Oregon’s public reporting of hospital cost

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

2. 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

3. 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, 2007 www.ohpr.oregon.gov Recent OHPR Reports Hospital Cost Transparency Project

4. 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

5. 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 public1 • Amount typically never paid to hospitals • Charges are 2.5 time higher the amount a hospital will actually be paid1 • 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

6. 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

7. 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

8. 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

9. 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

10. Results • 82 common conditions or procedures reported • Top 5 volume • Vaginal delivery (APR-DRG560) • Normal newborn (APR-DRG640) • Cesarean delivery (APR-DRG540) • Gynecology procedure for non-malignancy (APR-DRG513) • Surgical repair of herniated/ruptured disc (APR-DRG310) • Top 5 total cost • Vaginal delivery (APR-DRG 560) • Cesarean delivery (APR-DRG 540) • Knee joint replacement (APR-DRG 302) • Extensive procedures on small and large intestines (APR-DRG 221) • Gynecology procedure, except for cancer or benign tumor (APR-DRG 513) Hospital Cost Transparency Project

11. 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

12. Data table example-Researcher Hospital Cost Transparency Project

13. Data Table Example-Consumer Hospital Cost Transparency Project

14. Cost & Quality Hospital Cost Transparency Project

15. Web based, table creator http://www.ohpr.state.or.us/OHPPR/RSCH/comparehospitalcosts.shtml Hospital Cost Transparency Project

16. 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

17. 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

18. 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

19. 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

20. 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

21. For more info, questions… Office for Oregon Health Policy & Research www.ohpr.oregon.gov Jeanene Smith 503-373-1625 Jeanene.smith@state.or.us or Sean Kolmer, MPH Research & Data Manager 503-373-1824 Sean.Kolmer@state.or.us Hospital Cost Transparency Project