findings from a national employer-led hospital price ... · 5/30/2019  · national hospital price...

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Gloria Sachdev, President and CEO, Employers’ Forum of Indiana [email protected] Chapin White, Senior Policy Researcher, (adjunct) RAND Corp [email protected] Findings From a National Employer-led Hospital Price Transparency Study Master Slide Deck for Public Use Last updated 5-30-19 Rand 2.0 Authors: Chapin White, Ph.D., Senior Policy Researcher, RAND Corp Christopher Whaley, Ph.D., Policy Researcher, RAND Corp The contents represent the views of the authors and not the organization or it’s funders

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Page 1: Findings From a National Employer-led Hospital Price ... · 5/30/2019  · National Hospital Price Transparency Study, called “RAND 2.0” •We had a short amount of time to enroll

Gloria Sachdev, President and CEO, Employers’ Forum of [email protected]

Chapin White, Senior Policy Researcher, (adjunct) RAND [email protected]

Findings From a National Employer-led Hospital Price Transparency Study

Master Slide Deck for Public Use

Last updated 5-30-19

Rand 2.0 Authors:Chapin White, Ph.D., Senior Policy Researcher, RAND Corp

Christopher Whaley, Ph.D., Policy Researcher, RAND Corp

The contents represent the views of the authors and not the organization or it’s funders

Page 2: Findings From a National Employer-led Hospital Price ... · 5/30/2019  · National Hospital Price Transparency Study, called “RAND 2.0” •We had a short amount of time to enroll

ABOUT THE EMPLOYERS’ FORUM OF INDIANA

Healthcare coalition formed in 2001

Members include self-funded employers, health plans, health systems, and other interested parties

Aim is to improve the value payers and patients receive for their health care expenditures

www.employersforumindiana.org

Page 3: Findings From a National Employer-led Hospital Price ... · 5/30/2019  · National Hospital Price Transparency Study, called “RAND 2.0” •We had a short amount of time to enroll

Members of the Employers’ Forum of Indiana

•Anthem Blue Cross and Blue Shield•AON•American Health Network•Assured Partners•Barnes and Thornburg•Castlight Health•Chrysler (FCA)•Columbus Regional Hospital•Community Health Network•Cummins Inc.•Deaconess Hospital•Eli Lilly and Company•Encore Health•Eskenazi Health•Fort Wayne Community School Corp

•OneAmerica•OneBridge•Ortho Indy•Our Health Inc.•Parkview Health•Purdue University•Roman Catholic Archdiocese of Indianapolis•Roche & Genentech•St. Vincent Health•State of Indiana•Suburban Health Organization•The Henriott Group•Tippecanoe School Corp.•TrueRx•United Healthcare•Young at Heart Pharmacy

•Franciscan Alliance•Gregory & Appel•Healthcare Options•Indiana Farm Bureau•Indiana State Teachers Union•Indiana Health Information Exchange•Indiana Rural Health Association•Indiana University•Indiana University Health•Ivy Tech•JA Benefits•LHD Benefit Advisors•Mercer•Merck (affiliate)•Monarch Beverage•Northwest Radiology

Page 4: Findings From a National Employer-led Hospital Price ... · 5/30/2019  · National Hospital Price Transparency Study, called “RAND 2.0” •We had a short amount of time to enroll

QUESTIONS the Forum Aimed to Answer

Part A:-Are hospital prices high in Indiana?

-How do prices compare among our hospitals?

-Where can we find good value?

-What is our trend?Part B:

-How do our prices compare to those in other states?

Page 5: Findings From a National Employer-led Hospital Price ... · 5/30/2019  · National Hospital Price Transparency Study, called “RAND 2.0” •We had a short amount of time to enroll

Partnership between the Employers’ Forum of Indiana and RAND

FORUM’s Role:

• commission and partner with RAND Corp to conduct Round 1.0, Round 2.0, and Round 3.0 analyses per MOU

• co-develop study design

• co-recruit nationally for study participation

RAND’s Role:

• conduct all study analyses

• prepare study final reports and supplemental material

• co-develop study design

• co-recruit nationally for study participation

Page 6: Findings From a National Employer-led Hospital Price ... · 5/30/2019  · National Hospital Price Transparency Study, called “RAND 2.0” •We had a short amount of time to enroll

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.

Study funded by

the National

Institute for

Health Care

Reform (NIHCR),

using claims data

from automakers

and UAW

BACKGROUND

Page 7: Findings From a National Employer-led Hospital Price ... · 5/30/2019  · National Hospital Price Transparency Study, called “RAND 2.0” •We had a short amount of time to enroll

The Problem: Employer premiums have risen, and so have employee contributions.

7

*Estimate is statistically different from estimates for the previous year shown (p<.05).

SOURCE: KFF Employer Health Benefits Survey, 2018; Kaiser/HRET Survey of Employer-Sponsored Health Benefits. 1999-2017

Page 8: Findings From a National Employer-led Hospital Price ... · 5/30/2019  · National Hospital Price Transparency Study, called “RAND 2.0” •We had a short amount of time to enroll

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

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.

Use trending back to baseline.Use trending back to baseline.

Page 9: Findings From a National Employer-led Hospital Price ... · 5/30/2019  · National Hospital Price Transparency Study, called “RAND 2.0” •We had a short amount of time to enroll

QUESTION-PART A: ARE HOSPITAL PRICES HIGH IN INDIANA?PRICE TRANSPARENCY ANALYSIS

• The best method the Forum believed was to convert allowable payments made by employers to what Medicare would have paid for the exact service, thus report relative prices

• For Example: the report shows that employers paid Hospital “A” 200% or 2X on average what Medicare would have paid and Hospital “B” was paid 350% or 3.5X on average what Medicare would have paid

Aim:

To develop a fair method to compare

hospital prices for public reporting

Page 10: Findings From a National Employer-led Hospital Price ... · 5/30/2019  · National Hospital Price Transparency Study, called “RAND 2.0” •We had a short amount of time to enroll

THE RATIONALE FOR USING MEDICARE TO LEVEL SET ALL COMMERCIAL HOSPITAL PAYMENTS

Medicare is the Largest

Health Insurer in the

World

Medicare makes numerous adjustments in price to assure FAIR payments are made to a hospital and their methods are published:

• type & intensity of service/patient acuity

• hospital’s location

• disproportionate share of medically underserved

• medical education provided

Page 11: Findings From a National Employer-led Hospital Price ... · 5/30/2019  · National Hospital Price Transparency Study, called “RAND 2.0” •We had a short amount of time to enroll

RAND 1.0 EMPLOYER HOSPITAL PRICE STUDY: INDIANA ONLY

• Study was funded by RWJF and RAND Corp was contracted to do the study analyses

• Study time period was July 2013 to June 2016

• ~225,000 covered lives in Indiana

• 120 community hospitals in Indiana

• All hospital inpatient and outpatient services

• Total paid claims was $695 million

• Full report of study findings: freely downloadable from RAND’s website: https://www.rand.org/pubs/research_reports/RR2106.html

Page 12: Findings From a National Employer-led Hospital Price ... · 5/30/2019  · National Hospital Price Transparency Study, called “RAND 2.0” •We had a short amount of time to enroll

RAND STUDY 1.0 STUDY FINDINGSIndiana Commercial Hospital Allowable Prices Paid as a Percent of What

Medicare Would Have Paid for the Same Services

Source: White, 2017, Hospital Prices in Indiana.

272%

217% 358%

Page 13: Findings From a National Employer-led Hospital Price ... · 5/30/2019  · National Hospital Price Transparency Study, called “RAND 2.0” •We had a short amount of time to enroll

RAND 1.0 STUDY FINDINGSRelative Prices are Trending Up Away From Medicare

Source: White, 2017, Hospital Prices in Indiana.

Page 14: Findings From a National Employer-led Hospital Price ... · 5/30/2019  · National Hospital Price Transparency Study, called “RAND 2.0” •We had a short amount of time to enroll

QUESTION, PART B: HOW DO INDIANA HOSPITAL PRICES COMPARE TO OTHER STATES?

• Solution: Invite employers across the country to participate in a National Hospital Price Transparency Study, called “RAND 2.0”

•We had a short amount of time to enroll folks in RAND 2.0

•RAND 3.0 study enrollment is ongoing as demand for price transparency is high

AIM: Develop a way to

benchmark hospital prices in Indiana and across U.S. for the first time

Page 15: Findings From a National Employer-led Hospital Price ... · 5/30/2019  · National Hospital Price Transparency Study, called “RAND 2.0” •We had a short amount of time to enroll

Official Study Title: Prices Paid To Hospitals By Private Health Plans Are High Relative To Medicare And Vary Widely-Findings From An Employer-led Transparency Initiative

authored by Chapin White and Christopher Whaley, RAND Corporation

Page 16: Findings From a National Employer-led Hospital Price ... · 5/30/2019  · National Hospital Price Transparency Study, called “RAND 2.0” •We had a short amount of time to enroll

We have created a home page that includes everything about these studies: www.employerPTP.org

• RAND 1.0 and 2.0 National Hospital Price Transparency Report

• Rand 2.0 Supplement Database

• RAND 2.0 Interactive Map Tool

• Master Power Point slide deck which you are welcome to use as you wish

• News/media

• Sign up for RAND 3.0, FAQ and agreements

You may also find the full report and supplement database on the RAND website: https://www.rand.org/pubs/research_reports/RR3033.html

RAND 2.0 Study was Published on May 9, 2019

Page 17: Findings From a National Employer-led Hospital Price ... · 5/30/2019  · National Hospital Price Transparency Study, called “RAND 2.0” •We had a short amount of time to enroll

Our Study Made National & Local News…over 30 News Outlets, including:

• Many Hospitals Charge Double or Even Triple What Medicare Would PayThe New York Times, May 9, 2019

• Study: Employers Pay 240% More Than Medicare For Hospital CareForbes, May 9, 2019

• What Employers Pay Hospitals Varies Widely, Study FindsWall Street Journal, May 9, 2019

• Employer Health Plans Pay Hospitals 241% of What Medicare Would PayModern Healthcare, May 9, 2019

• Private Insurers Paid Hospital 241% of what Medicare Would HaveHealthLeaders, May 9, 2019

• Private Plans Pay Hospital Prices 241% Higher Than Medicare, RAND FindsAJMC, May 9, 2019

• Private Insurers Pay Hospitals 2.4 Times What Medicare PaysBecker’s Hospital Review, May 9, 2019

• Market Muscle: Study Uncovers Differences Between Medicare And Private InsurersKaiser Health News, May 9, 2019

• Study: Indiana hospitals charge private health plans 311% of what Medicare would payIndianapolis Business Journal, May 9, 2019

Page 18: Findings From a National Employer-led Hospital Price ... · 5/30/2019  · National Hospital Price Transparency Study, called “RAND 2.0” •We had a short amount of time to enroll

INTERACTIVE MAP OF US HOSPITAL PRICESemployerptp.org

Page 19: Findings From a National Employer-led Hospital Price ... · 5/30/2019  · National Hospital Price Transparency Study, called “RAND 2.0” •We had a short amount of time to enroll

SUPPLEMENTAL INFORMATION, TABLE 1

Source: Derived from Supplement, White, 2019, Prices Paid to Hospitals by Private Health Plans are High Relative to Medicare and Vary Widely-Findings from an Employer-Led Transparency Initiative. Line of service information for inpatient and outpatient services in tables 4 and 5

RAND 2.0 SUPPLEMENTAL STUDY DATABASE FREELY AVAILABLE

Hospital

name

Hospital

Compar

e Star

Number

of

Outpt.

services

Total

Private

Allowed

Outpt. ($

millions

Simulated

Medicare

Outpt.

Relative

price for

Outpt.

Services

Stand.

price per

Outpt.

service

Number

of

Inpt. stays

Total

Private

Allowed

Inpt. ($

millions

Simulated

Medicare

Inpt.

Relative

price for

Inpt.

services

Stand.

price per

Inpt.

stay

Total

Private

Inpt. and

Outpt. (#

millions)

Simulated

Inpt. and

Outpt. ($

millions)

Relative

price for

Inpt. and

Outpt.

services

Parkview

Regional

Medical Center 3 34863 30.1 5.8 515% $353.93 2401 18.1 6.5 280% $17,359 48.2 12.3 392%

Eskenazi Health 4 5494 1.0 .3 332% $249.98 375 2.1 1.3 157% $14,679 3.1 1.6 189%

Indiana

UniversityHealth 3 61214 33.5 7.0 475% $359.29 4431 52.8 21.1 249% $24,954 86.2 28.2 306%

Page 20: Findings From a National Employer-led Hospital Price ... · 5/30/2019  · National Hospital Price Transparency Study, called “RAND 2.0” •We had a short amount of time to enroll

RAND 2.0 National Hospital Price Study of 25 statesConducted by RAND, commissioned by Employers’ Forum of Indiana

20

Services Hospital inpatient, hospital outpatient

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

Years 2015-2017

Hospitals 1598 short-stay general medical/surgical

Allowed amount (2015-7)

$12.9 billion in payments ($6.3 billion inpatient, $6.6 billion outpatient)

Claims (2015-7) 330,000 claims inpatient, 14.2 million outpatient line items

Data sources 2 all payer claims databases,many health plans,~45 self-funded employers

Funders RWJF, NIHCR, THFI, self-funded employers (not health plans or hospitals)

Source: White, 2019, Prices Paid to Hospitals by Private Health Plans are High Relative to Medicare and Vary Widely-Findings from an Employer-Led Transparency Initiative

Page 21: Findings From a National Employer-led Hospital Price ... · 5/30/2019  · National Hospital Price Transparency Study, called “RAND 2.0” •We had a short amount of time to enroll

OUR APPROACH

Obtain claims data from

-Self-funded employers

-APCDs

-health plans

Measure prices in two ways

-Relative to a Medicare benchmark

-price per casemixweight

Create a publichospital price report

-Will be posted online, freely downloadable

-named facilities and systems

-inpatient prices and outpatient prices

Create privatehospital price reports for self-funded employers

-Optional for

employers

Page 22: Findings From a National Employer-led Hospital Price ... · 5/30/2019  · National Hospital Price Transparency Study, called “RAND 2.0” •We had a short amount of time to enroll

Two Ways Hospital Prices are Measured

1. “Relative prices”

2. “Price per casemix weight”

=𝐴𝑙𝑙𝑜𝑤𝑒𝑑 𝐴𝑚𝑜𝑢𝑛𝑡

𝑆𝑖𝑚𝑢𝑙𝑎𝑡𝑒𝑑 𝑀𝑒𝑑𝑖𝑐𝑎𝑟𝑒 𝐴𝑙𝑙𝑜𝑤𝑒𝑑 𝐴𝑚𝑜𝑢𝑛𝑡

=𝐴𝑙𝑙𝑜𝑤𝑒𝑑 𝐴𝑚𝑜𝑢𝑛𝑡

𝐶𝑎𝑠𝑒𝑚𝑖𝑥 𝑤𝑒𝑖𝑔ℎ𝑡𝑠

adjusted for• casemix• local wages• teaching• uncompensated care

comparable across service lines

adjusted for• casemix

not comparable across service lines

Page 23: Findings From a National Employer-led Hospital Price ... · 5/30/2019  · National Hospital Price Transparency Study, called “RAND 2.0” •We had a short amount of time to enroll

Source: White, 2019, Prices Paid to Hospitals by Private Health Plans are High Relative to Medicare and Vary Widely-Findings from an Employer-Led Transparency Initiative

Across 25 States: Employer Health Plans Pay Hospitals 241%of What Medicare Would Pay and Overall Trend in Increasing

Page 24: Findings From a National Employer-led Hospital Price ... · 5/30/2019  · National Hospital Price Transparency Study, called “RAND 2.0” •We had a short amount of time to enroll

Source: White, 2019, Prices Paid to Hospitals by Private Health Plans are High Relative to Medicare and Vary Widely-Findings from an Employer-Led Transparency Initiative

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

Page 25: Findings From a National Employer-led Hospital Price ... · 5/30/2019  · National Hospital Price Transparency Study, called “RAND 2.0” •We had a short amount of time to enroll

Source: White, 2019, Prices Paid to Hospitals by Private Health Plans are High Relative to Medicare and Vary Widely-Findings from an Employer-Led Transparency Initiative

Across 25 States: Average Relative Hospital Prices, 2017Percent Employer Health Plans Pay Hospitals Relative to What Medicare Would Pay

Page 26: Findings From a National Employer-led Hospital Price ... · 5/30/2019  · National Hospital Price Transparency Study, called “RAND 2.0” •We had a short amount of time to enroll

Indiana: TOTAL Hospital Commercial Prices Relative to Medicare, 2017(inpatient plus outpatient)

311%

160%

187% 187% 189%

257% 264% 267% 285% 284% 290% 295% 298% 301% 301%

312% 318%

370%

417%

160%

417%

** RAND 2.0 Study period (2015-2017) averages as study does not provide 2017 relative prices for these two hospitals onlySource: Derived from Supplement, White, 2019, Prices Paid to Hospitals by Private Health Plans are High Relative to Medicare and Vary Widely-Findings from an Employer-Led Transparency Initiative

311%

Page 27: Findings From a National Employer-led Hospital Price ... · 5/30/2019  · National Hospital Price Transparency Study, called “RAND 2.0” •We had a short amount of time to enroll

Indiana: INPATIENT Commercial Prices Relative to Medicare, 2017

236%

77%

117%

135%

157% 167%

188% 185% 190% 194% 197% 198%

220% 222% 228%

253%

267%

282%

303%

77%

303%

** RAND 2.0 Study period (2015-2017) averages as study does not provide 2017 relative prices for these two hospitals only Source: Derived from Supplement, White, 2019, Prices Paid to Hospitals by Private Health Plans are High Relative to Medicare and Vary Widely-Findings from an Employer-Led Transparency Initiative

236%

Page 28: Findings From a National Employer-led Hospital Price ... · 5/30/2019  · National Hospital Price Transparency Study, called “RAND 2.0” •We had a short amount of time to enroll

Indiana: OUTPATIENT Commercial Prices Relative to Medicare, 2017

403%

221% 232%

253%

325% 332% 343%

366% 379% 380%

390% 390% 404% 404% 409% 412%

451%

483%

542%

221%

542%

** RAND 2.0 Study period (2015-2017) averages as study does not provide 2017 relative prices for these two hospitals only Source: Derived from Supplement, White, 2019, Prices Paid to Hospitals by Private Health Plans are High Relative to Medicare and Vary Widely-Findings from an Employer-Led Transparency Initiative

403%

Page 29: Findings From a National Employer-led Hospital Price ... · 5/30/2019  · National Hospital Price Transparency Study, called “RAND 2.0” •We had a short amount of time to enroll

Single Health-System: Indiana vs. MichiganTOTAL Relative Inpatient plus Outpatient Prices 2017

284% 299%

312%

155% 145% 146%

%

50%

100%

150%

200%

250%

300%

350%

2015 2016 2017Indiana Michigan

Source: Derived from Supplement, White, 2019, Prices Paid to Hospitals by Private Health Plans are High Relative to Medicare and Vary Widely-Findings from an Employer-Led Transparency Initiative

Page 30: Findings From a National Employer-led Hospital Price ... · 5/30/2019  · National Hospital Price Transparency Study, called “RAND 2.0” •We had a short amount of time to enroll

INDIANA HEALTH SYSTEMS TREND OF TOTAL COMMERCIAL PRICES RELATIVE TO MEDICARE

28

0%

28

4%

31

4%

34

7%

38

3%

29

4%

29

7%

29

9%

31

9%

35

4%

38

9%

30

2%

29

8%

31

2%

31

8%

37

0%

41

7%

31

1%

F R A N C I S C A N A L L I A N C E A S C E N S I O N H E A L T H I N D I A N A U N I V E R S I T Y H E A L T H C O M M U N I T Y H E A L T H N E T W O R K

P A R K V I E W H E A L T H A L L H O S P I T A L S I N D I A N A

2015 2016 2017

Source: Derived from Supplement, White, 2019, Prices Paid to Hospitals by Private Health Plans are High Relative to Medicare and Vary Widely-Findings from an Employer-Led Transparency Initiative

Page 31: Findings From a National Employer-led Hospital Price ... · 5/30/2019  · National Hospital Price Transparency Study, called “RAND 2.0” •We had a short amount of time to enroll

Our Goal is to Improve Value, Where Value Includes Cost and Quality

BEST Value = High QualityCost

where Cost = Price x Quantity

Page 32: Findings From a National Employer-led Hospital Price ... · 5/30/2019  · National Hospital Price Transparency Study, called “RAND 2.0” •We had a short amount of time to enroll

QUALITY: CMS CREATED PUBLICLY AVAILABLE HOSPITAL COMPARE WEBSITE MEANT FOR CONSUMERS

Page 33: Findings From a National Employer-led Hospital Price ... · 5/30/2019  · National Hospital Price Transparency Study, called “RAND 2.0” •We had a short amount of time to enroll

QUALITY: CMS HOSPITAL COMPAREMEDICARE.GOV

1. Heart attack

2. Heart failure

3. Heart bypass

4. Pneumonia

5. Chronic

Obstructive

Pulmonary

Disease

6. Total knee/hip

replacement

Page 34: Findings From a National Employer-led Hospital Price ... · 5/30/2019  · National Hospital Price Transparency Study, called “RAND 2.0” •We had a short amount of time to enroll

GOAL!

< 150% 150-250% > 250%

Best Quality Using CMS Hospital Star Ratings and BEST PRICE Using RAND 2.0 Study Findings: Across 25 States

Source: White, 2019, Prices Paid to Hospitals by Private Health Plans are High Relative to Medicare and Vary Widely-Findings from an Employer-Led Transparency Initiative

Page 35: Findings From a National Employer-led Hospital Price ... · 5/30/2019  · National Hospital Price Transparency Study, called “RAND 2.0” •We had a short amount of time to enroll

Takeaway #1: Price transparency is the new normal…Hospital Shopping Should be a Team Sport

Patients

Physicians

Health Plans

Policy Makers

Employers

Page 36: Findings From a National Employer-led Hospital Price ... · 5/30/2019  · National Hospital Price Transparency Study, called “RAND 2.0” •We had a short amount of time to enroll

Takeaway #2: Markets Need Information, Buyers Need Options

• “Chaos behind a veil of secrecy” (Uwe Reinhardt)

• “Where there’s mystery there’s margin”

• We urgently need transparency in both cost and quality:• Prices vary significantly by state

• Prices vary even more so among hospitals within states

• Outpatient prices are more variable than inpatient prices and consume a greater share of the employer’s dollar

• The devil is in the details: you need cost and quality information at the level of the individual provider

Page 37: Findings From a National Employer-led Hospital Price ... · 5/30/2019  · National Hospital Price Transparency Study, called “RAND 2.0” •We had a short amount of time to enroll

Takeaway #3: Commercial Payment Models Do Not Need to be So Complex

How does Medicare pay?

base payment * facility-specific adjustments * casemix + outliers + bonuses: one number comparison of hospital prices!

How do self-funded employers pay?

mix of DRGs, per diems, fixed rates, discounted charges, P4P, shared savings ...

Multiple-of-Medicare contracting

simplifies shopping

bakes in value-based payment (RBB, bundling, pay-for-performance)

stabilizes price trend

States examples: Montana, North Carolina, and Oregon

Page 38: Findings From a National Employer-led Hospital Price ... · 5/30/2019  · National Hospital Price Transparency Study, called “RAND 2.0” •We had a short amount of time to enroll

Takeaway #4: There are Numerous Strategies Available to Drive Value

Benefit Design Levers

can be built on a foundation of contracting

a multiple of Medicare pricing so prices are

comparable

Narrow/Tiered networks

Reference based benefits

Centers of Excellence

Direct employer to hospital contracting

Policy Levers

Prohibit anti-gag clause between carriers and hospitals

Prohibit anti-tiering/-narrow/-tying network contracts

Revise profit/not-for-profit hospital status

Limit/cap on out-of-network charges

Page 39: Findings From a National Employer-led Hospital Price ... · 5/30/2019  · National Hospital Price Transparency Study, called “RAND 2.0” •We had a short amount of time to enroll

THANK YOU!

For The Most Current Information Including Enrolling In RAND 3.0 Study, Please Visit

www.employerPTP.org

Page 40: Findings From a National Employer-led Hospital Price ... · 5/30/2019  · National Hospital Price Transparency Study, called “RAND 2.0” •We had a short amount of time to enroll

EXTRA SLIDES TO BE SHARED IF HELPFUL

Page 41: Findings From a National Employer-led Hospital Price ... · 5/30/2019  · National Hospital Price Transparency Study, called “RAND 2.0” •We had a short amount of time to enroll

MICHIGAN Hospital Systems:Relative Prices (2017) and Operating Margins (2015-17)

-6.7%

8.2% 5.9%

-0.1%

2.2% 4.1% 5.7% 8.0% 7.5% 5.4% 7.5%

-50%

0%

50%

100%

150%

200%

250%

Rela

tive

pri

ce fo

r in

pati

ent a

nd

outp

atie

nt h

ospi

tal c

are

Relative prices Operating margins

Profit Margin information obtained from www.hospitaldatasets.org (: Relative prices are from Operating margins are calculated from Medicare hospital cost report data downloaded

Source: Derived from Supplement, White, 2019, Prices Paid to Hospitals by Private Health Plans are High Relative to Medicare and Vary Widely-Findings from an Employer-Led Transparency Initiative

Page 42: Findings From a National Employer-led Hospital Price ... · 5/30/2019  · National Hospital Price Transparency Study, called “RAND 2.0” •We had a short amount of time to enroll

MICHIGAN: There Are Good, Moderately Priced HospitalsBest Quality Using CMS Hospital Star Ratings and BEST PRICE Using RAND 2.0 Study Findings

0%

20%

40%

60%

80%

100%

1: Low (<145%) 2: Medium (145-160%)

3: High (>=160%)

Ho

spit

al C

om

pa

re S

tar

Rat

ings

, 20

18

(Sh

are

of

Ho

spit

als

Wit

hin

Pri

ce

Gro

up

)

Hospital Price Group (Relative to Medicare, 2015-7)

5 stars (highest)

4 stars

3 stars

2 stars

1 star (lowest)

Price Source: Derived from Supplement, White, 2019, Prices Paid to Hospitals by Private Health Plans are High Relative to Medicare and Vary Widely-Findings from an Employer-Led Transparency InitiativeCMS Star Ratings: https://data.medicare.gov/data/hospital-compare

Page 43: Findings From a National Employer-led Hospital Price ... · 5/30/2019  · National Hospital Price Transparency Study, called “RAND 2.0” •We had a short amount of time to enroll

COLORADO: TOTAL Hospital Commercial Prices Relative to Medicare, 2017(inpatient plus outpatient)

269%

159%

196%

246%

274%

311% 314% 319% 319% 320% 327%

ALL HOSPITALS IN

CO TOTALS

INDEPENDENT (CAH)

SCL HEALTH SAN LUIS VALLEY HEALTH

INDEPENDENT (IPPS)

UNIVERSITY OF COLORADO

HEALTH

HCA HEALTHCARE

ADVENTIST HEALTH SYSTEM

BANNER HEALTH

CATHOLIC HEALTH

INITIATIVES

QHR

Source: Derived from Supplement, White, 2019, Prices Paid to Hospitals by Private Health Plans are High Relative to Medicare and Vary Widely-Findings from an Employer-Led Transparency Initiative

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COLORADO: INPATIENT Commercial Prices Relative to Medicare, 2017

221%

125%

174%

193%

228% 233%

240% 246% 250%

260% 266%

ALL HOSPITALS IN

CO INPT

INDEPENDENT (CAH)

SCL HEALTH SAN LUIS VALLEY HEALTH

INDEPENDENT (IPPS)

BANNER HEALTH

UNIVERSITY OF COLORADO

HEALTH

QHR HCA HEALTHCARE

ADVENTIST HEALTH SYSTEM

CATHOLIC HEALTH

INITIATIVES

Source: Derived from Supplement, White, 2019, Prices Paid to Hospitals by Private Health Plans are High Relative to Medicare and Vary Widely-Findings from an Employer-Led Transparency Initiative

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COLORADO: OUTPATIENT Commercial Prices Relative to Medicare, 2017

350%

170%

251%

275%

350%

395% 396% 403% 407%

435% 454%

ALL HOSPITALS IN CO OUTPT

INDEPENDENT (CAH)

SCL HEALTH SAN LUIS VALLEY HEALTH

INDEPENDENT (IPPS)

ADVENTIST HEALTH SYSTEM

BANNER HEALTH

CATHOLIC HEALTH

INITIATIVES

QHR UNIVERSITY OF COLORADO

HEALTH

HCA HEALTHCARE

Source: Derived from Supplement, White, 2019, Prices Paid to Hospitals by Private Health Plans are High Relative to Medicare and Vary Widely-Findings from an Employer-Led Transparency Initiative

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Volume of Claims per State is Important

• Private Claims Volume in RAND 2.0 Study • Colorado > $ 5 Billion

• Michigan > $ 1 Billion

• Indiana > $1 Billion

• Pennsylvania < $12 million – thus no hospital-specific breakdowns possible

• There’s a wealth of information when sufficient claims are available for analysis.

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COMMENTS FROM AMERICAN HOSPITAL ASSOCIATION (AHA)

• Medicare payment covers 87% of hospital cost

• Medicare Payment Advisory Commission (MedPAC)

says hospitals are not efficient because commercial

payment is so high that hospitals do not have the

incentives to be efficient.

➢ 1.0/0.87 = 115% of Medicare is breakeven on hospital

costs so paying a bit more is reasonable.

https://www.aha.org/news/headline/2019-05-09-aha-responds-rand-study-prices-paid-hospitals-private-health-plans

MedPAC report, Marc 2019 http://www.medpac.gov/-documents-/reports

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So why are most hospitals…

Losing Money on Medicare?”

“Strong market power leads hospitals to reap higher revenues from private payers. This in turn leads these hospitals to have weaker cost controls. The weaker cost controls lead to higher costs per unit of service. As a result, hospitals have a narrower margin on their Medicare business.”

Jeffrey Stensland, PhDSr. Principal Policy Analyst

Medicare Payment Advisory Committee

48

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“Twenty years of wage stagnation on the middle class has been 95% caused by exploding healthcare costs.” - WSJ

March 5th, 2019 National Price Transparency Conference 49

The Health Market Place:

Providing a Failing Value-Proposition

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Edging Out Salary Growth & Economic Development

March 5th, 2019 50National Price Transparency Conference

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PLANS FOR A NATIONAL HOSPITAL PRICE TRANSPARENCY STUDY, RAND 3.0

• The more states and the more hospitals per state that participate in RAND 3.0, the more valuable it becomes to employers as it helps inform their local strategy towards paying for value

• Cost to participate in the study, 2 options:1. No charge to APCDs or TPAs

2. For employers, who in addition to contributing to the public report, wish to have a PRIVATE employer-level report, the charge is $0.20 per member, with a minimum of $1,000 and a max of $15,000, payable to RAND Corp.

3. No charge for employers who wish to contribute claims data to RAND for the PUBLIC report

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RAND 3.0 Study TimelineMonth, Year MilestoneMarch, 2019 Begin recruitment of self-funded employers, APCDs, and health

plansJuly, 2019 Have agreements in place between RAND and employers, DUAs

in place between RAND and health plans/APCDs, and

authorizations sent by self-funded employers to their TPAsOctober, 2019 Data delivery complete

November, 2019 Data testing and analysis, drafting of public report

First Quarter,

2020

Public report finalized and made public online, private employer-

level reports distributed

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ACKNOWLEDGEMENTS

• Robert Wood Johnson Foundation

• National Institute for Health Care Reform

• The Health Foundation of Greater Indianapolis, Inc.

• IBM Watson Health

• Economic Alliance for Michigan

• Center for Improving Value in Health Care (CIVHC)

• New Hampshire Comprehensive Health Care Information System

• Colorado Business Group on Health

• Houston Business Coalition on Health

• New Mexico Coalition for Healthcare Value