Thought Leadership

Cherry-picked data, price transparency, and what it means for your system

By Revive
posted Oct 16, 2020

By now, most of you may have seen that RAND released the most recent study in their Employer Hospital Price Transparency Project, called RAND 3.0. The study is meant to assist employers in understanding what private health plans are paying hospitals, so they can manage benefit design costs or steer patients to less expensive hospitals and systems. RAND’s suggestions are nothing new and are actually not actionable for employers. Why? Because of the insufficient, cherry-picked data used to complete the study. 

The American Hospital Association (AHA) responded to the RAND 3.0 study by appropriately identifying its serious shortcomings. RAND researchers used CMS payments as the benchmark measure for pricing and CMS star ratings and Leapfrog scores to measure quality. By combining these as standards, the study essentially bundles facility and professional fees to paint a picture that doesn’t even equate the important role of physicians and staff in the care process. Essentially the study found that private plans pay hospitals, on average, 235% more than what CMS would pay. The kicker? It shows that hospitals that had better quality scores cost more. Who’s shocked? You get what you pay for. 

Why is this important for you and your system? You have to be looking for the right partnerships. Whether that’s with senior centers for traditional Medicare or Medicare Advantage customers or working with local employers to tailor healthcare needs for their employees around diabetes, flu shots, or COVID-19 testing, healthcare services must extend outside of the walls of your hospitals. That way, when studies like RAND 3.0 attempt to paint an incredibly misleading picture of hospitals and systems, you can refute it by showing the innovative ways you are partnering with your patients and community to improve health.