rand 3.0 – hospital price transparency report results ......plans cover half of americans $1.2...
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RAND 3.0
Hospital Price Transparency Report Results
September 24, 2020
RAND 3.0 Results – September 24, 20201
Program Sponsors
Presenting Sponsors
Co-SponsorsAon
Fond du Lac Area Businesses on Health
Hays Companies
Lockton Companies
RAND 3.0 Results – September 24, 20202
Agenda
• Opening Comments
• Introductions
– Panelists
• Objectives
• RAND 3.0 Results
• Questions & Answers
• Call to Action
RAND 3.0 Results – September 24, 20203
Today’s Panelists
• Jeffrey Kluever – Executive Director, Business Health Care Group
• Cheryl DeMars – President & CEO, The Alliance
• Chris Reader – Senior Director of Workforce & Employment Policy at Wisconsin Manufacturers & Commerce
• Dave Osterndorf – BHCG Strategic Consultant, Partner & Chief Actuary, Health Exchange Resources
• Christopher Whaley – Policy Researcher, RAND Corporation
RAND 3.0 Results – September 24, 20204
Why Does RAND Matter to the Business Community?
Comments from:
• Cheryl DeMars – The Alliance
• Chris Reader – Wisconsin Manufacturers & Commerce
• Jeffrey Kluever – Business Health Care Group
RAND 3.0 Results – September 24, 20205
Objectives
Today’s session is intended to be about the “what?” and the “what now?”
The “What?”
• You’ll hear the results from this important study as it pertains to the state of health care costs and prices in Wisconsin
• You’ll get a chance to see the variability in prices for health systems in the state
• You’ll see how the results of this study stack up against other, similar studies
The “What Now?”
• You’ll gain additional insights into how some employer groups have used this information in managing their health care benefits program
• We’ll move forward the dialogue on what needs to change and how we can work together as employers, and ideally, health care providers, to create a more favorable health care market
RAND 3.0 Results – September 24, 20206
RAND 3.0 Results
Christopher Whaley
Policy Researcher, RAND Corporation
RAND 3.0 Results – September 24, 20207
Wisconsin Business Health Care GroupSeptember 24, 2020
Christopher Whaley
RAND Hospital Price Transparency Project
9
Background
Study approach
Study findings
Comparison to other studies
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
10
Employer-sponsored plans cover half of Americans
$1.2 trillionhealth care costs in 2018
$480 billionhospital costs in 2018 160 million
people
11
12
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 Data12
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
13
What do we know already?
14
• 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?
15
• 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
16
• 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
17
• 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?
18
• 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:
19
• Just Indiana
• employers
• facility fees
• relative prices
Phase 1.0
RAND’s hospital study journey:
20
• 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:
21
• 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
22
Background
Study approach
Study findings
Comparison to other studies
Implications & conclusions
Ou
tlin
e
23
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
24
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
25
• What do employers pay relative to what Medicare would have paid at the exact same hospitals?
• Easy to interpret and compare across hospitals
• Comparable across service lines
• Medicare adjusts for cost of living and wage differences
Recipe #2: Standardized prices
26
• 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
• Not comparable across service lines
• Don’t have to worry about teaching, DSH, etc. payments
Comparison to Medicare
27
• 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
28
• 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
29
Background
Study approach
Study findings
Comparison to other studies
Implications & conclusions
Ou
tlin
e
Commercial prices relative to Medicare have increased steadily
30
224%
230%
247%
200%
205%
210%
215%
220%
225%
230%
235%
240%
245%
250%
2016 2017 2018
Rel
ativ
e p
rice
for
inp
atie
nt an
d o
utp
atie
nt
hosp
ital
car
e
Commercial prices relative to Medicare vary widely across states
31
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 ho
spit
al c
are
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 ho
spit
al c
are
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
35
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
36
Some link between price and quality, but many high quality hospitals with low prices
37
0%
20%
40%
60%
80%
100%
1: Low (<1.5) 2: Medium
(1.5-2.5)
3: High
(>=2.5)
Ho
spit
al C
om
par
e S
tar
Rat
ings,
2018
(Shar
e o
f H
osp
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
Ho
spit
als
That
Hav
e B
oth
2018 R
AN
D
Pri
ce E
stim
ate
and 2
019
Lea
pfr
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
38
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 hosp
ital
car
e
Case mix–adjusted share of Medicaid and Medicare discharges
Wisconsin hospital system prices: inpatient + outpatient
39
Wisconsin hospital system prices: Inpatient
40
Wisconsin hospital prices: inpatient orthopedic
41
US hospital prices: inpatient orthopedic
420%
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
43
Background
Study approach
Study findings
Comparison to other studies
Implications & conclusions
Ou
tlin
e
Another Data Source—HCCI Health Marketplace Index
44
Another Data Source—HCCI Health Marketplace Index
45
Another Data Source—HCCI Health Marketplace Index
46
Another Data Source—HCCI Health Marketplace Index
47
Another Data Source—Health Affairs Study
• Chernew and colleagues (2020) Health Affairs
• Wisconsin sixth highest state for Medicare-commercial price gap
48
Another Data Source—Medicare Hospital Cost Reports
49
0
0.5
1
1.5
2
2.5
MD AL
MA
AR RI
HI
MI
NV LA MS
NY
TN IA CT
OK
DC KY
PA
GA AZ
TX FL All
NJ
NC
MN
MO KS IL UT
NH
AK
OH
ND
NM
MT
NE
VA
CA
WA
WV
DE
WY ID ME
OR SC VT
SD IN CO WI
Co
mm
erci
al H
osp
ital
Pri
ce R
elat
ive
to M
edic
are
50
Ou
tlin
eBackground
Study approach
Study findings
Comparison to other studies
Implications & conclusions
51
How can employers use price transparency?
Finally have
information
about pricesBenchmark
prices
Change
hospital
networks
52
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
53
Employers are using data to benchmark prices
Harris Meyer (2020) “Self-insured employers go looking for value-based deals“ Modern Healthcare
54
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
55
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
Unanswered Questions
56
• What has happened since 2018?
• How has COVID-19 impacted prices?
• What effects do market structure differences have on
prices?
• Have employer innovations led to lower prices?
RAND 4.0• Enrollment details: https://employerptp.org/enroll/
Conclusions
57
• 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
Christopher [email protected]
Questions & Answers
• Please type your questions in the webinar chat box
• Any questions not addressed in today’s session, will be answered in the webinar follow-up
Thank you!
RAND 3.0 Results – September 24, 202059
Call to Action
• Employers
– Submit your claims data for RAND 4.0 – easy process
• RAND homepage
• Contact page to enter your information if interested in submitting data
• Hospital Price Transparency Study FAQs
– Lend your employer voice to efforts to improve health care value in Wisconsin
– Join your regional employer coalitions and encourage other employers to do the same
– Engage with other quality and cost transparency initiatives (e.g.; Wisconsin Health Information Organization; Wisconsin Collaborative for Health Care Quality)
– Use the data to:
• Reward physicians and hospitals providing high value health care
RAND 3.0 Results – September 24, 202060
Call to Action
• Providers/Health Systems – Work toward great cost efficiency
– Collaborate with employers and health plans to meet the shared goals of affordability and access to highest quality care
– Engage with other quality and cost transparency initiatives (e.g.; Wisconsin Health Information Organization; Wisconsin Collaborative for Health Care Quality)
• Health Plans– Facilitate the evolution through greater data sharing, value-based contracting strategies and
elimination of barriers to positive change
• Broker/Consultants– Encourage clients to participate in RAND 4.0
– Assist clients in meeting their employer fiduciary responsibilities
RAND 3.0 Results – September 24, 202061
Contact Information
• Jeff Kluever, Executive Director, BHCG
– [email protected] / 262-875-3312
• Cheryl DeMars, President & CEO, The Alliance
– [email protected] / 608-210-6621
• Chris Reader, Senior Director of Workforce & Employment Policy, WMC
– [email protected] / 608-661-6947
• Christopher Whaley, Policy Researcher, RAND Corporation
– [email protected] / 310-393-0411 xt. 7969
RAND 3.0 Results – September 24, 202062
Thank You!Christopher Whaley, RAND Corporation
Aon, Fond du Lac Area Businesses on Health, Hays Companies and Lockton Companies
RAND 3.0 Results – September 24, 202063 RAND 3.0 Results – September 24, 2020