Hospital Prices in Indiana: Findings from an Employer-Led Transparency Initiative
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- Horace Farmer
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1 Hospital Prices in Indiana: Findings from an Employer-Led Transparency Initiative C H A P I N W H I T E S E P T E M B E R 2 0, This briefing represents the views of the author, and not RAND or RAND s funders. It has not been formally reviewed or edited. This briefing draws on a report that is freely downloadable from RAND s website:
2 What Data Did We Use? o Claims for hospital inpatient and outpatient services o 120 community hospitals in Indiana o Participating self-funded employers, ~225,000 covered lives o July 2013-June 2016 o $695 million in paid claims
3 What Did We Measure? o Relative prices amount paid by self funded plans in Indiana simulated amount paid applying Medicare s price setting formulas o Relative prices are o o casemix-adjusted adjusted for local wages, teaching, uncompensated care
4 Medicare Prices Vary, and We Know How and Why Source: CMS, Medicare Provider Utilization and Payment Data: Inpatient Charge Data, FY2013, Provider-Charge-Data/Downloads/Inpatient_Data_2013_XLSX.zip.
5 What Did We Find?
6 Source: White, 2017, Hospital Prices in Indiana. What Did We Find?
7 How Do Relative Prices Vary Across Hospital Groups?
8 How Do Relative Prices Vary Across Hospital Groups? Source: White, 2017, Hospital Prices in Indiana.
9 How Do Relative Prices Vary Across Hospitals Within Groups?
10 How Do Outpatient Relative Prices Vary Across Hospitals? Source: White, 2017, Hospital Prices in Indiana.
11 How Do Inpatient Relative Prices Vary Across Hospitals? Source: White, 2017, Hospital Prices in Indiana.
12 How Do Prices Vary Geographically? <<Price Map>>
13 Are Relative Prices Trending Up or Down?
14 Source: White, 2017, Hospital Prices in Indiana. Are Relative Prices Trending Up or Down?
15 Takeaways Prices paid by self-funded employer plans in Indiana o 272% of Medicare prices for same services, same hospitals o higher than national norms o relative prices higher for outpatient than inpatient
16 National Benchmark: Trends in Inpatient Prices Source: Selden, et al., "The Growing Difference Between Public And Private Payment Rates...," Health Affairs, 2015.
17 National Benchmark: Trends in Private vs Medicare Payment-to-Cost Ratios Source: American Hospital Association Chartbook, Table 4.4.
18 National Benchmark: Prices for 235 Care Bundles o Indiana average = 1.13 (i.e. 13% above national average) Source: Health Care Cost Institute, National Chartbook of Health Care Prices 2015, April 27, pdf.
19 National Benchmark: Private Prices for Knee Replacement Source: Health Care Cost Institute, National Chartbook of Health Care Prices 2015, April 27, pdf.
20 Source: White et al., High and Varying Prices for Privately Insured Patients Underscore Hospital Market Power, 2013,
21 Source: White et al., High and Varying Prices for Privately Insured Patients Underscore Hospital Market Power, 2013,
22 Takeaways (cont.) Prices paid by self-funded employer plans in Indiana o the 6 large systems generally get higher prices than small systems and independents o Parkview Health is the highest-priced system o relative prices vary widely among hospitals within each system o relative prices increasing, especially for Parkview and CHN
23 What Can Employers Do To Rationalize Prices? Over short term,... o Update price report to include July 2016-June 2017 o Expand price report to include more employers o Form an employer-led Health Data Coop
24 What Can Employers Do To Rationalize Prices? Over medium term, push health plans to... o Move away from discounted-charge contracts for outpatient o Move toward fixed-rate contracts (like Medicare) o Move patient volume away from high-priced providers o o o o tiered cost sharing reference-based benefits narrow networks ACOs/shared savings o Set performance targets for relative prices, with rebates for employers if plan overshoots
25 What Can Employers Do To Rationalize Prices? Over long term, push policy makers to... o Limit payments for out-of-network care (like Medicare) o Allow Medicare buy-in o Modify Cadillac Tax so that it is based on relative prices
26 Thank You! C O N T A C T : C H A P I N W H I T E C W H I T R A N D. O R G X C H A P I N W H I T E
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