Size, Not Hospital Quality and Performance, Influences Commercial Prices

Background: Total joint arthroplasty (TJA), including total hip and knee arthroplasty (THA/TKA), exhibits substantial price variation across hospitals. The 2022 Centers for Medicare & Medicaid Service Transparency in Coverage (TiC) Rule now requires public disclosure of negotiates commercial prices. This study sought to investigate the following: (1) association between hospital and market characteristics on commercial prices for TJA and (2) the relationship between prices and hospital quality and performance metrics. Methods: We analyzed 2,455 commercial negotiated prices from March 2024 between 950 hospitals and 5 major insurers for Medicare Severity Diagnosis Related Group 470. Hospitals were categorized by size, system affiliation, teaching status, ownership, state, and THA/TKA surgical volume. Market concentration was assessed using the Herfindahl-Hirschman Index. Hospital quality and performance metrics included Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey ratings, overall star ratings, and THA/TKA complication and readmission rates. A multivariate, log-transformed linear regression model with standardized beta coefficients was used to examine associations. Results: Healthcare quality and performance measures were not associated with commercial prices (HCAHPS star ratings β = 0.03, p = 0.55; overall star rating β = 0.02, p = 0.48). Similarly, complication rates and readmission rates were also not significant (β = -0.02, p = 0.65 and β = 0.01, p = 0.78, respectively). In contrast, higher prices were associated with hospital size (β = 0.11, p = 0.002) and system size (β = 0.12, p < 0.001). State-level effects on prices were also evident. Insurer was not associated with price differences (all, p > 0.05). The multivariate model explained 39% of price variability (Adjusted R 2 = 0.39). Conclusions: Hospital and system size, rather than hospital quality and performance metrics, are significantly associated with commercial prices for THA/TKA. Level of Evidence: Level III . See Instructions for Authors for a complete description of levels of evidence.