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A 4-D Hospital Price Scan: Preview of a National Employer-led - - PowerPoint PPT Presentation

A 4-D Hospital Price Scan: Preview of a National Employer-led Transparency Study N A T I O N A L H O S P I T A L P R I C E T R A N S P A R E N C Y C O N F E R E N C E : P A T H T O A F F O R D A B I L I T Y M A R C H 5 , 2 0 1 9 C H A


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N A T I O N A L H O S P I T A L P R I C E T R A N S P A R E N C Y C O N F E R E N C E : P A T H T O A F F O R D A B I L I T Y M A R C H 5 , 2 0 1 9 C H A P I N W H I T E C H R I S W H A L E Y

A 4-D Hospital Price Scan: Preview of a National Employer-led Transparency Study

This briefing represents the views of the author, and not RAND or RAND’s funders.

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“It’s Still the Prices, Stupid”

$0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000 $10,000 U.S. OECD median

Health Spending per Person, 2016 ($U.S., PPP)

Source: Anderson, G. F., Hussey, P., & Petrosyan, V. (2019). It’s Still The Prices, Stupid: Why The US Spends So Much On Health Care, And A Tribute To Uwe Reinhardt. Health Affairs, 38(1), 87-95. doi:10.1377/hlthaff.2018.05144.

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SLIDE 3

“It’s Still the Prices, Stupid”

  • Why private health plans?
  • persistently high growth in spending per

capita

  • Why hospitals?
  • $1.1T industry
  • private prices high, rising, and widely varying

$0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000 $10,000 U.S. OECD median

Health Spending per Person, 2016 ($U.S., PPP)

Source: Anderson, G. F., Hussey, P., & Petrosyan, V. (2019). It’s Still The Prices, Stupid: Why The US Spends So Much On Health Care, And A Tribute To Uwe Reinhardt. Health Affairs, 38(1), 87-95. doi:10.1377/hlthaff.2018.05144.

^ Private Hospital

X

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SLIDE 4

What Do We Know Already?

  • Prices paid by private health plans
  • higher and growing faster than Medicare
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SLIDE 5

Source: Selden, T. M., Karaca, Z., Keenan, P., White, C., & Kronick, R. (2015). The Growing Difference Between Public And Private Payment Rates For Inpatient Hospital Care. Health Affairs, 34(12), 2147-2150. doi:10.1377/hlthaff.2015.0706.

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SLIDE 6
  • Prices paid by private health plans
  • higher and growing faster than Medicare
  • increased spending on hospital care driven by prices, not utilization

What Do We Know Already?

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SLIDE 7

Health Care Cost Institute. (2018). 2016 Health Care Cost and Utilization Report. Retrieved from http://www.healthcostinstitute.org/report/2016-health-care-cost- utilization-report/. Prices are from Appendix Table A3,, utilization and intensity is estimated by dividing spending (from Appendix Table A1) by prices.

0.90 0.95 1.00 1.05 1.10 1.15 1.20 2012 2013 2014 2015 2016 Inpatient Price Utilization and Intensity 0.90 0.95 1.00 1.05 1.10 1.15 1.20 2012 2013 2014 2015 2016 Outpatient Price Utilization and Intensity

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SLIDE 8
  • Prices paid by private health plans
  • higher and growing faster than Medicare
  • increases in spending driven by price growth, not utilization
  • vary widely from market to market, and from hospital to hospital within

markets

What Do We Know Already?

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SLIDE 9

Source: White, C., Bond, A. M., & Reschovsky, J. D. (2013). High and Varying Prices for Privately Insured Patients Underscore Hospital Market Power (No. 27). Retrieved from http://nihcr.org/wp-content/uploads/2015/03/HSC_Research_Brief_No._27.pdf.

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SLIDE 10
  • Prices paid by private health plans
  • higher and growing faster than Medicare
  • price growth is driving increased spending, not utilization
  • vary widely from market to market, and within markets
  • tend to be higher at large hospitals offering specialized services

What Do We Know Already?

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SLIDE 11

High-priced Hospitals Tend to be Large, and Part of Even Larger Systems

Source: White, C., Reschovsky, J. D., & Bond, A. M. (2014). Understanding Differences Between High- And Low-Price Hospitals: Implications For Efforts To Rein In Costs. Health Affairs, 33(2), 324-331. doi:10.1377/hlthaff.2013.0747 .

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SLIDE 12
  • Prices paid by private health plans
  • higher and growing faster than Medicare
  • price growth is driving increased spending, not utilization
  • vary widely from market to market, and within markets
  • tend to be higher at large hospitals offering specialized services
  • outpatient prices very high and highly variable ... in Indiana
  • hospital prices rising ... in Indiana ... through mid-2016

What Do We Know Already?

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Outpatient Relative Prices in Indiana, by Hospital and System

Source: White, C. (2017). Hospital Prices in Indiana: Findings from an Employer-Led Transparency Initiative (RR-2106-RWJ). Retrieved from https://www.rand.org/pubs/research_reports/RR2106.html .

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SLIDE 14

What Do We Not Yet Know?

  • Is Indiana “normal”?
  • Are hospital prices continuing to rise?
  • Which hospitals and hospital systems are getting the highest

prices in other states?

  • Are those prices in line with the value they’re providing?
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SLIDE 15

The Inspiration

“Medicare Provider Utilization and Payment Data”

Source: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Medicare-Provider-Charge-Data/Downloads/Inpatient_Data_2016_CSV.zip

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SLIDE 16

The Inspiration

Source: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Medicare-Provider-Charge-Data/Downloads/Inpatient_Data_2016_CSV.zip

$0 $4,000 $8,000 $12,000 $16,000 $20,000

PHYSICIANS' MEDICAL CENTER LLC BAPTIST HEALTH FLOYD MEMORIAL HOSPITAL AND HEALTH CARE CENTER LA PORTE HOSPITAL COMMUNITY HOSPITAL SOUTH FRANCISCAN HEALTH HAMMOND THE ORTHOPAEDIC HOSPITAL OF LUTHERAN HEALTH NETWOR CLARK MEMORIAL HOSPITAL FRANCISCAN HEALTH CARMEL LUTHERAN HOSPITAL OF INDIANA FRANCISCAN HEALTH MUNSTER TERRE HAUTE REGIONAL HOSPITAL DEARBORN COUNTY HOSPITAL GOOD SAMARITAN HOSPITAL ST VINCENT KOKOMO ORTHOINDY HOSPITAL KOSCIUSKO COMMUNITY HOSPITAL INDIANA UNIVERSITY HEALTH ARNETT HOSPITAL BLUFFTON REGIONAL MEDICAL CENTER PINNACLE HOSPITAL GOSHEN GENERAL HOSPITAL FRANCISCAN HEALTH MOORESVILLE PORTER REGIONAL HOSPITAL IU HEALTH WEST HOSPITAL RIVERVIEW HEALTH HENDRICKS REGIONAL HEALTH ORTHOPAEDIC HOSPITAL AT PARKVIEW NORTH LLC DEKALB HEALTH ST MARY'S MEDICAL CENTER FRANCISCAN HEALTH MICHIGAN CITY COMMUNITY HOWARD REGIONAL HEALTH INC MARION GENERAL HOSPITAL ST MARY MEDICAL CENTER INC FRANCISCAN HEALTH CROWN POINT DEACONESS HOSPITAL INC FRANCISCAN HEALTH INDIANAPOLIS ST VINCENT CARMEL HOSPITAL INC JOHNSON MEMORIAL HOSPITAL SCHNECK MEDICAL CENTER HANCOCK REGIONAL HOSPITAL ST VINCENT FISHERS HOSPITAL INC KING'S DAUGHTERS' HEALTH COMMUNITY HOSPITAL FRANCISCAN HEALTH CRAWFORDSVILLE PARKVIEW NOBLE HOSPITAL PARKVIEW REGIONAL MEDICAL CENTER UNION HOSPITAL INC DAVIESS COMMUNITY HOSPITAL ST VINCENT ANDERSON REGIONAL HOSPITAL INC DUPONT HOSPITAL LLC MAJOR HOSPITAL INDIANA UNIVERSITY HEALTH NORTH HOSPITAL METHODIST HOSPITALS INC MEMORIAL HOSPITAL OF SOUTH BEND INDIANA UNIVERSITY HEALTH BLOOMINGTON HOSPITAL FRANCISCAN HEALTH DYER COMMUNITY HOSPITAL OF ANDERSON AND MADISON COUNTY FRANCISCAN HEALTH LAFAYETTE INDIANA UNIVERSITY HEALTH BALL MEMORIAL HOSPITAL ST CATHERINE HOSPITAL INC COLUMBUS REGIONAL HOSPITAL SAINT JOSEPH REGIONAL MEDICAL CENTER WITHAM HEALTH SERVICES COMMUNITY HOSPITAL NORTH REID HEALTH ST VINCENT HOSPITAL & HEALTH SERVICES ELKHART GENERAL HOSPITAL SAINT JOSEPH REGIONAL MEDICAL CENTER - PLYMOUTH COMMUNITY HOSPITAL EAST HENRY COUNTY MEMORIAL HOSPITAL PARKVIEW HUNTINGTON HOSPITAL MEMORIAL HOSPITAL INDIANA UNIVERSITY HEALTH MONROE HOSPITAL UNITY MEDICAL AND SURGICAL HOSPITAL ESKENAZI HEALTH

Medicare Allowed Amount, DRG 470, 2016

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SLIDE 17

National Study (“RAND 2.0”) Methods and Data

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Our Approach

  • Obtain claims data from
  • self-funded employers, APCDs, health plans
  • Measure prices in two ways
  • relative to a Medicare benchmark
  • price per casemix weight
  • Create a public hospital price report
  • will be posted online, freely downloadable
  • named facilities and systems
  • inpatient prices and outpatient prices
  • Create private hospital price reports for self-

funded employers

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SLIDE 19

Two Ways to Measure Hospital Prices

  • 1. “Relative prices”
  • 2. “Price per casemix weight”

= 𝐵𝑚𝑚𝑝𝑥𝑓𝑒 𝐵𝑛𝑝𝑣𝑜𝑢 𝑇𝑗𝑛𝑣𝑚𝑏𝑢𝑓𝑒 𝑁𝑓𝑒𝑗𝑑𝑏𝑠𝑓 𝐵𝑚𝑚𝑝𝑥𝑓𝑒 𝐵𝑛𝑝𝑣𝑜𝑢 = 𝐵𝑚𝑚𝑝𝑥𝑓𝑒 𝐵𝑛𝑝𝑣𝑜𝑢 𝐷𝑏𝑡𝑓𝑛𝑗𝑦 𝑥𝑓𝑗𝑕ℎ𝑢𝑡 adjusted for

  • casemix
  • local wages
  • teaching
  • uncompensated

care comparable across service lines adjusted for

  • casemix

not comparable across service lines

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Why Compare to Medicare?

  • Largest purchaser of health care in the world
  • Sets industry standards
  • Prices and methods are empirically based and transparent
  • Medicare prices intended to be fair
  • Uses quality measures/value-based payment
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SLIDE 21

What are the 4 Ds?

  • over time
  • across states
  • among named hospitals and hospital systems
  • across service lines (inpatient/outpatient)

Comparisons ...

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“ P R E V I E W ” I N C L U D E S C L A I M S D A T A A V A I L A B L E C U R R E N T L Y F I N A L R E P O R T W I L L I N C L U D E A D D I T I O N A L C L A I M S D A T A , H O S P I T A L S , A N D S T A T E S

National Study (“RAND 2.0”) Preview of Findings

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Scope of the Study

Services Hospital inpatient, hospital outpatient States CO, GA, IL, IN, KS, KY, LA, MA, ME, MI, MO, MT*, NH, NM, NY, OH, PA, TN, TX, VT, WI, WY* Years 2015-7** Hospitals 1222 short-stay general medical/surgical Allowed amount (2015-7) $12.3B, $6.0B inpatient and $6.3B outpatient Claims (2015-7) 310k inpatient stays, 13.5M outpatient lines Data sources 2 all payer claims databases, many health plans, ~40 self-funded employers*** Funders RWJF, NIHCR, self-funded employers (not health plans, or hospitals)

*: not included in this preview; **: NH,CO: 2012-7, IN: 2013-2017, MI,LA: 2015-2018; *** ~20 are included in this preview.

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SLIDE 24

All-State Trends in Hospital Prices Relative to Medicare

223.3% 225.7% 229.0%

100% 120% 140% 160% 180% 200% 220% 240% 2014 2015 2016 2017 2018 Commercial Medicare

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State Average Relative Prices, 2017

100% 125% 150% 175% 200% 225% 250% 275% 300% 325% 350% 375% 400% 425% PA MI LA NY KY TN VT NM IL KS MA MO All NH OH GA CO ME TX WI IN Inpatient + Outpatient Inpatient Outpatient

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State Trends in Relative Prices, 2015-7

277% 286% 295% 161% 151% 149%

100% 150% 200% 250% 300% 350% 2015 2016 2017 IN CO OH NH MI

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Large System Average Prices, 2015-7

50% 100% 150% 200% 250% 300% 350% 400% 450% 500% 550%

1 6 11 16 21 26 31 36 41 46 51

Inpatient + Outpatient Inpatient Outpatient

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SLIDE 28

50% 100% 150% 200% 250% 300% 350% 400% 450% 500% 550%

1 6 11 16 21 26 31 36 41 46 51

Inpatient + Outpatient Inpatient Outpatient

Which Hospital System is the Highest-Priced?

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SLIDE 29

There Are Good, Low-Priced Hospitals Out There

0% 20% 40% 60% 80% 100% Low (<1.5) Medium (1.5-2.5) High (>=2.5)

Hospital Compare Star Ratings, 2018 (Share of Hospitals Within Price Group) Hospital Price Group (Relative to Medicare, 2015-7) 5 stars (highest) 4 stars 3 stars 2 stars 1 star (lowest)

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SLIDE 30

Takeaways

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Takeaway #1: Markets Need Information

  • “Chaos behind a veil of secrecy” (Uwe Reinhardt)
  • “Where there’s mystery there’s margin”
  • Consolidated markets + secrecy

 highest health care prices in the world “ABI” (anywhere but Indiana)

  • Employers have a fiduciary duty to spend prudently

 need to know how, and how much, they are paying

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Takeaway #2: How You Pay Matters

  • How does Medicare pay?
  • base $ * facility-specific adjustments * casemix + outliers + bonuses
  • grows based on wages, assumes productivity increases
  • How do self-funded employers pay?
  • details are considered a “trade secret”
  • mix of multiple-of-Medicare, fixed rates, discounted charges
  • Discounted charges allow price inflation and wide variation
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SLIDE 33

Takeaway #3: Options for Employers

  • Impose market discipline
  • move away from discounted-charge contracts, toward fixed-rate contracts
  • find out what those fixed rates are, and how they compare to benchmarks
  • be willing to move patient volume away from low-value providers
  • be willing to switch TPAs
  • form purchasing alliances
  • Hand off responsibility for negotiating prices
  • support Medicare for All or Medicare buy-ins
  • support state-based rate setting
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E M P L O Y E R S ’ F O R U M O F I N D I A N A R O B E R T W O O D J O H N S O N F O U N D A T I O N N A T I O N A L I N S T I T U T E F O R H E A L T H C A R E R E F O R M I B M W A T S O N H E A L T H C E N T E R F O R I M P R O V I N G V A L U E I N H E A L T H C A R E ( C I V H C ) N E W H A M P S H I R E C O M P R E H E N S I V E H E A L T H C A R E I N F O R M A T I O N S Y S T E M C O L O R A D O B U S I N E S S G R O U P O N H E A L T H T H E H E A L T H F O U N D A T I O N O F G R E A T E R I N D I A N A P O L I S , I N C . H O U S T O N B U S I N E S S C O A L I T I O N O N H E A L T H N E W M E X I C O C O A L I T I O N F O R H E A L T H C A R E V A L U E E C O N O M I C A L L I A N C E F O R M I C H I G A N

Acknowledgements

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C O N T A C T : C H A P I N W H I T E C W H I T E @ R A N D . O R G 2 0 2 - 2 0 3 - 0 2 6 0 @ C H A P I N W H I T E

Thank You!