Price in­creases ease

Medi­care curbs slow some growth; Med­i­caid ticks up

Modern Healthcare - - THE WEEK IN HEALTHCARE - Me­lanie Evans

Acute-care hospi­tal prices cooled last year as prices paid by com­mer­cial pay­ers and Medi­care slowed. The slow­down in hospi­tal prices, cap­tured by the Bureau of La­bor Sta­tis­tics, comes as Medi­care seeks to curb spend­ing and hos­pi­tals re­port smaller in­creases from com­mer­cial health plans.

Hospi­tal prices climbed 2.1% last year af­ter an in­crease of 2.9% the year be­fore, ac­cord­ing to the broader of two mea­sures the la­bor bureau uses to mea­sure in­fla­tion, known as the Pro­ducer Price In­dex. The pro­ducer in­dex and its cousin, the Con­sumer Price In­dex, pro­vide snap­shots of how hospi­tal prices for house­holds, in­sur­ers, Medi­care and Med­i­caid change from one year to the next. Medi­care prices grew 1.4% last year, pre­lim­i­nary pro­ducer price fig­ures show, com­pared with 2.8% the prior year.

Notably, Med­i­caid prices re­bounded last year af­ter see­ing their first de­cline in a dozen years in 2010. Med­i­caid prices in­creased 1.2% last year af­ter the 0.4% drop the year be­fore. Paul Gins­burg, an econ­o­mist who is pres­i­dent of the non­par­ti­san Cen­ter for Study­ing Health Sys­tem Change, said the re­ver­sal could sug­gest that state pres­sure to squeeze hospi­tal Med­i­caid rates may have eased. Mean­while, com­mer­cial health plan prices climbed 3.2%, down from 4.7% in 2010.

Rat­ing an­a­lysts with Moody’s In­vestors Ser­vice have re­ported lower hospi­tal rate in­creases from com­mer­cial in­sur­ers, a trend that is likely to con­tinue. “We ex­pect com­mer­cial pay­ers to re­main highly ag­gres­sive in ne­go­tiat- Growth in hospi­tal prices paid by Medi­care and com­mer­i­cal health plans ebbed last year ing lower re­im­burse­ment rates with hos­pi­tals in 2012,” the rat­ing agency said in its Jan­uary out­look for the not-for-profit hospi­tal sec­tor.

Stan­dard & Poor’s an­a­lysts said in Jan­uary that smaller rate in­creases from com­mer­cial in­sur­ers were “an im­por­tant con­trib­u­tor” to a weak­en­ing rev­enue out­look for the sec­tor.

Gins­burg said growth in so-called nar­row net­work health plans, which limit pa­tient choice to cer­tain providers, could also wring rate con­ces­sions from hos­pi­tals that seek to join the net­work.

The sec­ond in­fla­tion mea­sure is a nar­rower al­ter­na­tive that more closely tracks out-of-pocket spend­ing by con­sumers. The agency’s Con­sumer Price In­dex seeks to mea­sure the prices paid by house­holds by track­ing de­ductibles and other out-of-pocket spend­ing and in­sur­ers’ share of pay­ments for plans that in­clude cost­shar­ing by pa­tients. The con­sumer in­dex does not re­flect Med­i­caid or Medi­care, ex­cept Part B.

The hospi­tal Con­sumer Price In­dex grew more rapidly last year, by 6.2%, but also slowed from the prior year’s in­crease of 7.8%. Con­sumer prices for pa­tients ad­mit­ted to the hospi­tal drove growth in over­all con­sumer hospi­tal prices. In­pa­tient hospi­tal prices climbed 6.8% last year as out­pa­tient prices grew more slowly at 5.1%. Con­sumer prices for the econ­omy as a whole climbed 3.2% last year, the bureau’s data show.

Over­all spend­ing on hos­pi­tals is af­fected by the vol­ume of hospi­tal care and the price of that care. In re­cent years, over­all spend­ing has been driven by changes in de­mand, not price.

An anal­y­sis by fed­eral health of­fi­cials shows that growth in de­mand for hospi­tal ser­vices— how of­ten peo­ple sought hospi­tal care and the in­ten­sity of care they re­ceived—fluc­tu­ated be­tween 2008 and 2010, the most re­cent data avail­able from the CMS.

Mean­while, growth in prices and pop­u­la­tion largely held steady. The CMS tracks prices us­ing the Pro­ducer Price In­dex for all hos­pi­tals, in­clud­ing acute-care hos­pi­tals, said Aaron Catlin, deputy di­rec­tor of the CMS’ Na­tional Health Sta­tis­tics Group.

Hospi­tal spend­ing growth de­clined in 2010 to 4.9% from 6.4% the prior year as the growth in de­mand for hospi­tal ser­vices fell to 1.1% in 2010 from the pre­vi­ous year’s 2.6%. Price growth hov­ered at 3% both years.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.