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Transparency in Health Data Reveals Significant Cost Differences

May 10, 2013 by Leave a Comment

In an effort to make our health care system more affordable and accountable, HHS Secretary Kathleen Sebelius announced a three-part initiative that for the first time gives consumers information on hospital charges. For years, consumers have been left in the dark when it comes to how much things cost at a hospital. However, under this new initiative, consumers will now have access to data on health care costs, and this data reveals some significant differences across the country, as well as within communities, in what hospitals charge for common inpatient services. In addition to releasing the data, HHS has also made approximately $87 million available to states to enhance their rate review programs and further health care pricing transparency.

“Currently, consumers don’t know what a hospital is charging them or their insurance company for a given procedure, like a knee replacement, or how much of a price difference there is at different hospitals, even within the same city,” Secretary Sebelius said. “This data and new data centers will help fill that gap.”

To kick off the movement to transparency in health care, CMS posted data today that includes information comparing the charges for services that may be provided during the 100 most common Medicare inpatient stays. The charges included in the data are comprised of what hospitals determine they will charge for items and services provided to patients and then these “charges” are the amount the hospital bills for that item or service.

Data Differences

Because the hospitals make this determination, the amounts vary widely. For example, CMS noted that on average, inpatient charges for services a hospital may provide in connection with a joint replacement range from a low of $5,300 at a hospital in Ada, Okla., to a high of $223,000 at a hospital in Monterey Park, Calif. And it is not just from one part of the country to another that these changes are occurring. Even within the same geographic area, these charges vary. For example, CMS noted that the average inpatient hospital charges for services that may be provided to treat heart failure range from a low of $21,000 to a high of $46,000 in Denver, Colo., and from a low of $9,000 to a high of $51,000 in Jackson, Miss.

“Transformation of the health care delivery system cannot occur without greater price transparency,” said Risa Lavizzo-Mourey, M.D., Robert Wood Johnson Foundation (RWJF) president and CEO. “While more work lies ahead, the release of these hospital price data will allow us to shine a light on the often vast variations in hospital charges.”

Funding is also being provided to data centers such as the RWJF, to collect, analyze, and publish health pricing and medical claims reimbursement data, in the hopes that this data will be made useful to consumers. According to CMS, the data centers’ work will help consumers better understand the comparative price of procedures in a given region or for a specific health insurer or service setting. Businesses and consumers alike can use these data to drive decision-making and reward cost-effective provision of care.

Filed Under: Centers for Medicare and Medicaid, HHS, Medicare, News

HHS Hangs “Welcome” Sign on Doorway to Health Care

May 1, 2013 by

Next year, 15 million currently uninsured Americans will be newly eligible for Medicaid coverage.  Low-income women, men and children from a variety of backgrounds will have access to health care, and under the new guidelines put forth by HHS’ Office of Minority Health, the current administration is making it clear that all individuals, no matter what ethnicity, sexual orientation or cultural background are welcome.

HHS announced the release of a promising set of updated cultural policies and principles to help providers better relate to minorities, address their care needs, and ultimately reduce health disparities. Many groups view this update as a major milestone in the implementation of the HHS Action Plan to Reduce Racial and Ethnic Health Disparities, as well as a step towards equality in health care.

HHS’ policy update, referred to as the National Standards for Culturally and Linguistically Appropriate Services in Health and Health Care, or CLAS Standards for short, is a set of guidelines to help provider practices relate culturally and provide linguistically appropriate health services. The enhanced National CLAS standards recognize health as being influenced by factors ranging from race and ethnicity to language, spirituality, disability status, sexual orientation, gender identity, and geography.

“We are making great strides in providing quality care and affordable coverage for every American, regardless of race or ethnicity or other cultural factors because of the Affordable Care Act,” said HHS Secretary Kathleen Sebelius as the release was announced. “The Enhanced National CLAS Standards will help us build on this ongoing effort to ensure that effective and equitable care is accessible to all.”

The update is well regarded among various organizations representing several groups. ThinkProgress posted a blog on the benefits to the lesbian, gay, bisexual and transgender (LGBT) community. The blog noted that included in the policy are recommendations made by the Joint Commission on Accreditation of Healthcare Organizations (JCAHO) in its field guide “Advancing Effective Communication, Cultural Competence, and Patient- and Family-Centered Care,” which provides guidance for incorporating the concerns of the LGBT community into the framework of culturally and linguistically appropriate care.

HHS updated the CLAS standards in response to changing demographics of the country and the growth of linguistic competency, and to ensure the relevance and applicability of the standards. This way, everyone will feel welcome and seek the care they need. In return, providers will be ready and able to respond.

“Many Americans struggle to achieve good health because the health care and services that are available to them do not adequately address their needs,” said J. Nadine Gracia, MD, MSCE, Deputy Assistant Secretary for Minority Health and Director of the HHS Office of Minority Health. “As our nation becomes increasingly diverse, improving cultural and linguistic competency across public health and our health care system can be one of our most powerful levers for advancing health equity.”

Filed Under: Health Insurance Exchange, HHS, Medicaid, Medicaid, News, Patient Protection & Affordable Care Act, Uncategorized

Per Capita Caps for Medicaid: Help, Hindrance, or Middle Ground?

April 24, 2013 by

Medicaid per capita caps, a proposed reform to Medicaid that would limit the amount of federal spending per beneficiary, may provide help to control the growth of federal spending on Medicaid, according to its supporters. However, some argue that instead of slowing the rate of spending growth, it would only shift the costs to the state, ultimately limiting poor Americans’ access to care. A recent health policy brief by Health Affairs and the Robert Wood Johnson Foundation examined this proposed “per capita cap” on federal Medicaid funding, in an attempt to determine whether it might be the key to controlling costs.

According to the brief, Medicaid spending is expected to grow to $795 billion by 2021, almost doubling from the $432 billion spent in 2011. Much of this growth in spending can be attributed to the Patient Protection and Affordable Care Act, which substantially increases the number of individuals eligible for Medicaid. Further, the federal government plans to cover 100 percent of expenses for the newly-eligible enrollees for the first few years, and then decrease that coverage to 90 percent. Covering more people costs more money, and concerns over the program’s costs at both the federal and state levels have led some policy makers to urge reforms.

Per Capita Caps Defined

One proposal to curb costs is to impose a per-beneficiary cap. Under the proposed Medicaid “per capita caps,” the federal government would no longer cover a fixed share of each state’s overall Medicaid costs but instead would limit each state to a fixed dollar amount per beneficiary. To calculate the cap, total spending and the total number of beneficiaries would each be calculated for a given base year. Then, the number representing total spending would be divided by the number of beneficiaries to calculate the initial amount spent per person, or per capita amount. This per capita amount would be adjusted annually for inflation, by some measure such as the consumer price index. Once the per capita cap is arrived at, it would be multiplied by the number of beneficiaries in the program.

Cost Control Theory

Using the per capita cap, total Medicaid spending would only increase as enrollment increases, which would give states an incentive to control other factors that lead to increased spending. Using Medicaid per capita caps is not a new idea, in theory or in practice. They are in place as an integral part of many demonstration projects as a means to control costs, and they were also part of President Bill Clinton’s budget proposal in 1997; however, they were not used.

Reluctance to Change

Despite the theory on cost control, the reluctance to move to a capitated model clearly still exists. Although many believe that the per capita cap approach would provide an incentive for states to be efficient, others question whether a per capita cap would truly save the federal government money. This is because much of the growth in Medicaid spending in the past ten years is due to increases in enrollment and less for increases in cost.

Causes for Concern

Many critics are concerned over problems inherent in determining the cap, such as population, base year and inflation. There are substantial differences in the cost of providing care to children versus adults, the elderly or the disabled. Whether the per capita cap would break the population down into various subgroups remains in question. The selection of a base year from which to develop the per capita cap cost would also be very important. Using this method, a combination of the enrolled population, payment rates, and covered services in the base year would determine how much spending would be available in future years. Spending levels from a base year marked by recession would likely reflect a narrower range of services or lower payment rates, but setting a base year during a time of improving economic conditions could well reflect more generous benefits and higher payment rates. And finally, the method used to mark inflation also gives critics pause. Both gross domestic product (GDP) and the consumer price index (CPI) are typical measures used to account for inflation. However, given that health care costs typically rise faster than either one, neither may sufficiently cover costs.

Future

Overall, whether a Medicaid per capita cap will emerge as part of entitlement reform efforts is unclear. The brief noted that per capita caps are a part of the discussion but have yet to make it into any sort of reform.

Filed Under: Centers for Medicare and Medicaid, Health care spending, HHS, Medicaid, Medicaid, News, Patient Protection & Affordable Care Act
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