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I N D I A N A A N D T H E F I G H T TO LO W E R H E A LT H C A R E C O S T S
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JORDAN ROBERTS
and the Fight to Lower Health Care Costs
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By Jordan Roberts
HEALTH POLICY ANALYST, JOHN LOCKE FOUNDATION
e know the lack of price transparency in health care is a significant problem. Health care isn’t purchased like any other product. In most cases, patients outsource consumer power to insurance companies and rely on them to obtain enough in-network providers, handle billing claims, and pay for the cost of the care. Not many people, including those who are involved in the care delivery process, know the final prices. But some self-insured plans are taking it a step further in by demanding that claims data, and therefore transparent pricing, be available to them. A recent article in Health Affairs article looks at how Indiana business leaders have attempted to tackle this problem: In 2016, the Employers’ Forum of Indiana (Forum), an employer-led multistakeholder coalition aiming to improve the value employers and patients receive for their health care expenditures, initiated a collaboration with the RAND Corporation to create a hospital price transparency study using claims data from self-insured employers in Indiana. This study, published in September 2017, was the first to publicly report relative hospital prices by hospital name. It found that, across 120 Indiana hospi-
tals, prices negotiated for employers in Indiana averaged 272 percent of what Medicare would have paid for the exact same services at the same hospitals over the period 2013–16. The Forum used these results to educate employers, build consensus, and demand better value from insurance carriers and hospitals. Self-insured employers are the owner of their claims data. They pay an insurance company to complete claims, but all of the data should belong to the employer to monitor cost variation and tie overall costs to health outcomes. The authors go on to describe how more price transparency among providers can help employers take back control of their plans: The pricing information generated from these studies gave self-insured employers unprecedented insight into the actual contracting outcomes between their carriers and hospitals. Since Medicare prices have already been adjusted for geographic variations in the standard of living, employers can compare the relative prices with local, regional, and national relative price benchmarks and monitor the trends over time. These insights allow employers to assess whether their negotiated prices are
Originally published by the John Locke Foundation. Reprinted with permission. 16
ShopHealth | Vol. 2 | Issue 3
