Oregon’s public reporting of hospital cost Jeanene Smith MD, MPH Office for Oregon Health Policy & Research State Coverage Initiatives Winter Meeting 2008

Hospital Cost Transparency Project About OHPR Responsible for the development and analysis of health policy in Oregon Reports and conducts analyses relating to health care costs, utilization, quality, and access Provides analysis, technical, and policy support to the Governor and the Legislature Serves as the policymaking body for the Oregon Health Plan (Oregon Medicaid program) Staff to Governor appointed committees and commissions Health Policy Commission – Strategic health planning Health Resources Commission – Evidence-Based Rx Reviews Health Services Commission – The Prioritized List Medicaid Advisory Committee NEW - Oregon Health Trust Board – Health reform Effort

Hospital Cost Transparency Project Recent OHPR Reports Trends in Oregon’s Healthcare Market and the Oregon Health Plan: Report to the 2007 Legislature Oregon’s Acute Care Hospitals Capacity, Utilization and Financial Trends: Report to the 2007 Legislature Inpatient Quality Indicators Profile of Oregon’s Uninsured: Findings from the 2006 Oregon Population Survey Oregon Health Policy Commission Roadmap to Health Care Reform: Creating a High-Value, Affordable Health Care System Oregon Physicians Workforce Survey,

Hospital Cost Transparency Project What aspect of the health care market is missing? OHPR provides clear picture of utilization, access and financial state of hospitals Inpatient discharge data Audited financials Databank American Hospital Association survey Physician workforce survey Reporting had limited use for the general public in health care decision making OHPR began reporting AHRQ’s Inpatient Quality Indicators in 2004 With quality reporting on going, cost is a missing component to health care decision making

Hospital Cost Transparency Project How Oregon began hospital cost reporting? Hospital cost reporting national standard is charge based Hospital association in Oregon currently reporting charges Charge data Little value for consumers, purchasers, providers and the general public 1 Amount typically never paid to hospitals Charges are 2.5 time higher the amount a hospital will actually be paid 1 Logical meaningful step is reporting payments to hospitals Payment Data Reflect actual payments for service provided Provide consumers, purchasers, providers and the general public with “real” dollar amounts Previous state efforts failed to create political momentum to report payments Governor Kulongoski made health care cost transparency a priority Support from insurance carriers, consumers, advocates, government 1 Colmers JM. Public reporting and transparency. The Commonwealth Fund Commission on a High Performance Health System, January 2007.

Hospital Cost Transparency Project Goal: To publicly report hospital payment data to improve cost transparency for consumers, purchasers, providers and the general public October 16, 2006 Insurance Division, under exam authority, issued a inpatient claims data call to insurance carriers for calendar year 2005 who had paid claims in excess of $50 million (11 largest carriers) Collaborated with OHPR

Hospital Cost Transparency Project Why is this project innovative? Data obtained from insurance carriers to profile hospitals Project reports payment data Oregon one of first states to report payment data Provide critical piece for use by the general public for health care decision making

Hospital Cost Transparency Project Data Methods Cost transparency workgroup Included members including Representatives from individual health insurance carriers Oregon Association of Hospitals and Health Systems Oregon Coalition of Health Care Purchasers Individual hospitals representatives Actuaries Other interested stakeholders Technical workgroup Included analysts from OHPR and insurance carriers

Hospital Cost Transparency Project Data Methods Most common conditions or procedures defined as At least 150 observations OR At least $1 million in charges Used 3M APR-DRG software Risk adjusted Severity level grouping Assigns severity through Diagnosis, procedure, length of stay, patient age, patient discharge disposition Categories: Minor/Moderate, Extreme/Severe Estimation of variance Supplemented claims data with 3-year Oregon hospital discharge data and Nationwide Inpatient Sample, 2003

Hospital Cost Transparency Project Results 82 common conditions or procedures reported Top 5 volume 1.Vaginal delivery (APR-DRG 560) 2.Normal newborn (APR-DRG 640) 3.Cesarean delivery (APR-DRG 540) 4.Gynecology procedure for non-malignancy (APR-DRG 513) 5.Surgical repair of herniated/ruptured disc (APR-DRG 310) Top 5 total cost 1.Vaginal delivery (APR-DRG 560) 2.Cesarean delivery (APR-DRG 540) 3.Knee joint replacement (APR-DRG 302) 4.Extensive procedures on small and large intestines (APR-DRG 221) 5.Gynecology procedure, except for cancer or benign tumor (APR-DRG 513)

Hospital Cost Transparency Project What the data represents? Oregonians only Oregon hospitals Inpatient claims Discharges from January 1, 2005 to December 31, 2005 Final bills (admit thru discharge) Carriers that earned at least $50 million in OR premiums About 50% of non-HMO commercial inpatient claims (e.g. no self-insured) Over 70% of the claims submitted by the represented carriers About 11% of all inpatient discharges during 2005 Groupings of diagnoses or procedures (APR-DRG classifications)

Hospital Cost Transparency Project Data table example-Researcher

Hospital Cost Transparency Project Data Table Example-Consumer

Hospital Cost Transparency Project Cost & Quality

Hospital Cost Transparency Project Web based, table creator RSCH/comparehospitalcosts.shtml

Hospital Cost Transparency Project Public Reporting Prior to public release Insurance carriers Verified data to be displayed Hospitals Provided aggregated hospital level data Was not required to verify data Encouraged to submit written comments to be posted Website approved by workgroup

Hospital Cost Transparency Project Public release August 3, 2007 Press releases Governor’s office Department of Consumer & Business Affairs Coverage in major paper press and news affiliate

Hospital Cost Transparency Project Limitations Data limitations Not all carriers Medicare or Medicaid claims Capitated health plans Claims for coordination of benefits Claims for patients treated in an outpatient clinic located at a hospital Synergy with quality data Bridging the gap between hospital payment and out of pocket cost to consumers

Hospital Cost Transparency Project Future Directions Annual reporting requirement Legislation Display trending data Increase the scope of the insurance market Medicaid Medicare Include all commercial carriers Refine display with quality

Hospital Cost Transparency Project Challenges to reporting cost Political will Must have high level champions Creating a display useful for consumers and research community Communicate data more effectively and broadly ALSO: Health Reform efforts – initial steps for more transparency in Oregon’s healthcare system

Hospital Cost Transparency Project For more info, questions… Office for Oregon Health Policy & Research Jeanene Smith or Sean Kolmer, MPH Research & Data Manager