RAND has released its “Nationwide Evaluation of Health Care Prices Paid by Private Health Plans Findings from Round 3 of an Employer-Led Transparency Initiative” Report

At the RAND web site you can find a full report or Click here for the report, an interactive map, and a downloadable Excel file with the entire database for all of the 46 States that are included in this year’s analysis of 3,000 US Medicare-certified short-stay hospitals for which they had sufficient data (e.g., 50 or more inpatient claims and 100 or more outpatient claims).   Rand 3.0 expanded significantly from Rand 2.0 which included 25 states.

Perhaps the two most striking – even though obvious – observations from the report are these….

  1. Employers and Taft-Hartley plans “bear responsibility for healthcare cost but have limited accessto useful information on hospital prices.”  Again, if you do not know what you are paying hospitals as a percent of Medicare, then you do not know what you are paying with 40% or more of your medical spend.
  2. “Although [hospital] consolidation is linked with higher prices,it has not been associated with improved quality, and higher-priced providers often do not have higher quality than lower-priced providers.”  This is exactly what we quantified last year with our 2019 Colorado Hospital Value Report.

A few things to point out:

Validity of Colorado Results.  Because of the Colorado All Payer Claims Database (APCD), Colorado’s results are some of the most complete and accurate in the country.  (Note:  It could be made even better if ALL self-funded employers insisted that their claims get submitted!!!  Not every health plan wants to do this.  Everyone should.)

Price Comparisons For this report, Rand looked at prices paid to hospitals in 2018 from two perspectives:

  1. Relative Pricing– the ratio of the actual private amount paid divided by the Medicare allowed amount for the same services by the same hospital.
  2. Standardized Pricing– the average allowed amount per standardized units of services (where services are standardized for case mix using Medicare relative weights)

Colorado Hospitals.  I’ve extracted Colorado hospitals from the entire database. Click here to download the list.

Overall Hospital Prices in Colorado. This year’s aggregate payment calculation to hospitals includes three components: Inpatient, Outpatient, and Professional.  Looking at inpatient and outpatient only, hospitals were paid 273% of Medicare in 2018 vs 268% in 2017.   Within that, you will see that, overall in 2018, Colorado hospitals were paid:

  1. Range of Combined IP and OP Prices Paid:  Relative prices (adjusted several ways) paid to Colorado hospitals range as a percent of Medicare from 124% to 508%.
  2. Overall Inpatient Facility:214% of Medicare.  (Paid prices ranged over 5 fold – from 70% to 377% of Medicare.)
  3. Overall Outpatient Facility:312% of Medicare.  (Paid prices ranged nearly 10 fold – from a low of 81% to 801% of Medicare.)
  4. Professional:166% of Medicare.
  5. Hospital Compare Star Ratings.You’ll note on the attached that the Rand report includes Medicare’s “Hospital Compare Star Ratings.”  I recommend you disregard these ratings.  They actually mislead in my opinion because outcomes vary as widely within hospitals as across hospitals and even within services within hospitals.  CBGH subscribes to Quantros’ CareChex Hospital Rating System – a significantly more sophisticated model providing a direct line of site to procedure specific outcomes by provider.  Let CBGH know if you’d like an overview of the three hospitals where you spend the most money.