AHRQ Study: Slower Price Increase Rates for Two Cardiac Procedures Linked to Medicare’s Hospital Compare Quality Scores

An AHRQ-funded study that looked at price trends for two common heart procedures found prices increased at a lower rate in states that did not have a public reporting system before Medicare began publishing Hospital Compare quality scores in 2008. The evidence suggests Hospital Compare provided leverage to purchasers in moderating price increases while adding competitive pressures to hospitals, researchers concluded. The study and abstract, “Medicare’s Hospital Compare Quality Reports Appear To Have Slowed Price Increases For Two Major Procedures,” appeared in the January issue of Health Affairs. To assess the relationship between quality reporting and hospital prices, researchers tracked pricing for coronary artery bypass graft and percutaneous coronary intervention before and after the 2008 start of Hospital Compare’s outcome-based quality scores. These cardiac procedures are among the most common major medical interventions in the United States and are among the most costly, accounting for more than $15 billion in health care spending in 2012.

2015 Jan 1;34(1):71-7. doi: 10.1377/hlthaff.2014.0263.

Medicare's Hospital Compare Quality Reports Appear To Have Slowed Price Increases For Two MajorProcedures.

Dor A1, Encinosa WE2, Carey K3.

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Abstract

Previous research has found that Hospital Compare, Medicare's public reporting initiative, has had little impact on patient outcomes. However, little is known about the initiative's impact on hospital prices, which may be significant because private insurers are generally well positioned to respond toquality information when negotiating prices with hospitals. We estimated difference-in-differences models of the effects of Hospital Compare qualityreporting on transaction prices for two major cardiac procedures, coronary artery bypass graft (CABG) and percutaneous coronary intervention (PCI). States that had mandated their own public reporting systems before the implementation of Hospital Compare formed the control group. We found that prices for these procedures continued to increase overall after the initiation of Hospital Compare quality scores, but the rate of increase was significantly lower in states with no quality reporting metrics of their own before Hospital Compare, when compared to the control states (annual rates of increase of 4.4 percent versus 8.7 percent for PCI, and 3.9 percent versus 10.6 percent for CABG, adjusted for overall inflation). This finding implies that Hospital Compare provided leverage to purchasers in moderating price increases, while adding competitive pressures on hospitals. Providing accurate quality information on both hospitals and health plans could benefit consumers.

Project HOPE—The People-to-People Health Foundation, Inc.