At What Price? Conceptualizing and Measuring Cost-of-Living and Price Indexes (2002) / Chapter Skim
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6 The Special Case of Medical Services
6 The Special Case of Medical Services
Pages 178-190
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From page 178... ...
This chapter begins by briefly outlining current procedures for calculating the Medical Care Price Index (MCPI) and then discusses a number of issues that have been raised concerning MCPI reliability and accuracy.
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From page 179... ...
Although BLS is currently reassessing the feasibility of proceeding with direct measurement of prices of health insurance policies, it has not taken that route (see Greenlees and Fixler, 2000; Bureau of Labor Statistics, 2001~. Rather than trying to price health insurance, the BLS distributes out-of-pocket expenditures for private health insurance (fees for service commercial carriers, Blue Cross/Blue Shield, preferred provider health plans, and health maintenance organizations)
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From page 180... ...
Finally, to obtain the total weights by subcomponent within the MCPI, the BLS sums up, for each category, consumers' direct out-of-pocket expenditures (except health insurance) , plus the reallocated private insurance (for commercial carriers fee for service, plus similar reallocations for Blue Cross/Blue Shield, preferred provider health plans, and health maintenance organizations)
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From page 181... ...
Input Substitution and Pricing Episodes of Medical Treatment One of the most significant issues facing BLS is whether it should price medical inputs or medical outputs (outcomes)
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From page 182... ...
More specifically, the BLS practice of separately pricing and weighting distinct medical item strata neglected the medical care sector's substitution across various strata (e.g., physician services, prescription pharmaceuticals, laboratory tests) , thereby overstating price increases.
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From page 183... ...
Retrospective medical claims data generally provide detailed information, by individual or family unit, including date of visit with the physician or other medical care professional, medical procedures provided, primary and secondary diagnoses, hospitalizations, dispensed medications, and the patient's and insurer's payments for each of these services. The diagnoses selected for pricing by the BLS could be chosen on the basis of the relative amounts spent on the disease so that, for example, heart attacks would be far more likely than conjunctivitis to be chosen, even though conjunctivitis has more entries than acute myocardial infarction in the ICD.
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From page 184... ...
Thus, we advise that the BLS price treatment episodes for selected diagnoses, independent of the actual treatment components. This method generalizes what the BLS is already doing in the context of using DRG reimbursements in hospitals for pricing hospital services for Medicare patients.
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From page 185... ...
While the panel does not believe that BLS should use outcomes-adjusted price indexes based on QALY or DALY measures in its official price indexes in the near future, high priority should be given to research examining the feasibility and sensitivity of alternative ways of incorporating quality-of-life aspects of medical treatments, both at the BLS and elsewhere. THE DOMAIN OF CONSUMER HEALTH EXPENDITURES: EMPLOYERS' HEALTH INSURANCE PAYMENTS The CPI is designed to price goods and services for which consumers make direct out-of pocket-expenditures.
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From page 186... ...
would need to be reexamined carefully. Even if employer health insurance payments were not incorporated into the MCPI and CPI, the usefulness and appropriateness of the CPI for measuring movements in the cost of living for subpopulations could be substantially affected by major policy changes, such as a prescription drug benefit for elderly Medicare beneficiaries.
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From page 187... ...
Such a change would eliminate the need for price quotes from third-party payers for their purchases of physician services, hospital services, and prescription drugs. Implicitly, such direct pricing of health insurance policies would be based on the reasonable assumption that prices paid by insurers for physician services, hospital services, and prescription drugs are reflected in the health insurance premiums they charge.
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From page 188... ...
Replacing indirect pricing with the direct pricing of health insurance policies offers very attractive possibilities, and we believe that this direct pricing alternative merits close scrutiny. But we also strongly recommend that no change from indirect to direct pricing be made without extensive experimentation and reliability assessment that includes consultation with leading health economists, actuaries, clinicians, and health insurance specialists.
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From page 189... ...
health care sector, a medical care price index that encompasses purchases from all payers governments, private third-party insurers, and consumers is needed. Whether such an index is best constructed by the BLS, the Bureau of Economic Analysis, some other government agency such as the Centers for Medicare and Medicaid Services, or a nongovernmental organization is unclear.
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From page 190... ...
This area is new and requires considerably more research, much of it interdisciplinary. After BLS has produced the experimental expanded-scope MCPI recommended above, BLS can consider whether, how, and why the outcomes of the treatments for those diagnoses are changing over time and finally consider how outcome changes should best be evaluated in computing a quality-adjusted medical care price index.
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