VTDigger.org: Report co-authored by UMMS reveals health services price variations across Vermont

October 10, 2014

A report co-authored by UMass Medical School health policy experts and presented to the Vermont Green Mountain Care Board details health services price variations across the state and suggests ways to set standards, according to an Oct. 6 story on the news website VTDigger.org.

The report, Price Variation Analysis, determined that prices among Vermont’s 14 hospitals and Dartmouth-Hitchcock Medical Center in New Hampshire vary from 72 percent of the state average to 130 percent over that average. Price variation among health insurers varied from 90 percent of the state average to over 130 percent, according to the report, which was presented to the board at a public meeting in Vermont on Oct. 2.

The analysis identified a number of factors that explain some variation in prices among providers. It also showed there is no consistency in the share of variation explained by each factor across health services.  Because the reasons for price variation vary across services, rate development must be service-specific.  The analysis does not establish what standard factors should be used to align all payment rates.

“The math is the easy part,” UMass Medical School’s Katharine London, MS, told the board, according to VTDigger.org. The report, of which London is a co-author, recommends steps the board can take to align the rates, including draft payment methods and a plan for phasing in standard rates.

“The hard part is figuring out what you want to do. So my major recommendation to you is that you develop a set of principles around what you want your rates to look like,” London said, VTDigger reported. London is a principal at the Center for Health Law and Economics, a unit within UMass Medical School’s Commonwealth Medicine.

The report and recommendations were created using interviews with key stakeholders and statistical analyses of inpatient hospital and professional claims data for calendar year 2012.

In addition to London, the UMMS report authors included Michael G. Grenier, MPA; Carol Gyurina, MMHS; Rebecca Kushner, MA, MPA; and  Tami Ohler, PhD. The project lead was the University of Vermont, College of Medicine, whose authors include Christopher Jones, DPhil; Steven Kappel, MPA; and Mujde Erten, PhD. Wakely Consulting Group Inc. also contributed to the report.

UMass Medical School’s Center for Health Law and Economics is also working with the state of Vermont to develop a financial model for its innovative single-payer health care system to be implemented in 2017. The center began working with Vermont on the project soon after the state’s Legislature voted to approve a single-payer system three years ago. 

A 2013 UMMS report, State of Vermont Health Care Financing Plan Beginning Calendar Year 2017, said Vermont must develop new financing mechanisms that raise $1.6 billion to fund single-payer. That new figure is $285 million less than the $1.9 billion that Vermont employers and individuals currently contribute through their health care premiums.

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