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:

 

For more information on Payer-Specific Relative Price:

NEW! Relative Price Report (April 2018)

Statewide Relative Price (February 2018)

Payer-Specific Methodology

Relative price is a calculated metric that measures provider price variation in the Massachusetts health care market. It compares 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 for policymakers addressing the implications of price variation in the health care market and also 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.

Provider Price Variation in the Massachusetts Health Care Market (April 2018)

CHIA's annual examination of provider price variation in the commercial health insurance market, illustrates differences in prices paid to providers for the same set of services. This report contains data through calendar year 2016 for acute care hospitals and calendar year 2015 for physician groups.

Using a composite metric known as statewide relative price (S-RP), CHIA also compares provider payments across commercial payers, while standardizing for differences in patient acuity, the types of services providers deliver to patients, and the different product types that payers offer their members. The report also includes payer-specific data, allowing for comparisons within an insurer’s network.

The report is accompanied by a databook, which includes detailed statewide and payer-specific RP data.

 

Key Findings

  • In 2016, $9.5 billion was paid to acute care hospitals in Massachusetts for inpatient and outpatient services provided to patients with commercial insurance plans.

     

     

  • Academic Medical Centers had the highest average commercial S-RP (1.17) and received 39% of commercial payments statewide, while community-High Public Payer hospitals had the lowest (0.93) and received 21% of commercial payments.

     

     

  • In 2015, $5.5 billion was paid to physician groups for services provided to patients with commercial insurance plans; of that, 85% of the payments went to physician groups with above-average relative prices 

 

Provider Price Variation Graphic

Previous Relative PRice Publication Materials