According to a recently released study by the RAND Corporation, Indiana ranks seventh in the nation for hospital costs.this RAND 4.0 ResearchIndiana pays hospitals nearly 300 percent more than Medicare pays for the same services, according to a study conducted by the nonprofit Public Policy Research Group.
The report examines medical claims from employer and state databases. Compared to the four border states of Illinois, Kentucky, Ohio and Michigan, Indiana has the highest relative prices. While Indiana has the seventh-lowest hospital costs in the nation, physician prices are the fourth-lowest — 126 percent of Medicare’s.
Now, experts and hospital advocacy groups are debating whether the report accurately depicts current prices and what hospitals in the state are doing to bring them down.
The RAND Corporation released the full report last week, but shared preliminary results earlier this month at the Employer Forum at the National Hospital Price Transparency Conference in Indiana.
The Indiana Employers Forum partnered with the RAND Corporation on the study. Gloria Sachdev, president of the Employers Forum, said patients in Indiana deserve lower prices.
“We all want the best quality at the best price,” says Sachdev.
Price transparency is an important factor in reducing healthcare costs, Sachdev said.At the conference, the organization released a Sage Transparency Provides data on hospital prices across the country.
“We can buy a car and see the quality and price scores for the car, the stapler, or anything we’re going to buy,” Sachdev said. “Now, for the first time, we have a way to buy healthcare services online, taking into account the price and quality of different types of services offered by different hospitals.”
But the Indiana Hospital Association is concerned that because some of the data in the report is from 2018, it doesn’t paint an accurate picture of the current hospital price landscape.
“Fast forward [to] Today, you may be seeing a very different picture of Indiana than some people are trying to paint,” said Brian Tabor, president of the hospital advocacy group.
Tabor noted that Indiana University Health, the state’s largest hospital system, announced in December that it would Freeze hospital prices In line with the national average by 2025.
Following the National Hospital Price Transparency Conference, Tabor expressed concern that the groups behind the conference were linked through state funding and wanted to move to government pricing.
“I’m concerned that these groups are coordinating the use of outdated reports to drive draconian policy and state public choice rather than price transparency and free-market solutions at work in Indiana,” Tabor said in an email.
Sachdev of the Indiana Employers Forum called Tabor’s statement “nonsense.”
“We’re working to increase transparency and lower prices in healthcare,” Sachdev said. “There isn’t any network about what’s going on. You know, employers are paying for health care, people are paying for health care, and they deserve better.”
Tabor also said the RAND study found but did not take into account the low levels of physician payments. He said hospitals must subsidize the low fees that big insurance companies pay doctors.
“If you’re going to look at the most recent data on pricing, if you’re going to have a full picture of how Indiana hospitals are paid by Medicare, but also by commercial insurance companies, and how they are doctors working for Indiana hospitals, how are these insurance companies paying them You’re going to see Indiana maybe really closer to the middle when it comes to health care costs,” Tabor said. “But when you look at a fairly narrow dataset, you can make some really quick assumptions.”
The study’s use of Medicare as a benchmark for hospital pricing is also an issue, Tabor said.
“To try to benchmark hospital spending, physician spending, drug spending with government programs that vary by stroke, maybe at the 30,000-foot level, provide some level of benchmarking,” Tabor said. “But the more you try to drill down into regions, states or specific hospitals, there’s a big difference.”
Michael Hicks is director of Ball State University’s Center for Business and Economic Research. He said Medicare was used as a benchmark because Medicare costs were based on the actual cost of services.
“The Medicare benchmark allows us to properly compare these current costs across states,” Hicks said.
Hicks said high hospital costs in Indiana affect all Indians because they pay some of the highest rates in the country.
“If you’re a business, employer-based health insurance pays for about half of Indiana’s health care spending, which means that your cost of doing business in Indiana is significantly higher than if you were driving across the Ohio River into owning a more reasonable Kentucky of the healthcare environment,” Hicks said.
Hicks said hospital costs in Indiana shouldn’t be as high as they are now.
“We’re a state that’s supposed to offer below-average health care costs, you know, cost of living and all that,” Hicks said. “The fact that we’re in the top seven with some cities, especially Fort Wayne, means there’s a very deep and enduring problem here.”
Price transparency is only part of the solution to reducing Indiana’s high hospital costs, Hicks said. He pointed to the huge market share Indiana hospitals have as one reason for the high costs.
“The monopoly of hospitals or the scarcity of hospitals, especially outside Indianapolis, allows them to capture the market and allow them to charge higher prices without facing competition that would normally lower prices,” Hicks said .
He said market share needs to be broken to bring down prices.
“I really don’t think this kind of modest legislative action is going to work,” Hicks said. “This has to be a very important thing involving the courts and the legislature.”
Last year, the state’s top lawmaker wrote letter Calls for hospitals and insurers to reduce the “runaway costs” of healthcare. In 2020, lawmakers passed a bill This will create a claims database to show transparency on hospital prices.