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1 — U.S. BUREAU OF LABOR STATISTICS • bl s.gov
Medical Care in the Consumer Price and Producer Price Programs
Kelley Khatchadourian, Consumer Price ProgramMelanie Santiago, Producer Price Program
Data Users’ ConferenceApril 21, 2021
2 — U.S. BUREAU OF LABOR STATISTICS • bl s.gov
Agenda
Importance of Health Care in the EconomyDefinitions and IndexesMethodologyDisease Based Price Indexes Recent ChangesUpcoming Projects and Research
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Importance of health care in the U.S. economy
National Health Expenditures in 2019 = $3.8 Trillion
$11,582 per person
17.7% of GDP
Source: Centers for Medicare & Medicaid Services, National Health Expenditures, 2019 Highlights
4 — U.S. BUREAU OF LABOR STATISTICS • bl s.gov
Who pays for health care?
Private Insurance 31%
Medicare 21%
Medicaid 16%
Out of Pocket 11%
Source: Centers for Medicare & Medicaid Services, National Health Expenditures, 2019 Highlights
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CPI & PPI definitions and indexes
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Hospital services indexes
50
70
90
110
130
150
170
190
Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21
Index
CPI PPI
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Physicians’ services indexes: 2009-2021
75
85
95
105
115
125
135
Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21
Index
CPI PPI
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PPI vs. CPI: How do they differ?
Sources of Payment Geographic Scope Level of Detail
Weight Sources Revisions
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CPI health care indexesMedical Care
Medical Care Services– Professional Services
• Physician Services• Dental Services• Eyeglasses and Eye Care• Services by Other Medical Professionals
– Hospital and Related Services• Hospital Services• Nursing Homes and Adult Day Services• Care of Invalids and Elderly at Home
– Health Insurance
Medical Care Commodities– Medicinal Drugs
• Prescription Drugs• Non-Prescription Drugs
– Medical Equipment and Supplies
10 — U.S. BUREAU OF LABOR STATISTICS • bl s.gov
CPI medical care indexes by city 2009-2020
90
100
110
120
130
140
150
Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21
Index
All Cities New York Chicago LA
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CPI medical care indexes by item 2009-2020
80
100
120
140
160
180
200
Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21
Index
All Items Medical Care Commodities Physicians' Services Hospital Services Health Insurance
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PPI family of indexes
Industry
Commodity
Final Demand
Intermediate Demand
Net Inputs to Industries
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PPI health care indexes by NAICS industry
Ambulatory Health Care ServicesOffices of PhysiciansOffices of DentistsMedical LaboratoriesDiagnostic Imaging CentersHome Health Care ServicesBlood and Organ Banks
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PPI health care indexes by NAICS industry (cont.)
HospitalsGeneral Medical and Surgical HospitalsPsychiatric and Substance Abuse HospitalsOther Specialty Hospitals
Nursing and Residential Care FacilitiesNursing Care FacilitiesResidential Developmental Disability Homes
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PPI industry indexes related to health care Pharmaceutical Preparation Manufacturing Electromedical Apparatus Manufacturing Surgical and Medical Instrument Manufacturing Surgical Appliance and Supplies ManufacturingDental Equipment and Supplies ManufacturingOphthalmic Goods Manufacturing Retail Pharmacies and Drug StoresHealth and Medical Insurance Carriers
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Selected health care services industries
80
90
100
110
120
130
140
150
Jul-10 Jul-11 Jul-12 Jul-13 Jul-14 Jul-15 Jul-16 Jul-17 Jul-18 Jul-19
Index
Selected Health Care Services Physicians Dentists
Medical and Diagnostic Laboratories Home Health Care Blood and Organ Banks
Hospitals Nursing Care Facilities Residential Developmental Disability Homes
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PPI health care commodity indexesPPI Health Care Commodity Indexes Relative Importance in
Final Demand - Dec 2020Health Care Services 17.7
Outpatient Care 10.7
Physician Care 4.1
Medical Laboratory and Diagnostic Imaging Center Care 0.3
Home Health and Hospice Care 0.7
Hospital Outpatient Care 4.3
Dental Care 1.2
Inpatient Care 7.0
Hospital Inpatient Care 5.4
Nursing Home Care 1.3
Intellectual and Developmental Disability Center Care 0.3
Sales of Blood and Blood Products, Organs, and Tissues 0.1
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Health care services indexes by payer
90.0
95.0
100.0
105.0
110.0
115.0
Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 Jun-19 Dec-19
Index
Medicare Patients Medicaid Patients Private Insurance Patients All Other Patients
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Input to industry indexes
Official Series - January 2015Inputs to Offices of Health Practitioners
Satellite Series – September 2020Inputs to Ambulatory Health Care ServicesInputs to HospitalsInputs to Nursing and Residential Care
Facilities
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Methodology
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Matched model
Goal: Measure price change for a unique item Steps (at a high level):
1. Select a sample of providers2. Select a unique service3. Track price change for the same service by a particular
provider over time4. Calculate indexes
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Provider sample selection
Population
Sample
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Service selection
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What is priced in the health care industries? Physicians and dentists:
per visit or per treatment
Hospitals: per stay for inpatient, per treatment for outpatient
Medical Labs, Diagnostic Imaging Centers, and Blood Banks:Per test or per unit
Home Health Care Services:Per billing period (hour, week, month, etc.)
25 — U.S. BUREAU OF LABOR STATISTICS • bl s.gov
What is the price for a health care service?
Price = Reimbursement
Reimbursement ≠ Bill
Total reimbursement may include payments from multiple payers
≠
26 — U.S. BUREAU OF LABOR STATISTICS • bl s.gov
Eligible sources of payment
Source of Payment CPI PPIDirect payments from patients
Private insurance
Medicare Parts B&C Parts A, B, CMedicaid
Other third party payers
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Physicians’ services indexes: 2014-2015
98
99
100
101
102
103
104
Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15
Index values, June 2014 = 100
CPI PPI
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PPI physician care by type of payer
80
85
90
95
100
105
Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15
Index
Medicaid Medicare Private Insurance All Other Patients
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The important role of weighting of indexes
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CPI medical care weightsConsumer Price Index (CPI) Dec-2020 Relative ImportanceMedical care 8.9
Medical care commodities 1.6Medicinal drugs 1.5
Prescription drugs 1.1Nonprescription drugs 0.4
Medical equipment and supplies 0.1Medical care services 7.3
Professional services 3.7Physicians’ services 1.8Dental services 1Eyeglasses and eye care 0.4Services by other medical professional 0.5
Hospital and related services 2.4Hospital services 2.2Nursing homes and adult day services 0.1Care of invalids and elderly at home 0.1
Health insurance 1.2
31 — U.S. BUREAU OF LABOR STATISTICS • bl s.gov
CPI health insuranceHow to track the cost of health insurance?Track out-of-pocket premiums
Cannot control for plan qualityChanging benefits
Indirect retained earnings methodTrack the cost of health insurance
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Retained earningsFigure A. Breakdown of health insurance premium components
Health insurance premiums
Retained earningsReimbursements for medical goods and services (benefits
paid out)
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Retained earnings relative
𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅 𝐸𝐸𝑅𝑅𝐸𝐸𝑅𝑅𝑅𝑅𝑅𝑅𝐸𝐸𝐸𝐸𝑇𝑇−1𝐵𝐵𝑅𝑅𝑅𝑅𝑅𝑅𝐵𝐵𝑅𝑅𝑅𝑅𝐸𝐸𝑇𝑇−1
𝜋𝜋𝐸𝐸2
𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅 𝐸𝐸𝑅𝑅𝐸𝐸𝑅𝑅𝑅𝑅𝑅𝑅𝐸𝐸𝐸𝐸𝑇𝑇𝐵𝐵𝑅𝑅𝑅𝑅𝑅𝑅𝐵𝐵𝑅𝑅𝑅𝑅𝐸𝐸𝑇𝑇
1/12
= Monthly RE relative
34 — U.S. BUREAU OF LABOR STATISTICS • bl s.gov
Index aggregation
Monthly RE Relative
Physicians’ Services 1M %x( (
Monthly RE Relative
Hospital Services 1M %x( (
Monthly RE Relative
Prescription Drugs 1M %x( (
Health Insurance Index
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Reassigning weight
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CPI health insurance (cont.)
Effects of indirect method of pricing health insuranceIncreases relative shares of other medical care items
Includes payments by third parties when measuring prices for medical care
Medical Care Factsheet
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Disease based price indexes
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What are disease based price indexes?
Measure changes in the average price level to treat an episode of specific disease
Includes all goods and services prescribed in the episode, from all providers:Medical proceduresDrugsOffice visits
39 — U.S. BUREAU OF LABOR STATISTICS • bl s.gov
How are disease based indexes different?
Specific medical condition vs. specific goods and services
Changes in utilization of services for treating a disease
Include technological improvementsType of treatment: drugs vs. surgeryIntensity of treatment: inpatient vs. outpatient
40 — U.S. BUREAU OF LABOR STATISTICS • bl s.gov
Disease based price indexes
First published in July 2015
Quantities from Medical Expenditure Panel Survey (MEPS)
BLS price data from both CPI and PPI
Update monthly about 1-2 weeks after release of CPI & PPI
Disease Based Price Index background, methodology, and data
41 — U.S. BUREAU OF LABOR STATISTICS • bl s.gov
A comparison of the growth of the disease based price index with the traditional medical price index, 1999-2016
1
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Disease-based price indexTraditional medical index
“The cost of care: new insights into healthcare spending growth,” Beyond the Numbers: Prices & Spending, vol. 6, no. 7 (U.S. Bureau of Labor Statistics, June 2017)
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Recent changes & research
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CPI physicians’ services index
Medical Expenditure Panel Survey (MEPS) weights by payer-type
Better reflects current market weights
Increases the share of payments covered by private insurance relative to self-pay and Medicare part B
weighting by payer-type
44 — U.S. BUREAU OF LABOR STATISTICS • bl s.gov
Physicians’ Services Indexes March 2018-February 2021
90
95
100
105
110
Mar-18 Sep-18 Mar-19 Sep-19 Mar-20 Sep-20
Index
CPI PPI
45 — U.S. BUREAU OF LABOR STATISTICS • bl s.gov
Recent PPI changes
Publishing by ICD Chapter instead of MDC
CPI/PPI Hospital Data Sharing
New Input to Industry Health Care Indexes
Use of Corporate DataRespondents provide data files with transaction level data for all
services provided for the month
46 — U.S. BUREAU OF LABOR STATISTICS • bl s.gov
CPI ongoing projects and research
Using medical claims data in the CPIAEA paper
Reduce respondent burden and increase participation
Improve the health insurance indexTimeliness improvementCNSTAT to review methodology
47 — U.S. BUREAU OF LABOR STATISTICS • bl s.gov
PPI ongoing projects and research
Using medical claims data in the PPI Evaluating changes to CMS payment models and the impacts on
medical care prices and PPI quality adjustment methodsMonitoring the impact of the COVID-19 pandemic on health
care providers, services, and prices Research into covering additional industries in the healthcare
sector
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Cross-program research
Research into quality adjusting disease based price indexes – use of Medicare claims data
Potential application of this research to CPI and PPI indexes
49 — U.S. BUREAU OF LABOR STATISTICS • bl s.gov
Kelley Khatchadourian, Supervisory EconomistConsumer Price Program
Melanie Santiago, Services Section ChiefProducer Price Program
Contact information
