Negotiated Prices for Reconstructive Surgery Converge without Reduction in Overall Price Level after Federal Price Transparency Regulations.

Abstract

Federal price transparency regulations require disclosure of negotiated commercial prices, but whether these policies improve affordability for reconstructive surgery remains uncertain. We evaluated post-regulation changes in negotiated prices, price convergence, price variation, and overall inflation-adjusted price levels. Retrospective longitudinal observational study of nationwide hospital price transparency data (December 2021-June 2024). Facility rates for 125 reconstructive surgery CPT codes were linked across 403 hospitals, 51 core-based statistical areas, and four national commercial insurers, yielding 496,868 observations and 16,028 negotiated rate groups. Annualized real rate change (ARRC) was modeled using linear mixed-effects regression with hospitals nested within geographic markets, adjusting for initial within-market price percentile, service category, payer, and market structure. Prices converged in 677 of 886 local markets (76.4%), with the gap between high- and low-priced hospitals narrowing by 13.4 percentage points annually. Overall inflation-adjusted negotiated prices remained stable (ARRC intercept -0.012; p=0.289). Price dispersion showed no robust directional change. Greater convergence was observed among initially higher-priced hospitals, with significant variation by payer and service category but not market structure. Hospital-level heterogeneity explained substantially more variance than measured covariates (conditional R² 0.577; marginal R² 0.132; hospital ICC 0.326). Convergence remained consistent across multiple sensitivity analyses. Following implementation of price transparency regulations, negotiated prices for reconstructive surgery services converged between high- and low-priced hospitals without meaningful changes in overall inflation-adjusted price levels or price variation. These findings suggest that transparency alone is unlikely to improve affordability and should be complemented by additional policy strategies targeting healthcare costs.