Wrong sites, wrong costs

I heard an excellent presentation by David Morales, Commissioner of the Massachusetts Division of Health Care Finance and Policy, a few weeks ago. He presented these two charts, one (above) showing the spread in payments to hospitals for childbirth, and the other (below) showing the sites of service, differentiated by those same payments.

The perverse nature of the current utilization and reimbursement system is evident. Higher priced facilities have a larger market share than lower priced facilities.

Over the coming months, in accordance with an act passed last summer, the Division will be constructing an all-payer claims database (APCD). It will comprise medical claims, dental claims, pharmacy claims, and information from member eligibility files, provider files, and product files. It will include fully-insured, self-insured, Medicare, and Medicaid data. It will also include clear definitions of insurance coverage (covered services, group size, premiums, co-pays, deductibles) and carrier-supplied provider directories.

The Commissioner noted that the result will be "a dataset that allows a broad understanding of health care spending and utilization across organizations, population demographics, and geography." In my view, it will be a moving force in rationalizing payments to providers across the state, allowing policymakers and businesses to address the market-power driven system of reimbursements that has evolved over the years.