RAND 3.0 – Hospital Price Transparency Report Results ......plans cover half of Americans $1.2...

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


Agenda

• Opening Comments

• Introductions

– Panelists

• Objectives

• RAND 3.0 Results

• Questions & Answers

• Call to Action


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


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


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

Christopher Whaley

Policy Researcher, RAND Corporation


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


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


21

• Just Indiana

• employers

• facility fees

• relative prices

Phase 1

• 25 states



• facility fees

• relative and standardized prices

Phase 2

• 49 states (excluding Maryland)



• facility and professional fees

• service-line prices

Phase 3.0

22

Background

Study approach

Study findings



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



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



Ou

tlin

e

Another Data Source—HCCI Health Marketplace Index

44


45


46


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



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/

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]

mailto:[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!


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


https://www.rand.org/

https://www.rand.org/health-care/projects/price-transparency/hospital-pricing/round3.html

https://www.rand.org/health-care/projects/price-transparency/hospital-pricing/round3/faq.html

http://whio.org/

https://www.wchq.org/

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


http://whio.org/

https://www.wchq.org/

Contact Information

• Jeff Kluever, Executive Director, BHCG

– [email protected] / 262-875-3312

• Cheryl DeMars, President & CEO, The Alliance


• Chris Reader, Senior Director of Workforce & Employment Policy, WMC


• Christopher Whaley, Policy Researcher, RAND Corporation

– [email protected] / 310-393-0411 xt. 7969


https://bhcgwi.org/


https://the-alliance.org/


https://www.wmc.org/


http://rand.org/


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

RAND 3.0 – Hospital Price Transparency Report Results ......plans cover half of Americans $1.2...

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