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Matching Revenue Flows With Population Needs:The Challenge of Payment Variation

Across Providers and Payers and Over Time

Stuart GutermanVice President, Payment and System Reform

Executive Director, Commission on a High Performance Health System

The Commonwealth Fund

Alliance for Health Reform Hill BriefingWashington, DC

April 13, 2012

THE COMMONWEALTH

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2Variation in Prices for Colonoscopy, Mammogram and MRI

Across Payers and Providers in New Hampshire

Source: CMWF analysis of data (July 2011) retrieved at http://www.nhhealthcost.org/costByProcedure.aspx

What Insurance Pays to Health Care Providers Across New Hampshire Per Procedure

Colonoscopy Mammogram MRI (back)(Outpatient)

Insurer A $1,430 – $5,012 $248 - $673 $642 – $3,211

Insurer B $1,171 - $3,671 $202 - $621 $867 – $2,689

Insurer C $1,181 - $3,839 $256 - $826 $821 – $3,174

Potentially Avoidable Hospital Use & Cost 3

SOURCE: Commonwealth Fund Local Scorecard on Health System Performance, 2012

HRR = hospital referral regionDATA: Commercial – 2009 Thomson Reuters MarketScan Database, analysis by M.Chernew, Harvard Medical School. Medicare – 2008 Medicare claims as reported by IOM . Ratio lower than 1.0 indicate percent lower than average; ratio higher than 1.0 indicate percent higher than average. Median spending determined separately for the commercially insured and Medicare populations

Commercially Insured and Medicare Spending per Enrollee, Relative to U.S. Median Spending for each population

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4Annual Rates of Increase in Hospital Costs per Case and

Medicare, Medicaid, and Private Payment Rates, 1988-2008

1.2%

2.6%2.0%

-0.5%

4.9%

7.8%

3.8%

6.8%

4.1%

10.6%

9.3%

6.3%

-5%

0%

5%

10%

15%

1988-1993 1993-2000 2000-2008

Costs per case Medicare pmt. rates

Medicaid pmt. rates Private pmt. rates

Source: Commonwealth Fund analysis of American Hospital Association Annual Survey data.

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Today’s Panelists

• Steven Safyer, M.D.—President and CEO of Montefiore Medical Center, New York, NY

• Gregory Reicks, D.O.—President, Mesa County Physicians IPA, Grand Junction, CO

• John Colmers—Chairman, Maryland Health Services Cost Review Commission

• Jim Bentley-Health Policy Consultant, Silver Spring, Maryland

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Questions for the Panel

• How do you match the flows of revenue from different sources with the needs of the population to be served?– Medicare, Medicaid, privately insured?– The uninsured?

• How do you deal with the changes over time in the flows of revenue from different sources?

• What lessons can be learned from your experience that could be applied to other areas/circumstances?

• What implications does your experience have for federal policy?

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