Normalizing Out-of-Network Revenues

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Normalizing out-of-network (OON) reimbursement to in-network levels is a common, yet fairly sophisticated payor analysis used for strategic planning, business sales, and litigation purposes .  Here are three resources for normalizing OON revenues. 1) HSC Research Briefs No. 16 and No. 27 The two best research studies of market pricing power for inpatient, outpatient, and physician services were published by the Center for Studying Health System Change.  These two studies describe variations in reimbursement in over a half dozen U.S. cities and compare the results as a percentage of Medicare rates.  These two studies are good references for setting the outer bounds of what is realistic.  Analysts can calculate normalized revenues by imposing these percentage of Medicare rates on the services being analyzed. Brief No. 16 used claims data from Aetna, Anthem Blue Cross Blue Shield, CIGNA and UnitedHealth Group for eight major metropolitan markets.  Here is a sample table from Brief No. 16 analyzing hospital prices as a percentage of Medicare.

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Brief No. 27 examines the same hospital and physician services with a slightly newer 2011 claims data for commercial insurance enrollees in 13 markets. Here is a sample chart from Brief No. 27 focusing on primary care physician services.

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 2) State All Payor Claims Databases As of this publication, about a dozen states have created all-payor claims databases, but only a handful have provided the public with detailed data for price comparison purposes.  These databases can be referenced to identify the prices commercial insurers and providers negotiate.  New Hampshire’s NH HealthCost and Maine’s HealthCost online tools provide their constituents with the best commercial pricing data.  Here is a snapshot of New Hampshire’s output for Cigna reimbursement for colonoscopies at various facilities. New Hampshire’s NH HealthCost: Selected Cigna, $2,000 deductible New Bitmap Image 3. Health insurance cost-comparison tools During the last four years, most major commercial health insurers have given their enrollees access to meaningful price comparison data for common procedures and diagnostic tests through their online website portals. To meet a growing need for pricing comparisons which insurers have only recently facilitated, private companies like Castlight Health have been mining health insurance claims data for self-insured employers to help them identify low-cost providers and services for their employees. Now that contracted commercial insurance rates with providers are widely available to tens of millions of enrollees, it is not difficult to access these rates if you know where to look.   ++++++++++++++++  

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