Building Blocks for Value-Based Payment N A H D O 2 0 1 9 H E A L - - PowerPoint PPT Presentation

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Building Blocks for Value-Based Payment N A H D O 2 0 1 9 H E A L - - PowerPoint PPT Presentation

Aug 28, 2022 158 likes •466 views

Medicare Price Benchmarks: Building Blocks for Value-Based Payment N A H D O 2 0 1 9 H E A L T H C A R E D A T A S U M M I T N O V E M B E R 6 , 2 0 1 9 L I T T L E R O C K , A R C H A P I N W H I T E S E N I O R P O L I C Y R E S

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N A H D O 2 0 1 9 H E A L T H C A R E D A T A S U M M I T N O V E M B E R 6 , 2 0 1 9 L I T T L E R O C K , A R C H A P I N W H I T E S E N I O R P O L I C Y R E S E A R C H E R , R A N D

Medicare Price Benchmarks: Building Blocks for Value-Based Payment

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

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The Evolution of Provider Payments

Full billed charges Discounted charges Cost reim- bursement Prospective rates Prospective rates for episodes/ bundles Prospective rates with P4P Risk sharing/ global budgets

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SLIDE 3
  • What do we know already?
  • 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
  • often based on discounted charges

Prices Paid by Private Health Plans for Hospital Care

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SLIDE 4

What Do We Not Yet Know?

  • How do prices paid by private health plans vary ...
  • hospital to hospital
  • hospital system to hospital system
  • state to state
  • service line to service line
  • Are prices in line with the value hospitals are providing?
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SLIDE 5

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 6

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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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
  • posted online, freely downloadable
  • facilities and systems identified by name
  • inpatient prices and outpatient prices
  • Create private hospital price reports for self-funded employers
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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 Use Medicare as the Benchmark?

  • 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
  • Prospective rates for bundles with modest P4P
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Scope of the Study

Services Hospital inpatient, hospital outpatient States CO, FL, GA, IL, IN, KS, KY, LA, MA, ME, MI, MO, MT, NC, NH, NM, NY, OH, PA, TN, TX, VT, WA, WI, WY Years 2015-7* Hospitals 1598 short-stay general medical/surgical (~1/3 of national total) Allowed amount (2015-7) $13.0B, $6.3B inpatient and $6.6B outpatient Claims (2015-7) 330k inpatient stays, 14.2M outpatient lines Data sources 2 all payer claims databases, many health plans, ~50 self-funded employers Funders RWJF, NIHCR, self-funded employers (not health plans, or hospitals)

*: NH,CO: 2012-7, IN: 2013-2017, MI,LA: 2015-2018

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F O R F U L L R E P O R T A N D D E T A I L E D D A T A G O T O H T T P S : / / W W W . R A N D . O R G / P U B S / R E S E A R C H _ R E P O R T S / R R 3 0 3 3 . H T M L F O R A S C R O L L A B L E I N T E R A C T I V E M A P G O T O H T T P S : / / E M P L O Y E R P T P . O R G / # V I S U A L I Z E

National Study (“RAND 2.0”) Findings

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SLIDE 13

State Average Relative Prices, 2017

100% 125% 150% 175% 200% 225% 250% 275% 300% 325% 350% 375% 400% 425%

MI PA NY KY TN VT KS MO IL MA FL NM NC LA NH WA OH GA TX CO MT WI ME WY IN

Relative price for hospital care Inpatient + Outpatient Inpatient Outpatient

Source: White, Chapin, and Christopher Whaley, Prices Paid to Hospitals by Private Health Plans Are High Relative to Medicare and Vary Widely: Findings from an Employer-Led Transparency Initiative, 2019. https://www.rand.org/content/dam/rand/pubs/research_reports/RR3000/RR3033/RAND_RR3033.pdf. .

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SLIDE 14

Commercial Relative Price TREND Varies at the State Level: Comparison of 5 States

Source: White, Chapin, and Christopher Whaley, Prices Paid to Hospitals by Private Health Plans Are High Relative to Medicare and Vary Widely: Findings from an Employer-Led Transparency Initiative, 2019. https://www.rand.org/content/dam/rand/pubs/research_reports/RR3000/RR3033/RAND_RR3033.pdf. .

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SLIDE 15

Colorado Hospital System Relative Prices, 2017

0% 100% 200% 300% 400% 500% Inpatient + Outpatient Inpatient Outpatient

Source: White, Chapin, and Christopher Whaley, Prices Paid to Hospitals by Private Health Plans Are High Relative to Medicare and Vary Widely: Findings from an Employer-Led Transparency Initiative, 2019. https://www.rand.org/content/dam/rand/pubs/research_reports/RR3000/RR3033/RAND_RR3033.pdf. .

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The Hospital Price Heat Map (from employerptp.org/#visualize)

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SLIDE 17

The Hospital Price Heat Map (from employerptp.org/#visualize)

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To Make Progress Toward VBP, Focus on Bringing up the Rear

  • unit prices paid by private health plans are very high
  • incompatible with VBP
  • discounted charge-based contracting still prevalent
  • antithesis of VBP
  • prices linked to market leverage, idiosyncratic histories
  • incompatible with VBP
  • moving straight to global budgets would bake in current prices

Benchmarking private plans to Medicare reveals

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SLIDE 19
  • Public report
  • https://www.rand.org/content/dam/rand/pubs/research_reports/RR3000/RR3033/RAND_RR3033.pdf
  • Detailed data
  • https://www.rand.org/content/dam/rand/pubs/research_reports/RR3000/RR3033/RAND_RR3033.data

.zip

  • Interactive map
  • https://employerptp.org/#visualize
  • FAQ on enrolling in next round
  • https://employerptp.org/wp-content/uploads/2019/05/RAND-EFI-hospital-price-transparency-study-

Round-3.0-FAQ.pdf

Links

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Medicare Reference-Based Pricing in Colorado

November 6, 2019

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Agenda

  • Health care costs in Colorado
  • Medicare reference-based prices in Colorado
  • Value of Medicare reference-based prices
  • Hospital price negotiation challenges
  • Centrality of Colorado APCD
  • Summary

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Health Care Cost Variation

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Multi-state benchmark analysis for 2016 from Network for Regional Healthcare Improvement (NRHI), the third report comparing the total cost of care for those with private insurance in various U.S. regions

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Health Care Costs in Colorado

  • Variation in total cost of health care across regions

driven by variation in local patterns of both health care utilization and prices

  • Colorado’s risk-adjusted total cost per person is 19%

higher, driven by 5% higher utilization of services and 13% higher prices.

  • Higher prices observed across all service categories;

main drivers of higher total cost

  • Inpatient – 31%
  • Outpatient – 15%
  • Professional – 7%
  • Pharmacy – 5%

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SLIDE 24

Medicare Reference Price Variation

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Regional Variation

  • Highest county paid almost six times Medicare rates

(Morgan – 576%) for hospital inpatient and

  • utpatient services combined; lowest paid county

paid just above Medicare rates (Pitkin – 115%)

  • Rural areas are on both the low as well as the high

end of the spectrum of counties; no apparent correlation to resort or non-resort areas

  • Evaluation of the Colorado Division of Insurance

rate-setting regions exhibits similar variation

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Value of Medicare Reference Prices

  • Context: Colorado hospital market is highly

unregulated

  • Important point of reference
  • Discount-from-charges may appear favorable, but may be

unfavorable when evaluated using Medicare benchmark

  • Useful for employer/purchasing alliances
  • Medicare reference-based prices used in direct

negotiations with hospital providers in several regions

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SLIDE 27

Hospital Price Negotiation Challenges

  • Health system consolidation
  • Prices not subject to usual market forces
  • Only one component in establishing better-functioning

market, based on value. Essential elements:*

  • Move from contracts based on discount-from-charges to

contracts benchmarked against Medicare, if feasible

  • Assess the performance of a given hospital’s service line(s)

against the reasonableness of the price and negotiate pricing accordingly

  • Phase-in value-based benefit designs that encourage employees

to use high quality, affordable services on a hospital-by-hospital basis

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* From the Colorado Hospital Value Report, Colorado Business Group on Health and Colorado Consumer Health Initiative

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SLIDE 28

Centrality of CO APCD

  • Includes commercial claims with actual payment

amounts that can be compared to Medicare benchmark

  • Useful for analyzing of Medicare reference-based pricing

by region, hospital and service line and by employer

  • Is a source of Medicare reference-based prices and,

potentially, provider performance measurement results; useful for employers, including ERISA self-funded employers

  • Includes commercial claims for wide range of services so

Medicare reference-based pricing can be expanded from hospitals to other key providers

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Summary

  • Health care costs in Colorado are high and driven

largely by prices of hospital inpatient and outpatient services (followed by drug costs)

  • Medicare reference-based pricing is an essential tool

to evaluate and negotiate better hospital prices

  • Medicare reference-based pricing for employers

using APCD can encourage submissions from ERISA self-funded employers

  • Medicare reference-based pricing using APCD can be

expanded from hospitals to other key providers/services

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