Health Aff (Millwood). 2026 Aug;45(8):871-879. doi: 10.1377/hlthaff.2025.01475.
ABSTRACT
Vertical integration between Medicare Advantage (MA) plans and hospital providers is increasingly common, but little is known about how vertically integrated plans pay affiliated providers for medical services. Providers may accept lower prices from affiliated plans to give those plans a competitive edge in the MA market. Conversely, plans may pay vertically integrated providers higher prices to increase their medical loss ratios-a measure of revenues spent directly on health care required by the Centers for Medicare and Medicaid Services. Using a novel data set of vertically integrated MA plans matched with negotiated hospital pricing data, we found that in 2024, 66-73 percent of hospitals charged similar prices to affiliated and unaffiliated plans, but prices differed at a sizeable minority of hospitals. On average, affiliated plan prices were 5.3 percent higher than unaffiliated plan prices for the same procedure at the same hospital. Affiliated plan prices were higher relative to unaffiliated plan prices in the inpatient (rather than outpatient) setting, in more concentrated MA markets, and where MA hospital prices were lower relative to traditional Medicare hospital prices. Our results suggest that vertically integrated MA plans behave differently from standard MA plans, but strategies vary by market and hospital characteristics.
PMID:42546239 | DOI:10.1377/hlthaff.2025.01475
