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The Truven Health Blog


The latest healthcare topics from a trusted, proven, and unbiased source.


New Regional Data Research: More Than $10,000 Difference in Commercial Bundled Costs for Total Joint Replacement


By Bob Kelley /Wednesday, February 17, 2016

 

While much data has been released by the Centers for Medicare and Medicaid Services (CMS) on how total joint replacement (TJR) bundled costs differ regionally for Medicare patients, data on commercial bundles has been more limited.

But as private insurers, in addition to government payers, apply bundled payment policies to their contract negotiations, commercial data and analysis become increasingly important as both providers and payers prepare for the trend.

In the new Truven Health AnalyticsTM research brief, Bundled Pricing for Total Joint Replacements (TJRs) in the Commercially Insured Population: Geographic Variation and Cost-Driver Insights, we’ve tackled the subject with simulated bundled pricing based on our proprietary commercial claims database and the nine U.S. Census divisions. Our bundles included inpatient hospitalization, post-acute care, and readmission costs.

The study found there is a nearly 30-percent variation in commercial-patient TJR bundled costs across census divisions, from nearly $30,000 per patient to more than $40,000.

Specifically, our analysis showed that the average TJR bundled cost in the commercial population ranged from $29,825 in the East South Central division to $40,431 in the Middle Atlantic — a difference of more than $10,500 per patient.

It is not surprising that this geographic variation research raised significantly more questions about why cost variation exists. We will be addressing those additional questions about cost-drivers, length-of-stay impact, and more in coming research briefs in this series and in future blog posts. You can download the first brief here.

In addition, if you’d like to be alerted via email when additional commercial bundled pricing research is released, please provide us with your information via http://truvenhealth.com/issues/bundled-payments.

Bob Kelley

Senior Research Fellow, Advanced Analytics

 


Price Transparency for Medicare Services and Procedures Can Help Avoid Wasteful Spending


By Michael L. Taylor/Tuesday, April 8, 2014
Mike Taylor imageI welcome the recent announcement from Centers for Medicare & Medicaid Services (CMS) that it is publicly releasing extensive data detailing how much Medicare part B pays physicians for more than 6000 services and procedures. I don’t share the American Medical Association’s position that this data release will be harmful. Medicare part B pays in excess of $77 billion annually for physician services, and the public should be able to see how those dollars are spent.

Truven Health research proves there is tremendous variation in price for hospital services and procedures, and I fully expect these new data will show the same level of price variation. I expect to see considerable variation in price for physician services (office visits, consultations, etc.), but I suspect the real story will be in the prices charged for procedures rather than just the physician services.
  • How much price variation is present for frequently performed services like EKGs and blood tests? I recently received a bill for a “Metabolic Panel Comprehensive.” The test costs pennies to run—and the bill was $145! In total, my lab bill was $1035.
  • Many physicians have invested in office testing equipment and can charge a wide range of prices for these tests. Bone densitometry equipment a good example: it’s marketed with a definite business plan. Doctors are told how many tests they need to do every month to pay for the equipment and guarantee a certain profit level.
Over the past months, several Truven Health articles and studies have highlighted the huge variation in prices for colonoscopies, a recommended screening test, ranging from several hundred dollars to thousands. The public has a right to see these prices before agreeing to the tests. That is the goal of the Truven Health Treatment Cost Calculator. Patients using this tool can see the actual charge for a given test in his or her community, compare costs and then make an informed decision. Our fee-for-service payment system drives wasteful spending on medical procedures, and full transparency is one way to better understand what is driving these high costs.

Michael L. Taylor, MD, FACP
Chief Medical Officer

Price Variation with No Discernible Relationship to Quality or Outcomes


By Michael L. Taylor/Friday, August 16, 2013
Mike Taylor imageTina Rosenberg, a highly respected healthcare journalist for the New York Times, recently published a two-part “Opinionator” series on healthcare costs. The second article in the series discussed the Truven Health white paper from 2012 that describes the $36 billion savings opportunity due to price variation among providers. I was pleased to speak with Ms. Rosenberg about the topic, and provide background information for the article.

Our research (and others) has shown price variation based on geographic location, with some areas of the country charging much higher rates than others for similar services—and not demonstrating any significant improvement in quality or outcomes. Our white paper extends the research to show prices also vary within any given market, again without discernible differences in quality. As an example, a hospital charge for a similar procedure may vary by a two-fold difference, based on the discounts negotiated between the payer and the hospital.

Further, the Institute of Medicine (IOM) recently reported even more information on price variation and pointed out the value of price transparency. That paper argues that it would be a mistake for CMS to make significant pricing changes based on geographic principles alone. One of the major data sources? The Truven Health MarketScan® Research Databases, and one of the consultants working with IOM on this paper was our own Teresa Gibson, PhD.

This topic of price transparency helps understand how to improve the quality and decrease the price of healthcare—the stated vision of Truven Health Analytics. This is a tangible example of how we are fulfilling that vision.

Michael L. Taylor, MD FACP
Chief Medical Officer

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