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Guest Article

Deloitte

(From the June 12, 2006 issue of Deloitte's Washington Bulletin, a periodic update of legal and regulatory developments relating to Employee Benefits.)

Medicare Posts Cost Data for Common Elective Procedures


The Centers for Medicare & Medicaid Services (CMS) has posted to its Web site the costs Medicare pays hospitals for 30 common elective procedures and other hospital admissions. This is the first step in a Bush Administration initiative to make health care cost and quality information available to the public. The goal is to encourage private insurers and providers to make similar information available for consumers to use when making health care purchasing decisions. Access to cost and quality data is a key element to the success of consumer-directed health plans (CDHPs).

Background

In February 2006, the Bush Administration issued a series of comprehensive proposals for reforming the health care system. Most of the proposals outlined in the White House National Economic Council's Reforming Health Care for the 21st Century are geared towards encouraging the continued expansion of CDHPs.

A Government Accountability Office (GAO) report released in late May estimates the number of Americans enrolled in CDHPs has nearly doubled -- from 3 million to between 5 and 6 million -- during the last year. The GAO study indicates this trend will continue as employers and individuals look for ways to cut health care spending. However, the GAO study also lists a number of factors that may stunt the growth of CDHPs, including a lack of "sufficient information to assess the cost and quality trade-offs of health care purchasing decisions." Of the five insurers the GAO interviewed for the study, only three provide "average hospital payment rates and average physician payment rates within a specified geographic area for selected services," and none provide the "actual payment rates that would be charged to enrollees that the carrier had negotiated with specific hospitals or physicians."

The Administration has called on "insurance companies and medical providers to make health care prices and quality information readily available to consumers." The short-term goal is "disclosure of per-service prices for the most common services and procedures." Eventually, the Administration hopes consumers will "be able to obtain all-inclusive prices for more complex procedures and meaningful quality information for each medical provider." Furthermore, the Administration has directed Medicare and the Federal Employees Health Benefits program (FEHBP) to begin making this type of information available. Together, Medicare and the FEHBP provide health coverage to more than 46 million people -- approximately 15 percent of the total U.S. population.

Medicare Cost Data

As noted, the CMS initially has posted the costs Medicare pays hospitals for 30 common elective procedures and other hospital admissions. The information is categorized by state and county and includes a range of prices, the national average payment for the procedure, and the number of cases the hospital has handled. Additionally, CMS is working with national and local organizations to develop more comprehensive and personalized information on quality and cost.

Later this summer CMS plans to post information for common elective procedures of ambulatory surgery centers, followed this fall by information about common hospital outpatient and physician services.

The data can be downloaded in Excel spreadsheet format. The first file, "Top 30 Elective Inpatient Hospital DRGs" contains the volume and ranges of Medicare payments between the 25th and 75th percentiles for a limited set of conditions treated in U.S. states and counties. Included are the 30 conditions that had the highest utilization rates among all Diagnosis Related Groups (DRGs). Data are aggregated at the county, state, and national level.

The second file, "Other Inpatient Hospital DRGs of High Utilization," contains ranges of Medicare payments between the 25th and 75th percentiles for a limited set of conditions treated in U.S. states and counties. These conditions are not among the top 30 utilized DRGs, but were deemed of interest to the Medicare community. Again, the data are aggregated at the county, state, and national level.

Two other "Sample State" files provide these data for the state of Florida.

The files are available on CMS's Web site, at www.cms.hhs.gov/HealthCareConInit.


DeloitteThe information in this Washington Bulletin is general in nature only and not intended to provide advice or guidance for specific situations.

If you have questions or need additional information about articles appearing in this or previous versions of Washington Bulletin, please contact: Robert Davis 202.879.3094, Elizabeth Drigotas 202.879.4985, Taina Edlund 202.879.4956, Laura Edwards 202.879, Mike Haberman 202.879.49634981, Stephen LaGarde 202.879-5608, Bart Massey 202.220.2104, Martha Priddy Patterson 202.879.5634, Tom Pevarnik 202.879.5314, Carlisle Toppin 202.220.2067, Tom Veal 312.946.2595, Deborah Walker 202.879.4955.

Copyright 2006, Deloitte.


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