Map of the state of Indiana

Hospital Price Comparisons in Indiana

Though disagreement about U.S. health care reform abounds, most agree on this: health care costs have spiraled out of control. Getting good value for the health care dollar is a tremendous challenge, and the complexity of how health care services are paid for make it difficult to spot which problems to tackle.

Most insured Americans get their health benefits through an employer. Through this system, employees delegate the process of shopping for plans and negotiating prices and provider networks to their employer. But it's hard to know whether these negotiations have made the best deals, in part because hospital-specific prices are usually not publicly available.

Uncovering Price Transparency

In this pilot study, RAND researchers worked with the Employers' Forum of Indiana to:

  • Measure prices for hospital services, including amounts actually paid by plans plus enrollees' out-of-pocket expenses
  • Simplify price comparisons by calculating relative prices using Medicare as a benchmark
  • Report hospital-specific prices

This study sheds light on prices in a way that no other tool has done before, including patient-facing price transparency tools such as Castlight. And because employers provided claims data, otherwise restricted information on hospital prices became available for analysis.

Hospital prices in Indiana are high—and highly variable—especially for outpatient services. But this phenomenon is typical across the United States.

Hospital Price Comparison Map

The map below shows prices for hospital services provided to individuals with employer-sponsored coverage relative to the prices that Medicare would have paid for the same services (1.00 means prices are the same as Medicare, 2.00 means twice Medicare, and so on). Relative prices are reported for individual hospitals, and color coded. Location markers for each hospital also contain more detail.

Relative price key

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Looking Forward

Future studies could shed further light on this problem by expanding this kind of analysis to include more employers, more states, and more services. Measures of quality could also be factored in, to get at the value of specific hospitals, not just the prices paid.

Ultimately, if employers can gain the information they need to be better-informed customers, they can do a better job shopping for health care on behalf of their employees.

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