For Immediate Release - November 13, 2012

New Report Shows Continued Variation in Prices Paid for Medical Services

BOSTON - On Tuesday November 13, 2012 the Center for Health Information and Analysis (CHIA) released a report entitled Health Care Provider Price Variation in the Massachusetts Commercial Market.

The report includes five key findings:

  • In every commercial health care payer network, there was a significant variation in prices paid to providers for hospital services and physician services, and less variation in prices paid to most other provider types.
  • The degree of price variation differed by commercial health care payer. Payers with larger market shares, as determined by the number of covered members within a payer’s network, generally had less price variation than payers with smaller market shares.
  • Acute hospitals with higher relative prices tended to be academic medical centers, teaching hospitals, specialty hospitals, and geographically isolated hospitals. A majority of the acute hospitals that had lower relative prices were community hospitals or hospitals that serve a disproportionate number of publicly funded patients (“DSH” hospitals).
  • Total payments from commercial payers were more concentrated in higher priced providers. Higher priced acute hospitals and physician groups accounted for about four out of every five dollars paid by payers to these provider types.
  • While many providers had prices that were above average in some networks and below average prices in other networks, certain hospitals and physician groups consistently had higher relative prices or lower relative prices, regardless of payers.

“It is really striking to see how some providers get paid three and even four times as much as other providers for similar services. Employers and patients should be aware of these differences as they are making value-based health care decisions,” said CHIA Executive Director Áron Boros. “Our agency is dedicated to bringing this kind of information to light in hopes that we can be part of the solution: reducing cost and improving quality in the health care system.”

Chapter 288 of the Acts of 2010 required the Division of Health Care Finance and Policy (DHCFP) to collect and report on health care provider relative prices. Chapter 224 of the Acts of 2012 dissolved the DHCFP and created CHIA as an independent state agency. CHIA assumed many of the DHCFP’s responsibilities, including the directive to collect, analyze, and report on relative price data. The data collection and analysis for relative prices was conducted by the DHCFP.