Nationwide Evaluation of Health Care Prices Paid by ...€¦ · Rose Kerber Research Programmer...
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Employer’s Forum of Indiana National Conference September 18, 2020 Christopher Whaley, Brian Briscombe, Rose Kerber, Brenna O’Neill, Aaron Kofner Nationwide Evaluation of Health Care Prices Paid by Private Health Plans: Findings from Round 3 of an Employer-Led Transparency Initiative
Transcript of Nationwide Evaluation of Health Care Prices Paid by ...€¦ · Rose Kerber Research Programmer...
Employer’s Forum of Indiana National ConferenceSeptember 18, 2020
Christopher Whaley, Brian Briscombe,
Rose Kerber, Brenna O’Neill, Aaron Kofner
Nationwide Evaluation of Health Care Prices Paid by Private Health Plans:Findings from Round 3 of an Employer-Led Transparency Initiative
2
Background
Study approach
Study findings
• Indiana-specific results
• Procedure-specific prices
Implications & conclusions
Ou
tlin
e
3
Background
Study approach
Study findings
• Indiana-specific results
• Procedure-specific prices
Implications & conclusions
Ou
tlin
e
• Funding provided by the Robert Wood Johnson Foundation and participating employers
• Study conceptualized by Employer’s Forum of Indiana
• The study team:
Brian BriscombeQuantitative Analyst
Rose KerberResearch Programmer
Christine GallagherContract Administrator
Brenna O’NeillResearch Programmer
Aaron KofnerResearch Programmer
Acknowledgments
4
Employer-sponsored plans cover half of Americans
$1.2 trillionhealth care costs in 2018
$480 billionhospital costs in 2018 160 million
people
5
6
Prices paid by employers are rising rapidly
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
2011 2012 2013 2014 2015 2016 2017 2018
Trends in Case-Mix Adjusted Inpatient Hospital Prices
Private Insurance Medicare Medicaid
Source: CMS Hospital Cost Report Data6
Why should we care about health care spending?
Source: Arnold and Whaley, Who Pays for Health Care Costs? The Effects of Health Care Prices on Wages. RAND Corporation, 2020.
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
201
8 i
nfl
atio
n-a
dju
sted
doll
ars
2008-2018 Trends in Wages and Health Insurance Costs
Wages
Health Insurance Costs
7
What do we know already?
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• Prices paid by private health plans are higher and growing faster than Medicare
• Increases in spending are driven by price growth, not utilization
• Prices vary widely from market to market, and from hospital to hospital within markets
What do we not yet know?
9
• How do prices compare across the country?
• Are hospital prices continuing to rise?
• Which hospitals/systems are getting the highest prices?
• What are the prices that individual self-funded employers are paying, and are these prices in line with the value that employers are getting?
Self-funded employers have a fiduciary responsibility
10
• Fiduciaries have a responsibility to “act solely in the interest of plan participants and their beneficiaries and with the exclusive purpose of providing benefits to them.” (Department of Labor)
• How can self-funded plans fulfill fiduciary obligations without knowing prices?
Hospital prices in the time of COVID-19
11
• COVID-19 is placing enormous financial pressure on both hospitals and employers
• Hospitals and health professionals are critical members of their communities
• Health benefits are one of the largest expenses for employers
• Now more than ever, employers need transparent information about hospital prices
Why did RAND undertake this study?
12
• We do not know what the “right” price is for hospital care
• Self-funded employers cannot act as responsible fiduciaries for their employees without price information
• Employers can use the information in this report—together with knowledge of their own employee populations—to decide if the prices they and their employees are paying align with value
RAND’s hospital study journey:
13
• Just Indiana
• employers
• facility fees
• relative prices
Phase 1.0
RAND’s hospital study journey:
14
• Just Indiana
• employers
• facility fees
• relative prices
Phase 1
• 25 states
• employers, health plans, and 2 APCDs
• inpatient/outpatient
• facility fees
• relative and standardized prices
Phase 2.0
RAND’s hospital study journey:
15
• Just Indiana
• employers
• facility fees
• relative prices
Phase 1
• 25 states
• employers, health plans, and 2 APCDs
• inpatient/outpatient
• facility fees
• relative and standardized prices
Phase 2
• 49 states (excluding Maryland)
• employers, health plans, and 6 APCDs
• inpatient/outpatient
• facility and professional fees
• service-line prices
Phase 3.0
16
Background
Study approach
Study findings
• Indiana-specific results
• Procedure-specific prices
Implications & conclusions
Ou
tlin
e
17
Obtain claims data from:
• self-funded employers
• APCDs
• health plans
Measure prices in two ways:
• relative to a Medicare benchmark
• price per case-mix weight
Create a publichospital price report:
• posted online, downloadable
• named facilities & systems
• inpatient prices & outpatient prices
Create privatehospital price reports for self-funded employers
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Comparing prices can be challenging• Every hospital is different
and performs different
services
• The Medicare system can
help us standardize and
make an “apples-to-apples”
comparison
• So let’s make an apple
pie—but with two recipes
Recipe #1: Percent of Medicare
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• What do employers pay relative to what Medicare would have paid at the exact same hospitals?
• Easy to interpret and compare across hospitals
• Medicare adjusts for cost of living and wage differences
Recipe #2: Standardized prices
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• Medicare has figured out how much more to pay for different services
• e.g., Medicare pays 34.65 times for a heart transplant (DRG 103) than for chest pains (DRG 143)
• we can use these weights to make an apples-to-apples comparison across hospital services
• average ”walk out the door” amount
• Don’t have to worry about teaching, DSH, etc. payments
Comparison to Medicare
21
• We leverage the Medicare payment system as a benchmark, not as a price endpoint
• Medicare prices and methods are empirically based and transparent
• Benchmarking to Medicare allows employers to compare prices between hospitals, relative to the largest purchaser in the world
Data protections
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• This study was regulated by RAND’s Human Subjects Protection Committee
• We conducted our data analysis in a secure computing environment—similar to the environment used to analyze confidential Medicare data
• RAND data analysts undergo HIPAA and human subjects training
• NDAs and DUAs were put in place to protect data confidentiality
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Background
Study approach
Study findings
• Indiana-specific results
• Procedure-specific prices
Implications & conclusions
Ou
tlin
e
Commercial prices relative to Medicare have increased steadily
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224%
230%
247%
200%
205%
210%
215%
220%
225%
230%
235%
240%
245%
250%
2016 2017 2018
Rel
ativ
e p
rice
fo
r in
pat
ien
t an
d o
utp
atie
nt
ho
spit
al c
are
Commercial prices relative to Medicare vary widely across states
25
100%
125%
150%
175%
200%
225%
250%
275%
300%
325%
350%
375%
400%
425%
AR
MI
RI
PA
NV
KY
CT
UT
MS
MA NJ
OK
KS
OH
LA
AL
OR
NE
TX
VT
ME
CO
AZ
NM
MO ID IA MT
WA
DE
NH
CA
NC IL
VA
WY
WI
GA
MN
NY IN FL
TN
AK
SC
WV
Rel
ativ
e p
rice
fo
r h
osp
ital
car
e
Inpatient + Outpatient Inpatient Outpatient
Facility prices relative to Medicare, by state:
0%
50%
100%
150%
200%
250%
300%
350%
400%
450%
RI
AR
MI
CT
PA
MA
NV
UT
KY
MS
NJ
KS
OK
OR
OH
LA
VT
AL IA NE
AZ
CO
MO
TX
ME
NM W
I
MN
NH ID
WA
WY
NC
CA
MT
DE IL
NY
VA
AK
GA IN FL
TN
SC
WV
Pri
ce R
elat
ive
to M
edic
are
Professional prices relative to Medicare, by state:
0%
50%
100%
150%
200%
250%
300%
350%
400%
450%
DE
KY
NV IN OK
PA
MT
LA
AR
UT
OH ID AL
MI
ME
VA
WA
KS
WV
CA
TN NJ
MS
TX
GA
NM
OR
NH
CO
MO
NE IL AZ
CT
SC
FL
VT
NC IA
WY
MA RI
NY
WI
MN
AK
Pri
ce R
elat
ive
to M
edic
are
0%
50%
100%
150%
200%
250%
300%
350%
400%
MN RI
WI
AK
MA IA CT
WY
MI
VT
NY
AR NJ
AZ
MS
NE
UT
OR
CO
AL
LA
NC
TX
PA
KS
ME
OH
KY
MO
NH
NM
NV
WA IL ID FL
CA
MT
TN
VA
GA
OK
DE
SC IN
WV
Rel
ativ
e p
rice
fo
r h
osp
ital
car
e
Professional fee Facility fee
In many states, there is a gap between professional and facility fees
100%
200%
300%
400%
500%
600%
700%
Re
lative
pri
ce
for
inp
atien
t an
d o
utp
atie
nt
ca
re
AR MI
NV PA KY C
TUT R
IKS
MS AL
OH
OR VT LA N
E ID NH
NM
MO N
YM
E AZCO
OK
WA
MT IA D
ECA TX
NC N
JM
A IL VAGA W
IW
YM
N IN TN FLW
VSC AK
Prices vary widely within states
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And also within hospital systems
100%
200%
300%
400%
500%
600%
700%
Rela
tive
pri
ce
for
inp
atie
nt
an
d o
utp
atie
nt
ca
re
Eas
tern
Main
e Hea
lthca
re S
yste
ms
Bap
tist H
ealth
care
Sys
tem
Ste
war
d Hea
lth C
are
Sys
tem
QHR
Prim
e Hea
lthca
re S
ervice
s
Unity
poin
t Hea
lth
Fairv
iew H
ealth
Ser
vice
s
UPM
C
Pea
cehea
lth
Trinity
Hea
lth
Bapt
ist M
emor
ial H
ealth
Care
Corp
Banner H
ealth
Par
tner
s Hea
lthca
re S
yste
m
SSM
Hea
lth
Pro
vide
nce S
aint
Jose
ph H
ealth
Balla
d Hea
lth
Cat
holic H
ealth
Initiat
ives
Franc
isca
n Heal
th
BJC
Hea
lthca
re
Mer
cy H
ealth
Uni
vers
al H
ealth
Ser
vice
s
Tenet
Hea
lthca
re C
orpo
ratio
n
Life
point H
ealth
Asc
ension
Heal
th
Adv
entis
t Hea
lth
Inte
rmou
ntai
n Hea
lthca
re
Indiana
Univ
ersity
Hea
lth
Adv
ocate
Aur
ora
Hea
lth
The C
leve
land
Clin
ic H
ealth
Sys
te
Dig
nity
Hea
lth
Com
mun
ity H
ealth
Sys
tem
s
Baylo
r Sco
tt an
d W
hite
Hea
lth
Appala
chian R
egion
al H
ealth
care
Quo
rum
Hea
lth
OSF H
ealth
care
Sys
tem
Ohiohe
alth
Texa
s Hea
lth R
esou
rces
RW
JBar
naba
s Hea
lth
Sutte
r Hea
lth
HCA H
ealth
care
30
Some link between price and quality, but many high quality hospitals with low prices
31
0%
20%
40%
60%
80%
100%
1: Low (<1.5) 2: Medium
(1.5-2.5)
3: High
(>=2.5)
Hosp
ital
Com
par
e S
tar
Rat
ings,
2018
(Shar
e of
Hosp
ital
s W
ithin
Pri
ce G
roup)
Hospital Price Group (Relative to Medicare, 2016-8)
5 stars (highest)
4 stars
3 stars
2 stars
1 star (lowest)
0
10
20
30
40
50
60
70
80
90
100
1: Low (<1.5) 2: Medium
(1.5–2.5)
3: High (>2.5)
Per
cent
of
Hosp
ital
s T
hat
Hav
e B
oth
2018 R
AN
D
Pri
ce E
stim
ate
and 2
019 L
eapfr
og G
rade
Hospital Price Group (Relative to Medicare, 2018)
A grade (highest)
B grade
C grade
D grade
F grade (lowest)
Patient mix doesn’t explain price variation
32
0%
50%
100%
150%
200%
250%
300%
350%
400%
450%
500%
0% 10% 20% 30% 40% 50% 60%
Rel
ativ
e p
rice
fo
r h
osp
ital
car
e
Case mix–adjusted share of Medicaid and Medicare discharges
33
Background
Study approach
Study findings
• Indiana-specific results
• Procedure-specific prices
Implications & conclusions
Ou
tlin
e
Indiana hospital system prices: inpatient + outpatient
0%
100%
200%
300%
400%
Inde
pend
ent (
CAH)
Life
point H
ealth
Bap
tist H
ealth
care
Sys
tem
Inde
pend
ent (
IPPS)
Little
Com
pany
of M
ary
Dea
cone
ss H
ealth
Sys
tem
Com
mun
ity H
ealth
Sys
tem
s
Hen
dricks
Reg
iona
l Hea
lth
Bea
con
Hea
lth S
yste
m
Union
Hea
lth
Colum
bus Reg
iona
l Hea
lth
Franc
isca
n Hea
lth
All ho
spita
ls in
the
stud
y
Com
mun
ity H
ealth
Net
wor
k
Asc
ension
Hea
lth
Indian
a Unive
rsity
Hea
lth
Sch
neck
Med
ical C
ente
r
Parkv
iew H
ealth
Sys
tem
Pri
ce R
ela
tive t
o M
edic
are
(%
)
34
Indiana hospital system prices: inpatient
35
0%
100%
200%
300%
$0
$10,000
$20,000
$30,000
Inde
pend
ent (
CAH)
Life
point H
ealth
Bap
tist H
ealth
care
Sys
tem
Inde
pend
ent (
IPPS)
Hen
dricks
Reg
iona
l Hea
lth
Union
Hea
lth
Little
Com
pany
of M
ary
Colum
bus Reg
iona
l Hea
lth
Com
mun
ity H
ealth
Sys
tem
s
Bea
con
Hea
lth S
yste
m
Sch
neck
Med
ical C
ente
r
Dea
cone
ss H
ealth
Sys
tem
All ho
spita
ls in
the
stud
y
Com
mun
ity H
ealth
Net
wor
k
Franc
isca
n Hea
lth
Asc
ension
Hea
lth
Parkv
iew H
ealth
Sys
tem
Indian
a Unive
rsity
Hea
lth
Pri
ce R
ela
tive t
o M
edic
are
(%
)S
tand
ard
ized
Pric
e ($
)
Indiana hospital system prices: outpatient
36
0%
100%
200%
300%
400%
$0
$200
$400
$600
Bap
tist H
ealth
care
Sys
tem
Life
point H
ealth
Inde
pend
ent (
CAH)
Inde
pend
ent (
IPPS)
Little
Com
pany
of M
ary
Dea
cone
ss H
ealth
Sys
tem
Com
mun
ity H
ealth
Sys
tem
s
Franc
isca
n Hea
lth
Hen
dricks
Reg
iona
l Hea
lth
Union
Hea
lth
All ho
spita
ls in
the
stud
y
Bea
con
Hea
lth S
yste
m
Colum
bus Reg
iona
l Hea
lth
Indian
a Unive
rsity
Hea
lth
Asc
ension
Hea
lth
Com
mun
ity H
ealth
Net
wor
k
Sch
neck
Med
ical C
ente
r
Parkv
iew H
ealth
Sys
tem
Pri
ce R
ela
tive t
o M
edic
are
(%
)S
tand
ard
ized
Pric
e ($
)
37
Background
Study approach
Study findings
• Indiana-specific results
• Procedure-specific prices
Implications & conclusions
Ou
tlin
e
Indiana hospital prices: inpatient orthopedic
38
0%
100%
200%
300%
400%
$0
$10,000
$20,000
$30,000
$40,000
Iu H
ealth
Tipto
n Hos
pita
l
Bap
tist H
ealth
Floyd
Phy
sician
s M
edical
Cen
ter
Mem
orial H
osp
& H
ealth
Car
e
Indian
a Orth
opae
dic Hos
pita
l
River
view
Hos
pita
l
Luth
eran
Mus
culosk
elet
al C
ente
r
St.
Jose
phs
Reg
Med
Cen
ter
Porte
r Mem
orial H
ospita
l
Col
umbu
s Reg
iona
l Hos
pita
l
Hen
dricks
Reg
iona
l Hea
lth
St.
Vin
cent
Car
mel H
ospita
l
Union
Hos
pita
l In
c.
St F
ranc
is C
arm
el
Sch
neck
Med
ical
Cen
ter
Com
mun
ity H
ealth
Net
wor
k
Ball M
emor
ial H
ospita
l
Dea
cone
ss H
ospita
l
Com
mun
ity H
ospita
l Sou
th
Com
mun
ity H
ospi
tal A
nder
son
St.
Vince
nt H
ospita
l & H
cc
St F
ranc
is H
&h −
Moo
resv
ille
St.
Franc
is H
ospi
tal &
Hea
lth C
ente
r
Mem
orial H
ospi
tal O
f Sou
th
Luth
eran
Hos
pita
l Of I
ndiana
Com
mun
ity H
ospita
l Of I
ndia
na
Iu H
ealth
Arn
ett H
ospita
l
Franc
isca
n Hea
lth L
afay
ette
Iu H
ealth
Nor
th H
ospita
l
St.
Vince
nt E
vans
ville
Kings
Dau
ghte
rs H
ospita
l
Iu H
ealth
Wes
t Hos
pita
l
Indian
a Unive
rsity
Hea
lth
IU H
ealth
Bloom
ingt
on H
ospita
l
Parkv
iew H
ospi
tal
Ortho
paed
ic H
ospt
.At P
arkv
iew
Pri
ce
Re
lative t
o M
ed
ica
re (
%)
Sta
nd
ard
ized
Pric
e ($
)
Inpatient Orthopedic Procedures
US hospital prices: inpatient orthopedic
390%
300%
600%
900%
1 200%
$0
$30,000
$60,000
$90,000
$120,000
Pri
ce R
ela
tive t
o M
edic
are
(%
)
Sta
nd
ard
ized
Pric
e ($
)
Inpatient Orthopedic Procedures
Indiana hospital prices: labor and delivery
40
0%
100%
200%
300%
$0
$10,000
$20,000
$30,000
Dea
cone
ss W
omen
s Hos
pita
l
Esk
enaz
i Hea
lth
Mem
orial H
ospita
l Log
ansp
ort
Cla
rk M
emor
ial H
ospita
l
Mar
gare
t Mar
y Com
mun
ity H
ospi
tal
Mem
orial H
osp
& H
ealth
Car
e
Dea
rbor
n Cou
nty Hos
pita
l
Bap
tist H
ealth
Floyd
Woo
dlaw
n Hos
pita
l
Dup
ont H
ospita
l
Luth
eran
Hos
pita
l Of I
ndiana
John
son
Mem
orial H
ospi
tal
Franc
isca
n Hea
lth C
rown
Point
Porte
r Mem
orial H
ospi
tal
Union
Hos
pita
l In
c.
With
am M
emor
ial H
ospita
l
Bal
l Mem
orial H
ospi
tal
IU H
ealth
Bloom
ingt
on H
ospita
l
Han
cock
Reg
iona
l Hos
pita
l
Parkv
iew H
ospita
l
River
view
Hos
pita
l
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Hau
te R
egio
nal H
ospita
l
Mem
oria
l Hos
pita
l Of S
outh
Hen
dricks
Reg
iona
l Hea
lth
Com
mun
ity H
ospita
l And
erso
n
Indian
a Unive
rsity
Hea
lth
Iu H
ealth
Arn
ett H
ospita
l
Colum
bus Reg
iona
l Hos
pita
l
St.
Vin
cent
Car
mel H
ospita
l
Iu H
ealth
Nor
th H
ospita
l
Sch
neck
Med
ical C
ente
r
Com
mun
ity H
ospi
tal
Franc
isca
n Hea
lth L
afay
ette
Com
mun
ity H
ospi
tal O
f Ind
iana
St.
Vince
nt E
vans
ville
Iu H
ealth
Wes
t Hos
pita
l
St.
Franc
is H
ospi
tal &
Hea
lth C
ente
r
St.
Jose
phs Reg
Med
Cen
ter
St.
Jose
ph H
ospi
tal
St.
Vince
nt F
ishe
rs H
ospita
l
Com
mun
ity H
ospita
l Sou
th
St F
ranc
is H
&h −
Moo
resv
ille
Com
mun
ity H
owar
d Reg
iona
l
St.
Vince
nt H
ospi
tal &
Hcc
Gos
hen
Hos
pita
l
Kings
Dau
ghte
rs H
ospi
tal
Hun
tingt
on M
emor
ial H
ospita
l
Pri
ce
Re
lative t
o M
ed
ica
re (
%)
Sta
nd
ard
ized
Pric
e ($
)
Inpatient Labor and Delivery Procedures
US hospital prices: labor and delivery
410%
200%
400%
$0
$20,000
$40,000
Pri
ce
Re
lative
to
Med
icare
(%
)S
tand
ard
ize
d P
rice
($)
Inpatient Labor and Delivery Procedures
Indiana hospital prices: inpatient circulatory
42
0%
100%
200%
300%
400%
$0
$10,000
$20,000
$30,000
$40,000
Kentu
ckiana
Med
ical C
ente
r
Bap
tist H
ealth
Floyd
Union
Hos
pita
l In
c.
Colum
bus Reg
iona
l Hos
pita
l
St.
Jose
phs Reg
Med
Cen
ter
Ball M
emor
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Re
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ed
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Inpatient Circulatory Procedures
US_IP_circ.pdf
US hospital prices: inpatient circulatory
43
0%
250%
500%
750%
1 000%
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$25,000
$50,000
$75,000
$100,000
Pri
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Inpatient Circulatory Procedures
Indiana hospital prices: inpatient respiratory
44
0%
100%
200%
300%
400%
$0
$10,000
$20,000
$30,000
$40,000
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Pri
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Pric
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Inpatient Respiratory Procedures
Indiana hospital prices: outpatient
450%
200%
400%
$0
$200
$400
$600
$800
Pri
ce R
ela
tive t
o M
edic
are
(%
)S
tan
da
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Pric
e ($
)
Outpatient Procedures
Indiana hospital prices: outpatient emergency department
46
0%
200%
400%
$0
$200
$400
$600
$800
Pri
ce R
ela
tive t
o M
edic
are
(%
)S
tan
da
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ed
Pric
e ($
)
Outpatient ED Procedures
Indiana hospital system prices: outpatient imaging (CT/MRI)
47
0%
250%
500%
750%
$0
$500
$1,000
Pri
ce R
ela
tive t
o M
edic
are
(%
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tan
da
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Pric
e ($
)
Outpatient CT/MRI Procedures
48
Ou
tlin
eBackground
Study approach
Study findings
• Indiana-specific results
• Procedure-specific prices
Implications & conclusions
49
How can employers use price transparency?
Finally have
information
about pricesBenchmark
prices
Change
hospital
networks
50
Employers are collecting information about prices
• The Colorado Business Group on
Health used RAND 2.0 data to
produce a report on value of
Colorado hospitals
• The report proposed options for
Colorado employers to address
prices in their specific markets
51
Employers are using data to benchmark prices
Harris Meyer (2020) “Self-insured employers go looking for value-based deals“ Modern Healthcare
52
And they’re citing RAND’s study in their negotiations
Anthem is attempting to support a core goal of the RAND study by holding hospital systems accountable for their prices, which in turn will benefit our employees' mental and physical health and their financial wellness.
—Purdue Senior Director of Benefits
Role for state and federal policymakers
53
Market structure limits ability for employer innovation
• many markets have limited provider options
• 70% of U.S. markets are concentrated (HCCI, 2019)
Employers can also push for regulatory reforms
• all-payer claims databases
• policies that promote competition and eliminate gag
clauses
• limits on out-of-network charges
• all-payer or global budget programs
Conclusions
54
• Rising health care costs place pressure on employers and
worker wages—especially during the COVID-19 pandemic
• The wide variation in hospital prices presents a potential
savings opportunity for employers
• Employers need to demand transparent information on the
prices they—and their employees—are paying
• Employers need to use transparency to inform benefit
strategy
