Factors affecting specialist group bargaining power over price in third party contracts

It is unclear to what extent physician practices influence the prices they receive under a selective contracting system. Previous physician pricing research has treated providers as homogenous within markets though variation in treatment patterns is known to exist. Economic theory suggests that higher quality should be associated with higher prices, but no previous research has examined if provider level quality is rewarded and/or encouraged in the selective contracting process. This research used a bargaining power model developed by Brooks and colleagues to (1) assess whether cardiologist groups have bargaining power and (2) evaluate whether or not this bargaining power can be attributed to quality as measured by the level of agreement between a group's previous treatment decisions and accepted measures of treatment quality.; Medstat MarketScan and Centers for Medicare and Medicaid Services (CMS) data were used to model the effect of market factors and practice level cardiac care performance in the previous year on cardiologist group bargaining power. The cardiologist group-insurance plan bargaining power estimate was based on the negotiated price (PN), and the highest (PH) and lowest prices (PL) received in a market for a bundle of five common cardiology procedures. The performance measures consisted of two process quality measures, post-acute myocardial infarction (AMI) beta-blocker prescribing rates and post-AMI cholesterol screening rates, and two outcome measures, post-AMI 28 day readmission rates and post-AMI average patient cost.; Consistent with earlier research that examined physician bargaining power at the market level, cardiologist group bargaining power was related to the level of primary care physician and cardiologist penetration, and the percentage of foreign educated physicians. The two outcome measures were statistically significant predictors of cardiologist bargaining power, while neither of the process quality measures was associated with bargaining power.; The results of this study show that provider level bargaining power can be modeled to allow for within market heterogeneity. Additionally, cardiology groups do have some control over the prices that they receive in selective contracts based on their treatment decisions. Policy makers interested in encouraging quality improvements must be aware that selective contracting may not reward better performance on all quality measures.