Can health care claims data improve the estimation of the Medical CPI?

1. Can health care claims data improve the estimation of the Medical CPI? CRIW Conference on Price Index Concepts and Measurement William D. Marder, PhD June 28, 2004

2. Acknowledgements • Support for this project came from a contract with the Bureau of Labor Statistics. • Coauthors: • Xue Song • Onur Baser • Bob Houchens • Jon Conklin • Ralph Bradley, BLS Can health care claims improve the Medical CPI?

3. Issues Specific to Medical Care • Third party payment for healthcare creates challenges and opportunities for price measurement • Consumer out-of-pocket spending is a fraction of the transaction price • Medical claims capture information about transaction prices (for some transactions) with little or no respondent burden – can this improve the reliability of estimates • Most of the money spent on healthcare is to treat illness. • Several researchers have investigated trends in the cost of treatment episodes created from claims databases • Committee on National Statistics (CNSTAT) recommendation • We report results on each of these issues. Can health care claims improve the Medical CPI?

4. Data • MarketScan data from Boston, New York, and Philadelphia 1998-2002. • BLS data from Boston, New York, and Philadelphia PSUs for the same years. • MarketScan is a convenience sample based on Medstat’s employer clients’ data • Fully integrated medical and drug claims including outpatient Rx use data • Comprehensive patient level data from over 6 million covered lives annually, tracking actual patients even as they change health plans • On-going data feeds from 50 major employers and over 100 health plans covering all plan types and carve-outs • For some employers includes employer-sponsored Medicare supplemental insurance with coordination of benefits • Fully HIPAA compliant Can health care claims improve the Medical CPI?

5. Characteristics of the claims database (1 of 2) • Coverage does not match population size • In 1998, MarketScan populations were: • Boston 146,000 • New York 43,520 • Philadelphia 104,901 Can health care claims improve the Medical CPI?

6. Characteristics of the claims database (2 of 2) Can health care claims improve the Medical CPI?

7. BLS Sample Sizes, 1998-2002 Can health care claims improve the Medical CPI?

8. Comparability of claims and current BLS price levels • Focus on outpatient prescription drug prices • Prescription drugs identified by 11-digit NDC codes in both BLS procedures and claims data • Compared price levels in the three cities for the specific NDCs in the current CPI data collection effort • These particular drugs are carefully selected with a probability that depends on patient spending patterns Can health care claims improve the Medical CPI?

9. Drug prices lower in claims than BLS • In each PSU separately, t-test statistics are -8.10 in Boston, -17.76 in New York) and -7.56 in Philadelphia, All three PSU’s combined t = -16.78 • As expected, prices collected in the claims database are lower than the prices collected by the BLS because of discounts. Can health care claims improve the Medical CPI?

10. Comparability of Drug Price Trends - Philadelphia Can health care claims improve the Medical CPI?

11. Disease-based price measures

12. Committee on National Statistics Recommendation 6.1 • BLS should select between 15-40 diagnoses from the ICD (International Classification of Diseases), chosen randomly in proportion to their direct medical treatment expenditures • Use information from retrospective claims databases to identify and quantify the inputs used in their treatment and to estimate their cost. • On a monthly basis, the BLS could re-price the current set of specific items (e.g., anesthesia, surgery, and medications), keeping quantity weights temporarily fixed. • Then, at appropriate intervals, perhaps every year or two, the BLS should reconstruct the medical price index by pricing the treatment episodes of the 15 to 40 diagnoses—including the effects of changed inputs on the overall cost of those treatments. • The frequency with which these diagnosis adjustments should be made will depend in part on the cost to BLS of doing so. • The resulting MCPI price indexes should initially be published on an experimental basis. The panel also recommends that the BLS appoint a study group to consider, among other things, the possibility that the index will “jump” at the linkage points and whether a prospective smoothing technique should be used. Can health care claims improve the Medical CPI?

13. Implementation of Recommendation 6-1 • Focused on three metropolitan areas • Used COTS to construct disease-based episodes for all diseases • Randomly selected 40 episodes for study • Summarized all resources used in treatment episode (and the frequency of use) • Repriced monthly within broad classes for hospital, physician and drug components of episodes: • DRGs • BETOS • Drug therapeutic classes • Respecified the bundle in the episode annually. Can health care claims improve the Medical CPI?

14. Medstat’s Episode Grouper (MEG) • -Commercial Off-the-Shelf software tool that groups claims into episodes of care • Comprehensive – covers all diseases in the ICD9 • Based on Disease Staging – originally developed for NCHSR (predecessor to AHRQ) Can health care claims improve the Medical CPI?

15. MEG Classification System • Classify Diseases • Conditions defined by diagnoses • Disease groupings based on conditions not treatments • Stage of disease defined by severity of complications • Build Episodes • Associate services and visits for same condition • Associate non-specific diagnoses • Require clean periods (look-back & episode-end) • Associate Pharmacy Data • Array prescriptions temporally to ongoing episodes • Assign drugs to appropriate episodes Can health care claims improve the Medical CPI?

16. From claims to episodes Can health care claims improve the Medical CPI?

17. Sampled Episodes Can health care claims improve the Medical CPI?

18. Diabetes Trends Can health care claims improve the Medical CPI?

19. AMI Trends Can health care claims improve the Medical CPI?

20. Disease-based Index – Boston Can health care claims improve the Medical CPI?

21. Disease-based Index – New York Can health care claims improve the Medical CPI?

22. Disease-based Index – Philadelphia Can health care claims improve the Medical CPI?

23. Decomposing the difference • Claims prices differ even when methods and numbers of cases are the same • Claims permit larger sample sizes at little or no incremental cost • Disease-based views of claims represent a significant new analytic construct. • How much of the difference is attributable to each of these steps? Can health care claims improve the Medical CPI?

24. Bootstrapping results are a work in progress • Clear that the monthly changes are noisy enough that the differences are not statistically significant • Cumulative effects are still being investigated. Can health care claims improve the Medical CPI?

25. Concluding remarks • Previous research looked at disease-specific costs in a new way and found dramatically different trends • Were the results specific to the diseases chosen? • This initial investigation with a randomly selected group of diseases suggests that a more general effect could be at work. • Limitations • Three cities with convenience samples that may not be representative • Significance testing not yet complete • Next steps Can health care claims improve the Medical CPI?