The Experts Were Wrong About the Best Places for Better and Cheaper Health Care - The New York Times

As part of his push for the Affordable Care Act in 2009, President Obama came to Central High School to laud this community as a model of better, cheaper health care. “You’re getting better results while wasting less money,” he told the crowd. His visit had come amid similar praise from television broadcasts, a documentary film and a much-read New Yorker article.

All of the attention stemmed from academic work showing that Grand Junction spent far less money on Medicare treatments – with no apparent detriment to people’s health. The lesson seemed obvious: If the rest of the country became more like Grand Junction, this nation’s notoriously high medical costs would fall.

But a new study casts doubt on that simple message.- Oops !

The Price Ain’t Right? Hospital Prices and Health Spending on the Privately Insured*

Moreover, whereas Medicare
hospital prices are set by a regulator (as is true for prices for health care services in most
countries), hospital prices for the privately insured are market-determined. However, this may change wth the Affordable Care Act, the transition from volume based reimbursement to new models of care, including quality of care and HEDIS scores which reflect hospital and  health care compliance with recomendations from NQAH.

Health care providers’
transaction prices – have been treated as commercially sensitive and have been largely
unavailable to researchers. As a result, there is a great deal that is unknown about how and why
health care providers’ prices vary across the nation and the extent to which providers’ negotiated
prices influence overall health spending for the privately insured. 

Add to that is the complex algorithm  upon which payments are based, including the DRG (Diagnostic Related Group). There are roughly 999 listed by CMS Future payments will be altered by a penalty for non-compliance with the standards... It is not really an incentive where hospitals would be rewarded with an increase in payments, but a penalty for not complying, another negative incentive. Do more, get paid less.

The research looked not only at Medicare but also at a huge, new database drawn from private-insurance plans – the sorts used by most Americans for health care. And it shows that places that spend less on Medicare do not necessarily spend less on health care over all. Grand Junction, as it happens, is one of the most expensive health care markets in the country for the privately insured – despite its unusually low spending on Medicare.

All of these figures were based upon 2011, prior to the Affordable Care Act. Stay tuned for more gobbledy-gook.

The Experts Were Wrong About the Best Places for Better and Cheaper Health Care - The New York Times