The Health Care Cost Institute is a valuable data resource. It collects data from four major commercial insurers: Kaiser, United Healthcare, Humana and Aetna. This data is for commercial/ESI and it provides a good but uneven insight into pricing variation in the individual, group and Medicare Advantage spaces. Usually we just see Medicare Fee for Service pricing variation from the Dartmouth Atlas as that data is readily available with only a short lag. Commercial data is almost never easily available.
So the HCCI is quite valuable.
It is also quite limited. Its data contributors are not evenly distributed.
Massachusetts is a case example. Mark Farrah and Associates have gone through all the regulatory filings to build county and state level marketshare databases.
The top three players in the commercial space in Massachusetts are regional insurers. They control 79% of the market. Other regional players control another 7% of the market. National insurers make up 14% of the entire Massachusetts market. Of that 14%, slightly more than a fifth of the sub-market share is from an HCCI contributor.
What do we know about insurers with low market share?
They get bad rates from providers. Hospitals and doctors don’t want to deal with another set of forms and requirements from an insurer that constitutes a very small proportion of their revenue unless they get paid very well for it. Insurers only get good rates when they can credibly threaten to move tens of thousands of members from Hospital A to Hospital B. This strategy falls apart when there are few members that could be moved or if there is no Hospital B.
HCCI data contributors in Massachusetts in the commercial market have no pricing power. The rate that they pay Mass General will be significantly higher than the rate paid by Blue Cross and Blue Shield of Massachusetts, it will be higher than the rate that Tufts pays for their tertiary hospital claims. It will be higher than the rate that Harvard Pilgrim pays.
This same problem exists in other markets. I know the Pittsburgh market is split between a Blue (Highmark) and UPMC. Their rate structures are very different and lower for the same codes than the rate that national providers pay to get into the area. North Carolina Blue Cross and Blue Shield has 75% of the commercial large group membership.
HCCI is a valuable resource. It is a limited resource.
We need data systems that bring in all claims for all payers from all systems. HCCI is a step in the right direction but it must be approached with significant caution.
Bradley
Im confused. In Pitt, the rates Highmark and UPMC pay are less than the providers with low market share receive? The opposite occurs in Mass (high market share pays higher).
Is that a function of the greater number of hospitals/providers in Mass over Pitt and the market dynamics in each?
Brad
FlyingToaster
@Bradley: Massachusetts also seems to have more medical schools per square inch, and it’s a market issue that many professionals expect their PCPs and specialists to be clinical instructors (waves). So employees (and hence employers) search out PPP or broad-network HMOs that cover, say, all doctors affiliated with Mass General or Beth Israel Deaconess or Lahey or Mount Auburn.
When my husband was hired at his current startup, I sent him the updated list of every doctor we’ve ever seen; we moved from the PPP at his hold employer to the broad-network HMO which covered basically every teaching hospital inside of 495. And it’s been seamless, from our perspective.
David Anderson
@FlyingToaster: Not quite. The data set is 4 national insurers. Those national insurers have significant national market share that is unevenly distributed. In some regions, the sample is rich and representative. In other regions like Massachusetts and Pittsburgh, the sample is composed of low market share insurers only.
Anything that uses HCCI data for Massachusetts or Western Pennsylvania will have a biased estimate upwards in price. In Pittsburgh the pricing structure at UPMC hospitals is: UPMC Health Plan, National carriers and tell Highmark to go take a long walk off a short pier. At Highmark hospitals , their pricing structure is Highmark insurance, National carriers and tell UPMC to go fornicate with a rusty farm instrument. Most people in Pittsburgh in the commercial market get either UPMC preferred or Highmark preferred rates.
dr. bloor
Surprised to see United, Cigna, and Anthem with such small shares, although I’d bet that changes over the next five years. United was initially a very small, pain-in-the-ass player in the RI market until they scored a bunch of state and municipal contracts by undercutting BCBS of RI’s premium rates. There aren’t very many docs left who take BC but not United here. I suspect Cigna and Anthem have similar muscle.