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Price increases for CABG, PCI slowed after advent of public reporting on quality
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Price increases for CABG and PCI slowed after the introduction of Medicare’s public reporting initiative, according to a new report.
“The initiation of Hospital Compare quality scoring slowed the rate of price increases in a majority of states that had not previously been exposed to comparable information through their own public reporting systems,” Avi Dor, PhD, MS, professor of health policy and management at the Milken Institute School of Public Health, George Washington University, Washington D.C., and a research associate at the National Bureau of Economic Research, Cambridge, Mass., and colleagues wrote. “The mere injection of quality information into the health care marketplace appears to be adding strength to the buyer side and increasing competitive pressures on hospitals.”
Dor and colleagues analyzed inpatient files from the Truven Analytics MarketScan Commercial Claims and Encounters database, which includes transaction prices. They extracted claims for hospitalizations from 2005 to 2010 for CABG (n=18,532) or PCI (n=54,301), which were selected because they are “costly and relatively frequently performed procedures [and] tend to be well defined in claims data used for research purposes,” Dor and colleagues wrote. Price data were adjusted by the CMS Wage Index and for inflation.
Price changes compared
The researchers evaluated price changes for both procedures before and after the introduction of the Hospital Compare outcome-based quality scores in June 2007. They also examined differences in price changes between six states that had public reporting of hospital quality metrics based on mortality rates following CABG or PCI before the advent of Hospital Compare — California, Florida, Massachusetts, New Jersey, New York and Pennsylvania — and 44 states that did not (no-report states).
In an unadjusted analysis, prices for PCI were significantly higher in the no-report states compared with the control states both before and after the introduction of the Hospital Compare rankings; however, for CABG, when compared with control states, no-report states had higher prices before the advent of the rankings, but lower prices afterward (P<.01 for all comparisons). Price increases were smaller in the no-report states compared with the control states.
The researchers also conducted a difference-in-differences regression analysis to control for patient case-mix and product heterogeneity. The independent effect of being in a no-report state and the overall effect of being in the time period after the advent of Hospital Compare were large and significant (P<.01 for all comparisons). The net effect of Hospital Compare quality reporting in states without previous reporting was a reduction in CABG prices by 13.7% and a reduction in PCI prices by 11.4%.
Public reporting affected rates
From the end of 2007 to 2010, CABG prices rose 35.4% (annual rate of increase, 10.6%) in control states compared with 12.1% (annual rate of increase, 3.9%) in no-report states. PCI prices rose 28.5% (annual rate of increase, 8.7%) in control states vs. 13.9% (annual rate of increase, 4.4%) in no-report states during the same period, according to the report.
The advent of the Hospital Compare rankings “served to mitigate the rate of increase in those states that did not have cardiac report cards of their own in previous years,” the researchers wrote. “Indeed, these states would have been more exposed to the injection of new information, as it became available at the national level, compared with states that had previously implemented similar report cards of their own.”
Dor said in a press release that “if the results from this study can be verified, they suggest that public reporting on hospital performance might ultimately lead to a slowing of insurance premium increases, to the benefit of consumers.”
Disclosure: Two researchers report receiving support from the Agency for Healthcare Quality and Research and the NIH.
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