New Tool Allows for Local and National Comparisons of Price to Assess Market “Health”

Washington, D.C., April 26,2017 – A new interactive mapping tool and accompanying issue brief, released today by the Health Care Cost Institute (HCCI) with support from the Robert Wood Johnson Foundation, illuminates the dramatic variation in prices for different categories of medical services within communities and across the country.

The Healthy Marketplace Index: Medical Service Category Price Index enables communities to compare health care prices for inpatient, outpatient, and physician services, relative to a national average, within their local market. The data show that, while some markets had consistently low (e.g. Cincinnati), average (e.g. Nashville, Tennessee), or high (e.g. Dallas) prices, most health care markets had substantial variation in price levels between the three medical categories. For example, Trenton, New Jersey had average inpatient and physician prices, but high outpatient prices compared to the national averages.

Using the price indices communities can also compare local prices within a category over time – for instance, inpatient prices in Baltimore-Columbia-Towson, Maryland increased only 2.6 percent between 2012 and 2014. And communities can compare prices in their market to those of other communities in a state or region. For example, of the five Wisconsin markets included in the study, physician prices in all five markets were among the highest in the study but there was also wide variation between them.

“Using this information, local policymakers, employers, and providers can identify trends in prices that are potentially contributing to the largest growth in overall health care spending,” said Eric Barrette, Director of Research at HCCI. “This insight can inform efforts to develop meaningful policy aimed at reducing overall health care spending while maintaining, and even improving, quality.”

The report covers the period of 2012-2014. During that time, prices for inpatient, outpatient, and physician services increased– but not at the same rate. Prices for outpatient services rose fastest, while physician price increases were minimal. The most consistent growth was seen in inpatient prices which increased, on average, five percent each year.

HCCI’s analysis shows a link between inpatient and outpatient price levels – many markets with higher prices for inpatient care also tended to have higher prices for outpatient care, and vice versa. This suggests that some aspects of the drivers underlying inpatient and outpatient prices may be related, such as commonalities in labor supply or population health. HCCI found only a minimal relationship between physician prices and either inpatient or outpatient prices.

The issue brief is the first in a series of briefs to be released this year that report measures from the Healthy Marketplace Index (HMI), a set of metrics related to the economic performance of health care markets. The HMI provides measures that communities can use as benchmarks in their assessments of the affordability and value of their populations’ health care services. Now in its second year, the HMI is one of the most comprehensive sets of local-level measures of health care spending, utilization, and prices available for the commercially insured population. Future HMI issue briefs will explore local level measures of hospital concentration, as well as measures of price, utilization, and the intensity of health care service use for specific types of medical treatments.

“The Healthy Marketplace Index takes the pulse of our country’s local health care markets,” said Katherine Hempstead, Director of Health Insurance Coverage at the Robert Wood Johnson Foundation. “Our hope is that this information will help local stakeholders better understand the markets they operate in and use it to design policies that deliver higher-value care.”

The data for the HMI analyses is from HCCI’s health care claims data for over 40 million Americans, under age 65 with employer-sponsored insurance per year, which accounts for more than 25 percent of the nation’s commercially insured population. Health care markets are defined by Core Based Statistical Areas for these analyses. CBSAs are commonly used geographic based regions of economic integration comprised of collections of counties.

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