Our View: New Cost Evidence Validates Push for Complete Data and Calls Consolidation into Question

The New York Times just published a story on a ground breaking study showing variation in costs for Medicare vs. privately-insured patients within the same healthcare market. It also found that a lack of competition among local hospitals and other providers can inflate charges for privately-insured patients. The national study showed that hospitals with fewer competitors had substantially higher prices.

This study may be the first to give us widespread national evidence for what we’ve discussed and studied in regions and states for years. The study serves as an important milestone in our journey toward healthcare transparency as it illustrates the limitations of relying on narrow datasets, the value of regional analysis, and the consequences of healthcare provider consolidation.

As this study suggests, understanding and mitigating cost drivers in healthcare requires complete data. At the regional level, NRHI members have developed and partnered with all payer claims databases (APCDs) to collect commercial insurance data and combine it with public payer data from Medicare and Medicaid. This aggregated all-payer information has been used for many years to illustrate cost variation and study cost drivers in regions across the country as done in this national study.

One way NRHI has demonstrated the utility of complete data is through its Total Cost of Care Project. With leadership from NRHI, several regions across the country are reporting the total amount paid for healthcare services for a single individual at the primary care practice level. The project participants determined a standard way to implement an NQF-endorsed total cost of care measure to enable apples to apples comparisons from one physician practice to another and across states. These reports help providers understand how they stack up and where they should target for cost and quality improvements. And early results are showing that total cost is driven more by price than utilization. This type of analysis would not be possible without complete data from all payers, and it would not drive change without leveraging regional relationships and expertise.

As for competition, this national study is tracking with what purchasers of health benefits have bemoaned for years – that often where public payers pay less, private payers pay more- the ‘cost shifting’ phenomenon. Our members have worked closely with employers in their regions to help identify how changes in the market like consolidation and ACOs may impact prices and to facilitate community conversations with transparent data to create a better functioning marketplace.

NRHI members are now beginning to couple cost information with clinical and patient experience data to help purchasers, providers, payers and patients alike to implement effective care improvement strategies. Complete cost information is necessary, but doesn’t tell the whole story. An industry that welcomes and benefits from transparent cost, quality and patient experience information will enable true transformation. This national study and the important points it makes both validate and bolster the work of NRHI and its members. Bringing all healthcare stakeholders around a common table to use transparent data is the critical foundation to fixing our broken system.