Relative Price and Provider Price Variation


Relative Price Metric

The relative price method standardizes the calculation of provider prices and neutralizes the effect of differences in the quantity and types of services providers deliver to patients, and the different product types that payers offer to their members. CHIA calculates both payer-specific relative prices and cross-payer statewide relative prices.

For more information on Statewide Relative Price, see:

 

For more information on Payer-Specific Relative Price, see:

NEW! Relative Price Report (May 2017)

Payer-Specific Relative Price Methodology

Statewide Relative PRice

Relative price is a calculated metric that measures provider price variation in the Massachusetts health care market. It allows for comparison of different provider prices within a payer’s network for a standard mix of insurance products (e.g. HMO, PPO, and Indemnity) to the average of all providers’ prices in that network. Commercial payers’ prices for similar services vary considerably among Massachusetts providers.

The study of provider price variation can be helpful both for policymakers addressing the implications of price variation in the health care market and for consumers in making cost-conscious decisions on where to go for care.

As the Commonwealth strives toward greater price transparency in the health care market, it is increasingly important to monitor variation in provider prices and the relationship between price and market dynamics.

New!
Provider Price Variation in the Massachusetts Health Care Market (May 2017)

CHIA has released its annual examination of provider price variation in the commercial health insurance market, illustrating differences in prices paid to providers for the same set of services. This report includes data through calendar year 2015 for acute care hospitals and calendar year 2014 for physician groups. 

For the first time, CHIA reported on a new metric, statewide relative price, developed to produce a single RP for hospitals across commercial payers.  In addition to statewide relative price, CHIA also produced payer-specific relative price, allowing for comparisons within an insurer’s network.

The report is accompanied by a databook, which includes detailed statewide and payer-specific RP for hospitals, physician groups, and other provider types.

 

Key Findings:

        • Since 2012, commercial payments to acute hospitals have been concentrated among the highest-priced hospitals, representing more than 50 percent of commercial payments in each of these years. Among acute hospitals, Academic Medical Centers had the highest average commercial statewide relative price and community-High Public Payer hospitals had the lowest. 

 

        • In 2014, $5.5 billion was paid to physician groups for services provided to patients with commercial insurance plans—of that, 86% of the payments went to physician groups with above-average relative prices. 



Provider Price Variation Graphic

Previous Relative PRice Publication Materials