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The Need For A Comprehensive, Current, And Market-Representative Health Care Cost Benchmark


October 7th, 2014

A recent post from Jonathan Skinner and colleagues on Health Affairs Blog posited an interesting solution to ever-increasing health care costs, suggesting that imposing price caps on all medical services, equal to 125 percent of the Medicare payment, would serve to eliminate wide variations in quoted prices for health care services.

While the overall idea of controlling costs through the establishment of a mutually agreed-upon and accessible benchmark is a sound one, the use of Medicare reimbursement levels as a ceiling for this purpose would present a number of challenges. For example, Medicare does not assign a value to all codes; a separate system would be needed to price services not addressed by Medicare’s fee schedule.

Also, Medicare’s reimbursement levels can be influenced by governmental imperatives and therefore may not be truly representative of market costs. And the establishment of a 125 percent of Medicare cap—a standard used by some health plans for in-network care where providers are guaranteed a high volume of patients—might not be adequate reimbursement for one-off, out-of-network services that lack a network’s compensatory volume economics.

We at FAIR Health suggest an alternative approach using measures that are acceptable to all stakeholders as reference points for out-of network charges to help achieve the proposal’s laudable goal: to provide quality health care at transparent prices that are reasonable for consumers and fair to providers.

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A Call For Clarity In Health Care: The FAIR Health NPIC Database


November 28th, 2012

By all accounts, health care in America has been ailing for several decades. Americans have struggled with acquiring and maintaining adequate health insurance as costs have steadily increased. While the increased insurance coverage provided under the Affordable Care Act (ACA) will help individuals access and pay for health care services, the ACA’s impact on cost, which will be shifted but not eliminated, seems likely to be less substantial. Developing new approaches to rein in spending and improve the value of care delivery remains a critical challenge for all of the diverse players in the health care arena.

We know that there are a number of drivers of health care costs. New, more expensive medicines and technology — and particularly technology that brings with it only incremental benefits — are obvious factors. A related issue is the overuse and misuse of certain procedures and tests. Finally, the burden of treating a population with high rates of chronic illness brings with it significant costs and presents an increasing challenge as rates of chronic illness grow.

Putting clarity into the health care system. To truly bend the cost curve, we need to take a holistic approach. While the call for transparency in the health care system is a common one, we need to also be thinking about how we can move beyond transparency to insist on clarity across the health care system. Clarity is achieved by giving people information that they will find useful to their decision-making process and empowering them to act on that information. Such clarity must take place on two different levels: macro and micro.

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