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Recent Trends in
December 2010 Hospital Prices in
California and Oregon
LIST OF FIGURES, TABLES AND APPENDICES
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Figure 1. Statewide Absolute Growth in Net Inpatient Revenue per Day, California
Hospitals, 2000-2009 ………………………………………………………………………...5
Figure 2a. Oregon Statewide Average Reimbursement for Normal Vaginal Delivery,
2005-2009 ……………………………………………………………………………………. 5
Figure 2b. Oregon Statewide Average Reimbursement for Knee Joint Replacement,
2005-2009 ……………………………………………………………………………………. 5
Table 1. Medicare, Medi-Cal, and Commercial Revenue per Day and per Discharge,
All “Comparable” California Hospitals, 2000-2009 ………………………………………..8
Table 2. Average Price of Selected Procedures, Data from Nine Private Health Insurance
Plans, Oregon Hospitals, 2005-2009 ……………………………………………………... 9
Table 3. Average Price of Procedures Related to Women’s Health, Data from Nine
Private Health Insurance Plans, Various Oregon Hospitals, 2005-2009 .………………10
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APPENDIX A: OSHPD Data Notes
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Table A-1. Changes in Hospital Names Reported, 1995-2008 .…………………………………….. A-2
APPENDIX B: Number of Discharges and Yearly Growth in Average Payment per Patient Discharge,
Statewide, All Reporting Oregon Hospitals, 2005-2009 and 2008-2009
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Table B-1. Number of Discharges and Average Payment per Patient, Statewide,
All Reporting Oregon Hospitals, 2005 and 2009 …………………………………………. B-1
Table B-2. Number of Discharges and Average Payment per Patient, Statewide,
All Reporting Oregon Hospitals, 2008 and 2009 …………………………………………. B-4
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December 2010
SUMMARY
Price inflation can be very hard to measure in the U.S. health care system. Many available
measures of health care costs or charges fall short of capturing true prices – amounts actually
paid by insurers – for particular health care services.
This report presents new data on the growth of hospital prices in California and Oregon. To
our knowledge, these are the only states that systematically report transaction prices for
hospital services paid by private insurers over a relatively long period of time.
Using data from California’s Office of State Health Planning and Development (OSHPD) for
major payer groups (such as Medicare and commercial insurers), we can track trends in
prices for very general categories of service, such as hospital inpatient days or hospital
“discharges” (a term for a unique hospital stay that may include several days from admission
to discharge of one patient). The California price data in this report are from 2000-2009.
The state of Oregon now publishes actual transaction prices1 for an array of detailed hospital
services – such as appendix removal and knee joint replacement – paid by the state’s nine
largest commercial health insurance plans. Oregon price data from 2005-2009 are now
available from the Office for Oregon Health Policy and Research (OHPR).
Here are some highlights of the California and Oregon price trends:
In California, transaction prices for a day in the hospital (or a discharge) paid by
commercial insurers increased by more than 150 percent between 2000 and 2009 (an
average annual growth rate of 11 percent per year).
1 Oregon reports insurers’ average aggregate allowed charges, which may be paid in part by patients through deductibles,
copayments or coinsurance amounts. Allowed charges are generally based on insurers’ negotiated rates, and are thus a
measure of the total effective price of the hospital service for insured patients.
As with any measure of prices over time, the California and Oregon data may over- or under-
state true price trends if the underlying service being measured (such as a day in the hospital
or a hospital stay to remove an appendix) is itself changing in quality or in the basic nature of
how the service is performed. For example, if the way a procedure is done changes over time
– requiring more or fewer resources – the observed transaction price of a hospital stay for that
procedure could reflect more than a true price change.
Likewise, the data in each state are subject to reporting errors and missing values, and results
for particular years or individual hospitals may be subject to considerable uncertainty.
However, the California data for general price trends by type of payer and the Oregon prices
for specific hospital services seem consistent with other recent studies. We believe the
results presented here represent a reasonable approximation of price increases affecting
commercial health plans in those states.
Broad measures of health costs, such as total However, in recent years, the prices of some health
national health expenditures (NHE), are also affected care services have accelerated to the point that they
by the numbers of persons covered. In a recession, cannot be offset by improvements in care
the growth of health spending may decelerate management and changes in benefit design. In
because fewer people are insured and thus may not many parts of the country, price increases for a unit
have ready access to health care services, of service – such as a day in the hospital – are now
regardless of trends in the cost of coverage. driving a large share of the increase in health costs.
For example, growth in total private insurance Unfortunately, the regular price indexes that we use
premiums in the NHE accounts has fallen to 3 for most other goods and services – the Consumer
percent in 2008, and is projected to grow slowly in Price Indexes and Producer Price Indexes – are not
2009 (3 percent) and 2010 (4 percent).2 However, much help for assessing the prices of covered health
alternative measures of underlying cost growth per care benefits. For example, the CPI for Medical Care
covered enrollee, such as the new Healthcare (CPI-M) is designed to measure the inflation rate for
Economic Indices compiled by Standard & Poor’s, consumer out-of-pocket health costs. Therefore, the
show much more rapid growth: a 7 percent annual CPI-M mainly measures prices for health care
rate for the 12 months ending in August 2010 (5 services that are not covered by insurance. The CPI-
percent cost growth for Medicare and 9 percent for M contains some elements for insured benefit costs,
commercial insurance).3 since consumers pay a share of their premiums and
have out-of-pocket costs for coinsurance and
deductibles. However, the main components of the
2 NHE Projections 2009-2019. Centers for Medicare and Medicaid CPI-M are prices for non-covered goods and
Services. https://www.cms.gov/NationalHealthExpendData/
downloads/proj2009.pdf. Accessed November 2010.
services, such as over-the-counter medications and
3 S&P Healthcare Economic Composite Index. Standard & Poor’s. 21
supplies, dental services, and eyeglasses.
October 2010. In addition to changes in enrollment, aggregate
premiums may grow faster or slower than underlying health costs
because benefit packages are changing or because administrative
costs are changing. For example, total administrative and “net” costs of premiums in recent years. This has reduced the growth of premiums in
private insurance in the NHE data have fallen as a percentage of the NHE account below the rate at which benefit expenses are growing.
4 K. John McConnell and Neal Wallace, Oregon’s Cost-Shift: The
Effect of Public Insurance Coverage on Uncompensated Care, 5 Although they do not have identical meanings, the terms hospital
200%
Oregon reports actual allowed payments (including
150% both the insurance reimbursement and any patient
159%
liability) for hospital discharges associated with
100%
certain major diagnosis codes, such as normal
50% 76% childbirth and coronary artery bypass surgery, from
18%
the state’s nine largest health insurance plans. The
0%
Oregon data reflect prices for a particular type of
MediCal Medicare Commercial
hospital discharge without regard to how many days
Source: State of California, Office of Health Planning and patients averaged in the hospital for those conditions.
Development (OSHPD). Calculations by AHIP Center for
Policy and Research. Thus, the Oregon data reflect the transaction price of
a specific episode of inpatient care.
Figure 2a. Oregon Statewide Average
Reimbursement for Normal Vaginal California Hospital Costs by Payer. Table 1 (see
Delivery, 2005-2009 page 8) shows inpatient revenues per day and per
$7,000 admission by payer for Medi-Cal and other programs
$6,000 Absolute
$6,424
for the indigent, Medicare, and private health
Growth = 69%
$5,000 insurance plans in California over the last 10 years.
$4,000 In California, changes in hospital prices paid by
$3,000 $3,805
private insurers may be affected by changes in Medi-
$2,000
Cal losses, Medicare losses, and the number of
$1,000
$-
uninsured patients.
2005 2009
Between 2000 and 2009, Medicare inpatient revenue
Figure 2b. Oregon Statewide Average per hospital day grew by 76 percent. That is about
Reimbursement for Knee Joint
Replacement, 2005-2009 6.5 percent per year – faster than general price
inflation, but not unusual in health care in recent
$35,000
Absolute years. However, during the same period, inpatient
$30,000
Growth = 44% revenue per day for Medi-Cal and other programs for
$25,000 $28,682
$20,000 people with low incomes grew by only 18 percent –
$15,000 $19,866 approximately 2 percent per year. The Medi-Cal
$10,000 program is the lowest paying Medicaid program in the
$5,000 nation. Inpatient revenues from commercial
$- insurance per patient day during the period 2000-
2005 2009 2009 grew by a whopping 159 percent, more than 11
Source: Office for Oregon Health Policy and Research (OHPR). percent per year (see Figure 1).
Note: Data from nine private health insurance plans.
THE CALIFORNIA “ALL YEARS” submitted a full annual financial disclosure report
(i.e., without any reporting modifications). Please
DATASET FROM OSHPD ANNUAL
note that there may have been additional
AND QUARTERLY REPORTS “comparable” facilities in the full dataset, but that
were removed when we deleted non-acute care
In order to study trends in hospital revenue and other
cases. Those hospitals designated as “non-
factors in California, we constructed an “All Years”
comparable” have unique characteristics and have
data file from individual year files on the OSHPD
been granted modifications to the annual reporting
website.11 We used the data sheets for the hospital
requirements. We excluded these data in order to
Annual Financial Data Pivot Profiles for 1995-2008,
avoid inaccurate or misleading information that may
and quarterly filings for 2009.12
result from including those facilities.
A dataset suitable for analysis of trends over time
Type of Hospital ("TYPE_HOSP")
required a considerable amount of data filtering and
Comparable 5,043
cleaning. In general, the results prior to 2000 were
Kaiser 246
less detailed. Therefore, we only used hospital data
LTC Emphasis 8
from 2000-2009 to compute the trends in this report.
Other Non-Comparable 20
State 9
First, we filtered the data to include only
“comparable” facilities that provide general acute Total cases* 5,326
* Note that the “total cases” is not the number of different hospitals;
care. We removed 1,113 cases to delete those rather it represents all hospitals for all years, 1995 through 2008.
facilities that were not designated by OSHPD as
“general acute.” With these exclusions, the resulting dataset had 409
unique facility numbers. Of those, 246 appear in
Type of Care Provided ("TYPE_CARE") each year with no apparent errors; 163 of the facility
General Acute 5,326 numbers do not appear in each year. We have 670
Psychiatric 696 unique facility names, 390 of which appear in each
Specialty 417 year with no apparent errors; 280 of those facility
Total cases* 6,439 numbers do not appear in each year.
* Note that the “total cases” is not the number of different
hospitals; rather it represents all hospitals for all years, 1995
through 2008. In many cases, there were apparent mismatches
between facility numbers and names. Often these
Then we removed 283 cases to delete those facilities were relatively minor differences in the reporting of a
that were not designated as “comparable,” using the hospital name and were easily corrected. For
OSHPD definition, which includes all hospitals that example, Table A-1 shows changes in the hospital
name associated with one hospital facility code
11 http://www.oshpd.ca.gov/HID/Products/Hospitals/AnnFinan during the 1995-2008 period. In the case of this
Data/PivotProfles/default.asp facility, the facility name apparently changed once –
12 Annual data for 2009 have subsequently been published by OSHPD;
the differences between the final annual data and the preliminary possibly due to a merger; was reported several
quarterly data used for this report are minimal and do not substantially different ways – e.g., “Ctr” versus “Center;” and one
affect the trend rates of growth.
year of data was missing (2000).
America’s Health Insurance Plans, Center for Policy and Research A-1
America’s Health Insurance Plans, Center for Policy and Research A-2
APPENDIX B
Table B-1. Number of Discharges and Average Payment per Patient, Statewide, All Reporting Oregon Hospitals,
2005 and 2009
America’s Health Insurance Plans, Center for Policy and Research B-1
Table B-1. Number of Discharges and Average Payment per Patient, Statewide, All Reporting Oregon Hospitals,
2005 and 2009 (continued)
America’s Health Insurance Plans, Center for Policy and Research B-2
Table B-1. Number of Discharges and Average Payment per Patient, Statewide, All Reporting Oregon Hospitals,
2005 and 2009 (continued)
America’s Health Insurance Plans, Center for Policy and Research B-3
Table B-2. Number of Discharges and Average Payment per Patient, Statewide, All Reporting Oregon Hospitals,
2008 and 2009
America’s Health Insurance Plans, Center for Policy and Research B-4
Table B-2. Number of Discharges and Average Payment per Patient, Statewide, All Reporting Oregon Hospitals,
2008 and 2009 (continued)
America’s Health Insurance Plans, Center for Policy and Research B-5
Table B-2. Number of Discharges and Average Payment per Patient, Statewide, All Reporting Oregon Hospitals,
2008 and 2009 (continued)
America’s Health Insurance Plans, Center for Policy and Research B-6
Table B-2. Number of Discharges and Average Payment per Patient, Statewide, All Reporting Oregon Hospitals,
2008 and 2009 (continued)
America’s Health Insurance Plans, Center for Policy and Research B-7
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