 935 were merged with hospital-level variables, ABA verification status, and Herfindahl-Hirschman Index (HHI) data. For the DRG 927 (most intensive burn admission) a linear mixed effects model was fit with cost as the outcome and the following variables as covariates: HHI, plan type, safety net status, profit status, verification status, rural status, teaching hospital status. Random intercepts allowed for individual burn centers. There were 170,738 rates published from 1541 unique hospitals. Commercial reimbursement rates for the same DRG varied by a factor of approximately three within hospitals for all DRGs. Similarly, rates across different hospitals varied by a factor of three for all DRGs, with DRG 927 having the most variation. Burn center status was independently associated with higher reimbursement rates adjusting for facility-level factors for all DRGs except for 935. Notably, HHI was the largest predictor of commercial rates (p<0.001). Negotiated prices for inpatient burn care vary widely. ABA-verified centers garner higher rates along with burn centers in more concentrated/monopolistic markets.