More public reporting on hospital quality could help to reduce hospital prices, results of a study suggest.
The prices for two common cardiac procedures did not increase as quickly in states where the first public reporting on cardiac quality occurred when Medicare released it in 2007, researchers reported in the latest issue of Health Affairs. Prices for the same two procedures grew more quickly in states where cardiac quality data already was available.
Results suggest that commercial health plans used hospital performance as leverage to negotiate prices where quality data became available for the first time, wrote economists Avi Dor of George Washington University, William Encinosa of the Agency for Healthcare Research and Quality and Kathleen Cary at Boston University.
New quality data increases pressure on hospital to compete. Price is one way to compete, said Dor, a health policy professor at George Washington University and one of the study's three researchers. “The good news is that getting information to consumers—in this case it's really purchasers who make decisions on behalf of individuals—providing that information helps mitigate hospital price inflation,” he said. The results suggest a growing benefit for consumers as report cards proliferate. "It's really valuable to provide information."
The study analyzed commercial health plan prices between 2005 and 2010 for coronary artery bypass grafts and percutaneous coronary interventions, two common and pricey procedures that accounted for $15 billion in U.S. healthcare costs in 2012. The findings add a possible twist to reporting that was intended to increase public pressure to improve the quality of care, not its price.
Dor and his colleagues analyzed prices before and after 2007, when Medicare first published hospital performance on heart attack and heart failure patients' mortality using its website Hospital Compare. The researchers compared trends in states with and without public cardiac quality reporting.
States without public measures of cardiac quality before 2007 saw a 3.9% and 4.4% annual increase for coronary artery bypass grafts and the percutaneous coronary interventions, respectively. That compared with 10.6% annual price growth for coronary artery bypass grafts and 8.7% annual inflation for percutaneous coronary interventions in states with published quality data. The data included more than 18,500 coronary artery bypass and roughly 54,300 percutaneous coronary intervention procedures. It was adjusted to reflect potential prices differences for more complicated and acutely ill patients.
Prices accelerating more quickly in states that already report cardiac quality measures suggests that those markets had already adjusted to previously introduced quality data, Dor said.
The potential effect of quality data on prices could be greater if Medicare quality reporting was more precise, he said. Medicare ranks hospitals by whether performance is above, below or in line with national rates. Those that rank above the national rate or below it account for 1% of U.S. hospitals. The rest fall into an indistinguishable middle.
Bargaining between hospitals and health plans also may benefit from greater health plan accountability, the authors wrote. “There may be concerns that the current practice of quality reporting is lopsided, placing pressures on hospitals—but generally not on insurers—to become more competitive. The planned introduction of quality ratings for health plans that operate in exchanges created by the Affordable Care Act would “restore balance in hospital-insurer negotiations,” they wrote.
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