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AHIP: Hospital Inpatient Pricing Up Sharply

 |  By John Commins  
   March 20, 2013

Prices for inpatient hospital care rose 8.2% between 2008 and 2010, with wide price and cost growth fluctuations recorded across states and localities over the timeframe, according to a study by America's Health Insurance Plans.

Even after adjusting for more numerous or complex procedures performed per admission, prices climbed sharply for most types of hospitalizations. Unadjusted hospital prices per admission rose from $13,016 in 2008 to $15,236 in 2010, an average annual growth rate of 8.2%, said the study,Trends in Inpatient Hospital Prices, 2008 to 2010, which appeared in this week in The American Journal of Managed Care.

"Despite the keen interest in US healthcare costs, there is surprisingly little detailed public information available on one of its key components: transaction prices paid by commercial insurers for inpatient hospital care," the study said.

The 15.2% price growth for spinal fusions topped the list of 10 common admissions categories, while bronchitis and asthma came in second with 10.3% price growth, the study said.

New York led all states with a 10.5% price increase over the three years, followed by Texas at 9.3% and Tennessee at 8.8%. Within states the price growth could fluctuate considerably. For example, the price growth in the Buffalo-Niagara Falls region was 14.4% for the period, the study said.

AHIP President and CEO Karen Ignagni said in prepared remarks accompanying the study that "the price of healthcare services is the major driver of overall healthcare cost growth. To make healthcare coverage more affordable for consumers and employers, there needs to be a much greater focus on the underlying cost of medical care." 

The American Hospital Association, however, in a statement given to HealthLeaders Media, dismissed the study's findings as "simply a rehash designed to divert attention from the harmful consumer impacts of health insurers' own rising premiums."

"Hospitals across America are examining ways to make care more affordable by better coordinating care, reducing red tape, and providing the right care at the right time in the right setting. These efforts have led to hospitals to hold costs down, keeping health care spending growth at historically low levels for the third straight year and the rate of growth in hospital cost per service is at a decade-low," the AHA statement read.

"As a study by the American Medical Association found, anticompetitive market conditions are common across managed care plans. It's important to note that growth in insurance costs from 2010 to 2011 was more than double that of the underlying healthcare costs, including hospitals.  It is not hospital prices that are driving the rise in insurance premiums."

The hospital group pointed to a report last year from the Centers for Medicare & Medicaid Services' office of the actuary which found that premium rates for private insurers rose faster than underlying healthcare costs and that for the first time in seven years, growth in total premiums exceeded growth in total benefits.

Jeffrey G. Micklos, executive vice president and general counsel for the Federation of American Hospitals says the study doesn't explain the reasons for cost growth and price variations that it found.

"What we're seeing is that provider consolidation is happening and it is a response to the marketplace," Micklos told HealthLeaders Media. "It's not only the affordable care act and coordinated care and integrated care efforts but it is also reaction and rebalancing in some markets. So when they have a finding that says there are wide variations in price levels and growth rates in localities and states our position is 'that is the market and the market is working. Some places there will be more rebalancing than others. These trends are cyclical. They come and go."

While provider consolidations have been cited as a driver of healthcare costs by the health insurance industry, Micklos says market leverage is not the sole motivation.

"It's really being driven by trying to break down the silos of care and coordinate care more," he says. "Hospitals look at themselves as healthcare companies and there are a bunch of reasons why they are aligning with physicians. And it is not just their desire to do so. Physicians are also facing this new market where they are being asked to do more with less with regards to capital investment and health information technology and developing a quality infrastructure platform and malpractice and other typical costs that make it difficult for them to continue to practice in that two- or three-doctor practice."

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.

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