Medicares Hospital Compare Quality Reports Appear To Have Slowed Price Increases For Two Major Procedures
Author: Avi Dor, William E. Encinosa, Kathleen Carey
Previous research has found that Hospital Compare, Medicare’s public reporting initiative, has had little impact on patient outcomes. However, little is known about the initiative’s impact on hospital prices, which may be significant because private insurers are generally well positioned to respond to quality information when negotiating prices with hospitals. We estimated difference-in-differences models of the effects of Hospital Compare quality reporting on transaction prices for two major cardiac procedures, coronary artery bypass graft (CABG) and percutaneous coronary intervention (PCI). States that had mandated their own public reporting systems before the implementation of Hospital Compare formed the control group. We found that prices for these procedures continued to increase overall after the initiation of Hospital Compare quality scores, but the rate of increase was significantly lower in states with no quality reporting metrics of their own before Hospital Compare, when compared to the control states (annual rates of increase of 4.4 percent versus 8.7 percent for PCI, and 3.9 percent versus 10.6 percent for CABG, adjusted for overall inflation). This finding implies that Hospital Compare provided leverage to purchasers in moderating price increases, while adding competitive pressures on hospitals. Providing accurate quality information on both hospitals and health plans could benefit consumers.