On the road to price transparency with APCDs

08.11.2018
5 min.
title

There’s still no consistent or uniform cost data accessible for patients when they shop for an insurance plan. This lack of price transparency in healthcare leaves patients unable to make informed decisions about their care options.

To add insult to injury, the deductibles go up each year, impeding patients from receiving care the same way they receive services in any other industry. While the idea under high deductibles was to trim the waste by making patients go only for those care services that they really need, it didn’t work well. On the contrary, care consumers started to cut even on needed care. And when patients don’t get regular screenings, vaccinations or lab tests, it increases the risk of unplanned admissions, complications, and readmissions. These occurrences hit the whole healthcare system, driving costs up and creating the vicious circle.

However, there might be a solution to break the circle and save healthcare, demystifying costs and balancing out the insurance programs. We are talking about all-payer claims databases or APCDs, one of the major trends in healthcare software development.

Cracking the basics of APCDs

APCDs are large-scale databases with continuously aggregated information on medical, dental, and pharmacy claims as well as eligibility and provider files across all care settings reported directly by insurers. APCDs can also comprise information on actual transaction prices, patient payments, and health plan payments.

There are three distinct features of APCD data, differentiating it from other datasets and making it more possible for APCDs to become the next standard for care price, resource utilization, and performance reporting:

  1. All-payers claim databases provide information on private payers and health plans.
  2. APCDs collect data on most or all payers in a specific state, creating a comprehensive picture.
  3. APCDs extend care delivery information with large sample sizes, geographic representation, and individual patients’ longitudinal tracks across different care settings beyond admissions, ER visits, and discharges.

As of 2018, 20 states enabled all-payer claims databases and 28 states passed cost transparency laws to encourage or mandate better price regulation in healthcare.

If the current adoption trends are to continue, we anticipate more than half of all states enabling an APCD or APCD-like data storage by 2022.

APCD applications in healthcare

By providing the extended access to significant care delivery and cost data points, APCDs can ensure that policy makers, payers, employers, and care consumers have a unified and shared understanding of the healthcare market with specific rates varying among providers, procedures, and health plans across states. Each party taps into its own fair share of benefits.

How employers and private payers can benefit from APCDs

All-payers claim databases can provide insights to help employers cut on unneeded spending for their health plans. For instance, the Oregon APCD publishes detailed reports on monthly costs per each patient for commercial and public health plans in Oregon, allowing employers to see the pricing variations and identify where they’re currently at. The Colorado APCD also discloses data on cost ranges for common procedures and tests in care delivery settings within the state.

Given the fact that premiums for healthcare services only grow, employers and employees can’t stay out in the dark about the actual cost of care—especially with sometimes ridiculous price variations across different states and hospitals. For example, a limb MRI in Alaska can cost up to $3.2K more when taken in a hospital instead of a freestanding imaging center.

Therefore, having access to and understanding this type of information is particularly valuable to employers and employees as premiums and employees’ cost sharing for healthcare services continue to increase.

The open and transparent access to pricing information along with the identified pitfalls of current employer spending patterns will help the companies to make both cost-effective and health-beneficial decisions over when, where, and how can their employees receive medical assistance.

How states and public payers can harness APCDs

The data within APCDs can also help public payers, state governments, and policy makers introduce more knowledge-based activities regarding the current and upcoming programs.

A recent research peeking into Virginia’s APCD insights discovered that inexpensive and low-value healthcare services delivered in 2014 amounted to over $586 million or $9.09 per patient and per month in avoidable spending. The most wasteful spending services included preventable lab tests, EKGs for low-risk and asymptomatic patients, and unnecessary vitamin D screenings.

Following their findings, researchers suggested that “instead of pursuing a politically charged strategy to reduce the use of high-profile and higher-cost low-value services, an alternative approach that initially targets the reduction of high-volume and less costly items might be a more strategic way to catalyze the movement to tackle the problem of low-value care.”

APCD use case studies

While all-payer claims databases are a quite recent addition to the healthcare system, they are already proving its value through successful cases. Here are some of our picks.

Minnesota’s cost-saving opportunities

In 2015, the state of Minnesota used APCD data on ER utilization, admissions, and preventable readmissions to identify 1.3 million avoidable ER visits and hospitalizations translating into $2 billion in potential savings. The top conditions for preventable admissions comprised COPD, pneumonia, and heart failure.

These potentially preventable acute events could be avoided with such measures as primary care activities, therapeutic education, remote patient health monitoring, established care coordination, improved medication adherence, and more.

For example, a urinary tract infection can be treated in primary care settings instead of an ER visit, if a patient is more aware of how they should act when experiencing certain symptoms. Likewise, a COPD‑related readmission stemming from the lack of continuous follow-up care can be avoided with more thorough patient consultations and detailed post-discharge.

Massachusetts’s CompareCare

CompareCare is a consumer-facing web tool based on APCD, targeting patients located in Massachusetts. Its goal is to help care consumers navigate in care costs and make informed decisions about particular medical procedures and clinical settings in their vicinity.

In particular, the resource provides a number of educational and reference features, including:

  1. Conversation Guides with basic information about procedures and a list of questions to discuss with the provider before deciding on a health plan.
  2. Compare Treatment Cost offers pricing estimations for a particular procedure in a particular city and according to a chosen insurer.
  3. Get Quality Care allows patients to compare specific providers according to their care quality and performance.

Colorado’s high care costs demystified

A recent multi-state study highlighted the reasons for higher care delivery costs and opened the opportunity for Colorado to save more than $48 million annually. The research reported the total costs for healthcare services to be 17% and 30% higher for inpatient and outpatient settings respectively, compared to other states reviewed.

The reasons for such gaps were rooted in higher prices for the care services that Coloradans were using more often. The state can cut on healthcare costs if providers with higher average costs would initiate actions to reduce per member per month spending to $437, which is the median value across the state. Of course, the complexity is that each practice will have to dive into their own data to elicit the most costly and low-value services.

Let’s start walking the road

APCDs hold great potential to introduce price transparency to healthcare because they allow for an unbiased and multifaceted outlook of current healthcare costs, price variation, care quality, and utilization aspects. If equal access to them is granted to all parties, this will create a common ground for better healthcare regulation.

Still, there’s plenty of work to be done to achieve the nation-wide results. First, the majority of states need to enable APCDs or APCD-like data storages. Then, there also should be a standard procedure for providers to report on procedure- and patient-specific pricing, since it can be a massive administrative burden, and there’s no current best practice for this process.

Let’s also not forget about ever-emerging PHI data privacy and protection issues. While these all can be dealt with, they still require consolidated effort to establish positive patterns and then some time to mature.

Tags: