Limiting the rate of growth in provider prices
- Collection:
- Health Policy and Services Research
- Series Title(s):
- State strategies for controlling health care costs implementation guide
- Author(s):
- Hwang, Ann, author Bailit, Michael, author
- Contributor(s):
- Commonwealth Fund, issuing body.
- Publication:
- [New York, New York] : The Commonwealth Fund, January 2023
- Language(s):
- English
- Format:
- Text
- Subject(s):
- Capitation Fee Cost Control Health Care Costs State Government Delaware Rhode Island
- Genre(s):
- Technical Report
- Abstract:
- Rapidly growing prices are the major driver of health care cost growth in the commercial market. From 2016 to 2020, the increase in health care spending was driven entirely by rising average prices, which grew by nearly 16 percent while utilization declined by 5.4 percent. Hospital inpatient prices had the greatest increase (24.6%). Hospital inpatient care, hospital outpatient care, and professional services accounted for over three-quarters (77%) of total spending. Thus, to successfully contain health care cost growth in the commercial sector, states will need to address the growth in provider prices. To limit health care cost growth, two states--Rhode Island and Delaware--have established caps on how much provider prices can grow each year. By directly influencing a key driver of health care cost growth, provider price growth caps can be highly effective in constraining costs. According to an independent study, following Rhode Island’s implementation of its affordability standards, there was a $55, or 5.8 percent, net decrease in quarterly total health care spending per commercially insured enrollee, relative to a control population. The following steps present a sequence of important decisions for states to work through. States should be prepared for a process that is both iterative, where questions may need to be revisited over time, and dynamic, to account for new questions and new answers that may emerge. Step 1. Establish goals for adopting price growth caps and confirm readiness to proceed. Step 2. Identify and secure the authority that will be needed to cap the growth of provider rates. Step 3. Determine which prices will be subject to the growth cap. Step 4. Set the level of the cap. Step 5. Determine whether to apply the cap to individual service prices, individual provider entities, or to an aggregation of services and provider entities. Step 6. Consider incorporating quality measurement and incentives. Step 7. Consider adjustments or other mechanisms to address underlying payment disparities. Step 8. Design, implement, monitor, and evaluate the program with equity at the center. Step 9. Plan for effective oversight. Step 10. Take steps to mitigate gaming the system. Step 11. Identify and secure the analytic resources needed. Step 12. Engage stakeholders throughout design, implementation, and evaluation.
- Copyright:
- Reproduced with permission of the copyright holder. Further use of the material is subject to CC BY license. (More information)
- Extent:
- 1 online resource (1 PDF file (8 pages, 1 unnumbered page)).
- NLM Unique ID:
- 9918540687706676 (See catalog record)
- Permanent Link:
- http://resource.nlm.nih.gov/9918540687706676