As of January 1, 2021, regulations require U.S. hospitals to post to their websites all of their negotiated payment rates in one sprawling machine-readable file, although many hospitals may not meet the initial deadline. The aim of the regulation is to increase price transparency with the goal that such transparency will lead to increased competition, improved customer choice, and ultimately lower prices. There will be challenges, though, to extract useful competitive information from the files. This article by Milliman professionals examines those challenges.
California Healthline looks at San Diego-based Sharp HealthCare’s selection as a Pioneer accountable care organization (we blogged about this brand of ACOs earlier this week). Here is an excerpt:
According to Alison Fleury, CEO of the Sharp HealthCare ACO, the ability to inform beneficiaries ahead of time whether they were assigned to an ACO was an important step in learning about the population Sharp will be managing.
Under the program, beneficiaries who received the majority of their care from a care provider within an ACO network during the past three years are aligned with that ACO.
Finally, the ability to move from a shared-savings model to a population-based payment arrangement was very important for many organizations.
“One thing at least some of the organizations are excited about is that eventually CMS would be willing to go to a capitated approach. I think a lot of these Pioneer ACOs, given that they are leaders in care coordination already, like that option,” said John Pickering, principal consulting actuary with the actuarial and consulting firm Milliman…
We’ve commented before about the evolving research around cost shifting. The CT Mirror picks up on this discussion with a look at Connecticut hospitals and the pressures created by disparate commercial vs. Medicare/Medicaid payment rates. Here’s an excerpt:
Not everyone agrees that the higher costs commercial insurers pay to hospitals can be blamed on government underpayment. The Medicare Payment Advisory Commission, or MedPAC, which advises Congress on Medicare issues, has argued that Medicare payments are adequate for relatively efficient hospitals, and that raising Medicare rates would not necessarily lead to lower commercial charges. Hospitals that make high margins from commercial payers have less pressure to rein in costs, the group has argued, leading to expenses beyond what Medicare pays.
The actuarial firm Milliman concluded that a cost shift did exist in a 2008 analysis prepared for insurers and hospitals. The firm estimated the cost shift nationwide at $88.8 billion per year, or about 15 percent of what commercial insurers spend on hospital and physician services. The report defined cost shift as the difference between actual payments and payment amounts that would produce equal margins for each payer.
But more recent Milliman research has suggested that cost shifting is not the only option for hospitals, and that they might have little choice in the future but to become more efficient. The firm identified cities that have “high-value” hospital care, with low per capita inpatient costs for both Medicare and commercial insurance, and positive hospital margins.
“Considering cost shifting to be inevitable ignores both the potential for cost management within hospitals and hospitals’ flexibility to set commercial prices,” one report said. “The data demonstrates that hospitals can prosper in some low-Medicare cost regions without cost shifting to commercial payers for their inpatient services.”
We’re seeing lots of concern over the fate of reform (with some questioning if it is even reform we’re attempting). Analysts are viewing the delay as a silver lining, a tactical opportunity, or even a welcome timeout. Whatever your perspective, there is surely more to come.
One of the reform priorities that has not yet been fully fleshed out has to do with cost—how do we pay for reform, and how do we bend the cost curve over time. What people sometimes forget is that the rate of cost increase has decreased in the last three years (though unfortunately a decline in the cost trend still leaves us with hefty increases in terms of total dollars). Meanwhile there are plenty of good ideas for continuing to bend the curve in a more affordable direction.
Here’s one. Milliman principal John Pickering has developed a new approach to insurance design—market-based insurance design—that brings price competition to providers.
Milliman experts and their research are increasingly a part of Congressional discussions of healthcare reform. On Tuesday, AHIP President and CEO Karen Ignagni cited research by Will Fox and John Pickering in her testimony before the Senate Health, Education, Labor and Pensions Committee:
A December 2008 study by Milliman, Inc. projects that this cost shifting essentially imposes a surtax of $88.8 billion annually on privately insured patients, increasing their hospital and physician costs by 15 percent. This study concluded that annual health care spending for an average family of four is $1,788 higher than it would be if all payers paid equivalent rates to hospitals and physicians. The transfer of these costs to those with private coverage cannot be sustained and is critical to addressing concerns over affordability.