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Total Cost of Medical Care in Minnesota Increased 3 Percent Last Year

Total Cost of Medical Care in Minnesota Increased 3 Percent Last Year

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The total cost of medical care in Minnesota increased by 3 percent over the past year for commercially-insured patients, while the average price of the most common tests, procedures and services provided in clinics increased by 6 percent, according to a new report published by MN Community Measurement.

“Prices for clinic services are rising faster than the overall cost of care,” explained Jim Chase, MNCM President, “suggesting that medical groups are controlling the amount of care being provided or using less expensive services.”

The overall total cost of care (TCOC) per commercially-insured patient per month was $449 in 2014, a $14, or 3.2 percent, increase over the previous year.

However, some medical groups are bucking the trend.

For example, Hennepin County Medical Center (HCMC) reduced its TCOC by 4 percent by transitioning patients out of crisis care in emergency rooms and into primary care. Efforts included implementing a Coordinated Care Center, which provides multi-disciplinary support for patients with complex medical and social needs; establishing interventions to connect frequent emergency department patients with primary care doctors; and using data to identify patients who need additional support and outreach to remain healthy.

“[Internal] teams are talking to each other to get the patient to the right care setting at the right time,” explained Amy Harris-Overby, HCMC’s Population Health Program Director. They are focused “using the information about our population to understand patients’ risk and need, and then creating the right set of interventions or support for people.”

TCOC information along with the cost of 85 common medical procedures can be searched by and compared across medical groups at MNHealthScores.org. TCOC is available for 132 medical groups, representing 954 clinics, across Minnesota and neighboring communities; average procedure costs are available for 201 medical groups.

The results of both cost measures are based on the 2014 health insurance claims of more than 1.5 million commercially-insured patients enrolled with four Minnesota health plans: Blue Cross and Blue Shield of Minnesota, HealthPartners, Medica and PreferredOne.

Total Cost of Care

TCOC measures all costs associated with treating commercially-insured patients, including professional, facility inpatient and outpatient, pharmacy, lab, radiology, behavioral health and ancillary costs. It is the full cost that is paid by both patients and health insurance companies. This is the second release of TCOC information in Minnesota; the first occurred in 2014.

“We evaluated $8.3 billion in health care costs that were accrued by Minnesotans during 2014, making this the most in-depth, comprehensive assessment of the cost of medical care in the country,” Chase said.

The 3.2 percent increase in TCOC aligns with the overall Consumer Price Index for medical care services in Minneapolis, which increased 3.1 percent during the same period.

Individual medical group results ranged from $298 to $823 per patient per month. The statewide average for adult patients was $529 per month and for pediatric patients was $225 per month.

“A difference of $1,700 per patient annually exists between the high and low cost providers,” Chase explained. “That’s a considerable difference in the cost of health care in our state – and that’s where the greatest opportunity for improvement exists.”

The amounts were risk-adjusted and outlier costs were removed to level the playing field for all medical groups so true cost variation can be evaluated. The measure is endorsed by the National Quality Forum.

Providers have found value in having a standardized, reliable measure of health care cost.

“When you sit in a provider system and you have multiple payer contracts and each may measure cost a little differently, you can lose your true north. [TCOC] is a level set for the industry,” Harris-Overby said.

Consumers, employers and health plans are using the information to better evaluate high-value health care.

“The employer and purchaser community increasingly demand methods to better define high value care,” said Howard Epstein, M.D., Chief Medical Officer at PreferredOne. “Total cost of care data, along with quality outcomes, is an essential tool to effectively identify high value providers and network options. PreferredOne has developed Accountable Care, Narrow and Tiered networks utilizing this type of data.”

Average Cost per Procedure

MNCM also released the average cost of the 85 most common medical procedures in ambulatory care settings, ranging from routine office visits and simple lab tests through MRIs and caesarean section deliveries. This is the third publication of average procedure cost information, which was previously released in 2009 and 2013.

“Patients can pay substantially more for virtually every medical procedure, including routine expenses such as lab tests and office visits, based on the clinic they choose,” Chase said. “As patients are being increasingly asked to pay a larger portion of their medical expenses, those differences add up.”

For example, a rapid strep test can cost from $19 to $86 and a 15-minute office visit can cost from $76 to $157 for commercially-insured patients, depending on where they get care.

The average procedure cost represents the professional fees for the physician conducting the procedure or seeing the patient. The majority of procedures available from MNCM occur in the doctor’s office; thus, the cost will generally reflect the full cost of the service.

Seventeen new procedures were added this year, including lumbar spine MRI, Human Papilloma Virus vaccinations, psychotherapy office visits and echocardiogram. Particular emphasis was placed on expanding the cost information available for mental health visits and high-tech imaging.

About Us

MN Community Measurement is a non-profit organization dedicated to improving health by publicly reporting health care information. A trusted source of health care data and public reporting on quality, cost and patient experience since 2003, MNCM works with medical groups, health plans, employers, consumers and state agencies to spur quality improvement, reduce health care costs and maximize value.