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 P I N W H I T E C H R I S W H A L E Y This briefing represents the views of the author, and not RAND or RAND’s funders.
“It’s Still the Prices, Stupid” $10,000 Health Spending per Person, 2016 ($U.S., PPP) $9,000 $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 U.S. OECD median 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 “It’s Still the Prices, Stupid” X ^ $10,000 Health Spending per Person, 2016 ($U.S., PPP) $9,000 $8,000 o Why private health plans? $7,000 o persistently high growth in spending per $6,000 capita $5,000 o Why hospitals? $4,000 o $1.1T industry $3,000 o private prices high, rising, and widely varying $2,000 $1,000 $0 U.S. OECD median 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.
What Do We Know Already? o Prices paid by private health plans o higher and growing faster than Medicare
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.
What Do We Know Already? o Prices paid by private health plans o higher and growing faster than Medicare o increased spending on hospital care driven by prices, not utilization
Inpatient Outpatient 1.20 1.20 1.15 1.15 1.10 1.10 1.05 1.05 1.00 1.00 0.95 0.95 0.90 0.90 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 Price Utilization and Intensity Price Utilization and Intensity 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.
What Do We Know Already? o Prices paid by private health plans o higher and growing faster than Medicare o increases in spending driven by price growth, not utilization o vary widely from market to market, and from hospital to hospital within markets
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.
What Do We Know Already? o Prices paid by private health plans o higher and growing faster than Medicare o price growth is driving increased spending, not utilization o vary widely from market to market, and within markets o tend to be higher at large hospitals offering specialized services
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 .
What Do We Know Already? o Prices paid by private health plans o higher and growing faster than Medicare o price growth is driving increased spending, not utilization o vary widely from market to market, and within markets o tend to be higher at large hospitals offering specialized services o outpatient prices very high and highly variable ... in Indiana o hospital prices rising ... in Indiana ... through mid-2016
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 .
What Do We Not Yet Know? o Is Indiana “normal”? o Are hospital prices continuing to rise? o Which hospitals and hospital systems are getting the highest prices in other states? o Are those prices in line with the value they’re providing?
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
Source: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Medicare-Provider-Charge-Data/Downloads/Inpatient_Data_2016_CSV.zip Medicare Allowed Amount, DRG 470, 2016 $12,000 $16,000 $20,000 $4,000 $8,000 $0 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 The Inspiration 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
National Study (“RAND 2.0”) Methods and Data
Our Approach o Obtain claims data from o self-funded employers, APCDs, health plans o Measure prices in two ways o relative to a Medicare benchmark o price per casemix weight o Create a public hospital price report o will be posted online, freely downloadable o named facilities and systems o inpatient prices and outpatient prices o Create private hospital price reports for self- funded employers
Two Ways to Measure Hospital Prices adjusted for casemix • local wages • 𝐵𝑚𝑚𝑝𝑥𝑓𝑒 𝐵𝑛𝑝𝑣𝑜𝑢 1. “Relative prices” = teaching • 𝑇𝑗𝑛𝑣𝑚𝑏𝑢𝑓𝑒 𝑁𝑓𝑒𝑗𝑑𝑏𝑠𝑓 𝐵𝑚𝑚𝑝𝑥𝑓𝑒 𝐵𝑛𝑝𝑣𝑜𝑢 uncompensated • care comparable across service lines adjusted for casemix • = 𝐵𝑚𝑚𝑝𝑥𝑓𝑒 𝐵𝑛𝑝𝑣𝑜𝑢 2. “Price per casemix weight” not comparable across 𝐷𝑏𝑡𝑓𝑛𝑗𝑦 𝑥𝑓𝑗ℎ𝑢𝑡 service lines
Why Compare to Medicare? o Largest purchaser of health care in the world o Sets industry standards o Prices and methods are empirically based and transparent o Medicare prices intended to be fair o Uses quality measures/value-based payment
What are the 4 Ds? Comparisons ... o over time o across states o among named hospitals and hospital systems o across service lines (inpatient/outpatient)
National Study (“RAND 2.0”) Preview of Findings “ 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
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 $12.3B, $6.0B inpatient and $6.3B outpatient (2015-7) 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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