Health Care Provider Price Variation in Massachusetts Commercial Market Feb 2015

RELATIVE PRICE Health Care Provider Price Variation in the Massachusetts Commercial Market February 2015

List of Figures Acute Hospitals: (1) Distribution ofAcute Hospital Inpatient Payments, by Relative Price (RP) Quartile, 2011-2013 Distribution ofAcute Hospital Outpatient Payments, by RP Quartile, 2011-2013 (2) Distribution ofAcute Hospital Inpatient Relative Prices, by Payer, 2013 (T op 6 commercial payers, ranked by share of inpatient payments) (3) (4) Distribution ofAcute Hospital Outpatient Relative Prices, by Payer, 2013 (T op 6 commercial payers, ranked by share of outpatient payments) Acute Hospital Composite RP Percentile (Blended), by Hospital Cohort, 2013 (5) (6) Distribution ofAcute Hospital Payments, by SystemAffiliation, 2013 (7) Acute Hospital Composite RP Percentile (Blended), by System, 2013 (8) Acute Hospitals Share of T otal Hospital Payments, 2013 Note: Acute hospital inpatient and outpatient relative prices and payments correspond to calendar year 2013 (CY 2013). Data as reported by 12 commercial payers for all commercial products combined. Physician Groups: (9) (10) Distribution of Physician Group Payments, by RP Quartile, 2010-2012 Distribution of Physician Group Relative Prices, by Payer, 2012 (T op 6 commercial payers, ranked by share of physician group payments) Distribution of Physician Group Payments, by SystemAffiliation, 2012 (11) (12) Physician Group Composite RP Percentile (Blended), by SystemAffiliation, 2012 (13) Physician Groups Share of T otal Physician Group Payments, 2012 Source: Physician relative prices and payments correspond to calendar year 2012 (CY 2012). Data as reported by 11 commercial payers (no Network Health) for all commercial products combined. Note: Calculated values reported in these figures are based on Relative Price valuesprior to rounding.Network Health did not report commercial businessin 2012.

Acute Hospitals

Commercial payments for inpatient services remained concentrated among the highest- priced acute hospitals. The distribution of payments fluctuated slightly in the last three years. Figure1: Distribution of AcuteHospitalInpatientPayments,by RelativePrice Quartile 2011-2013 14.4% payments ($0.49 b.) 85.6% payments ($2.89 b.) 2013 4.4% 10.0% 21.6% 64.0% 15.8% payments ($0.50 b.) 84.2% payments ($2.67 b.) 2012 3.9% 3.9 21.9% 62.4% 11.9% 14.2% payments ($0.49 b.) 85.8% payments ($2.98 b.) 2011 4.1% 10.2% 20.7% 65.1% Q3 Q1 Q2 Q4 (highest RP) (lowest RP) Note: Celticare and United are excluded from 2012 and 2013, and Network Health is excluded from 2013, to align with 2011 data asreported. Celticare andUnited were excluded in 2011 because of data qualityissues, andNetwork Health onlyreported commercial businessin 2013. Percentages may not sum to 100% because of rounding.

Similarly , commercial payments for outpatient services also remained concentrated among higher-priced acute hospitals, though the share of payments to these hospitals declined slightly in recent years. Figure2: Distributionof AcuteHospitalOutpatientPayments,by RelativePrice Quartile 2011-2013 27.3% payments ($1.26 b.) 72.7% payments ($3.37 b.) 2013 9.1% 18.2% 28.4% 44.3% 25.3% payments ($1.11 b.) 74.7% payments ($3.25 b.) 2012 8.4% 16.9% 29.0% 45.7% 24.8% payments ($1.16 b.) 75.2% payments ($3.50 b.) 2011 7.5% 17.3% 31.0% 44.1% Q1 Q2 Q3 Q4 (highest RP) (lowest RP) Note: Celticare and United are excluded from 2012 and 2013, and Network Health is excluded from 2013, to align with 2011 data asreported. Celticare andUnited were excluded in 2011 because of data qualityissues, andNetwork Health onlyreported commercial businessin 2013. Percentages may not sum to 100% because of rounding.

In each of the top six payers networks, more than half of total acute hospital payments for inpatient care were concentrated among hospitals that had relative prices that were at least 20% higher than the network average. Figure3: Distribution of AcuteHospitalInpatientRelativePrices, by Payer,2013 Payer share of total hospital inpatient payments (Top 6 commercialpayers, rankedby shareof total inpatient payments) Number of hospitals Number o N=17 32% N=24 13% N=9 (N) and pe 51% total netw rcent of ork N=11 4% BlueCrossBlueShield of Massachusetts (49%) inpatient payments, inpatient within eac price inter h relative val N=10 16% N=15 10% N=16 70% N=17 3% Harvard Pilgrim Health Care (22%) N=13 28% N=18 11% N=11 N=16 4% 57% Tufts Health Plan (10%) N=4 8% N=17 9% N=9 70% N=25 12% Aetna (5%) N=11 37% N=6 4% N=8 51% N=30 8% Fallon (3%) N=5 7% N=6 11% N=12 64% N=35 18% Cigna (3%) Relative Price 0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 2 2.2 2.4 2.6 Note: Figure excludes six hospitalsthat serve specific patient populations,based either on age or type of medical condition.These "Other Specialty" hospitalsare not considered comparable with other full-service acute hospitalsand are not depicted in the figure. However, payments to these hospitalsare incorporatedinto payers shares of total inpatientpayments. Percentages may not sum to 100% because of rounding.

For the top three payers, outpatient payments similarly were more concentrated among hospitals with relative prices near the network median than inpatient payments. Figure4: Distribution of AcuteHospital OutpatientRelativePrices, by Payer, 2013 (Top 6 commercialpayers, by shareof total outpatient payments) Payer share of total hospital outpatient payments N=16 8% N=26 N=10 26% 28% N=9 Number of hospit als (N) and percent of total network outpatient network outpatie payments, within relative price inte 37% 37% and percent of to BlueCross BlueShield ofMassachusetts (45%) each rval N=13 23% N=14 9% N=22 N=12 36% 32% Harvard Pilgrim Health Care (20%) N=20 16% N=23 N=6 42% 17% N=11 24% Tufts Health Plan (12%) N=17 17% N=15 N=10 26% 17% N=14 40% Aetna (5%) N=21 16% N=14 N=10 19% 26% N=14 39% Cigna (4%) N=28 64% N=9 N=7 11% 9% N=15 16% Fallon (3%) RelativePrice 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0 2.2 2.4 2.6 2.8 3.0 3.2 Note: Figure excludes six hospitalsthat serve specific patient populations,based either on age or type of medical condition.These "Other Specialty" hospitalsare not considered comparable with other full-service acute hospitalsand are not depicted in the figure. However, payments to these hospitalsare incorporatedinto payers shares of totaloutpatient payments. Percentages may not sum to 100% because of rounding.

All six academic medical centers, most teaching hospitals, and nearly all geographically isolated hospitals had prices that were higher than the network median across all payers networks. Academic Medical Centers Figure5: AcuteHospitalCompositeRP Percentile(Blended), by HospitalCohort,2013 Teaching 100th Community, DSH 90th Community 80th Geographically Isolated 70th 60th Within each hospital cohort, percent of total payments to hospitals with composite RP percentile higher than the median (50thpercentile) 2% 100% 95% 37% 5 50th 40th 30th 20th Number of hospitals in each cohort, percent of total hospital payments attributed to each cohort 10th 0th Community (N=20, 19%) DSH ) Community, (N=26, 14% Academic Medical Centers (N=6, 40%) Teaching (N=9, 14%) Note: Composite RP percentile for each hospital is equal to the simple average of all payers Blended RP percentiles for that hospital. Blended denotes that inpatient and outpatient RP results are combined. Bubbles denote each hospital s composite RP percentile and are sized according to providers shares of total hospital payments. Note that the percentages do not sum to 100%:six hospitals were excluded because they deliver care to specific patient populations, based either on age or type of medical condition. These "Other Specialty" hospitals are not considered comparable with other cohorts, and are omitted from the analysis. These hospitals accounted for approximately 12%of total hospital payments in 2013.Grey bubbles denote geographically isolated hospitals, where the provider is the sole acute hospital within a 20-mile radius.

Nearly 70% of total acute hospital payments from commercial payers went to system- affiliated hospitals in 2013. Partners-affiliated hospitals received the largest share (31%), more than three times the share of the next largest system, CareGroup (10%). Figure6: Distributionof TotalAcuteHospitalPayments,by SystemAffiliation,2013 Partners 31% Unaffiliated 31% Other affiliated 12% eGroup 10% Lahey UMass 6% Steward th Note: Other Affiliated includesacute hospitalsaffiliatedwith the followinghealth systems: Baystate Health, Berkshire Health System, Cape Cod Health Care, Circle Health, Heywood Healthcare, Shriners Hospitalsfor Children, and Vanguard(nowTenet, as of November, 2013).

As in previous years, Partners-affiliated hospitals consistently had prices above each payers network median. Most Steward-affiliated hospitals had prices below the network median. Figure7: AcuteHospitalCompositeRP Percentile(Blended), by System, 2013 Academic Medical Centers 100th Teaching Community, DSH 90th Community 80th Geographically Isolated 70th 78% 60th 100% 85% 73% 23% 67% 74% Within each hospital system, percent of payments to hospitals with composite RP percentile higher than the median (50th percentile) 50th 40th 30th 20th 10th Number of hospitals in each system; percent of total hospital payments attributed to each system 0th Partners (N=7, 31%) CareGroup (N=4, 8%) UMass (N=5, 6%) Lahey Health (N=2, 5%) Steward (N=10, 5%) Other Affiliated (N=13, 12%) Unaffiliated (N=20, 20%) Note: Composite RP percentile for each hospital is equal to the simple average of all payers Blended RP percentiles for that hospital. Blended denotes that inpatient and outpatient RP results are combined. Other Affiliated includes hospitals affiliated with the following systems: Baystate, Berkshire, Cape Cod, Circle Health, Shriners, and Vanguard. Bubbles denote each hospital s composite RP percentile , and are sized according to providers shares of total hospital payments. Note that percentages do not sum to 100%:six hospitals were excluded because they deliver care to specific patient populations, based either on age or type of medical condition. These "Other Specialty" hospitals are not considered comparable with other cohorts, and are omitted from the analysis. Geographically isolated indicates that the hospital was the sole acute hospital within a 20-mileradius.

Higher-priced hospitals tended to represent a larger share of all payments to acute hospitals Figure8a: AcuteHospitals Shareof TotalCommercialHospitalPayments,2013 Massachusetts General Hospital (94) Brigham and Women'sHospital (92) UMass Memorial Medical Center (76) Academic Medical Centers Beth Israel Deaconess Medical Center (69) Tufts Medical Center (62) Boston Medical Center (58) by ls are grouped ls aregrouped then listed in f descending ite RP percenti in parentheses Hospita cohort, Berkshire Medical Center (84)* order o order o compos (values see no Brigham and Women'sFaulkner Hospital (78) le ite RP percenti ; St. Elizabeth's Medical Center (68) see note below). Teaching Hospitals Baystate Medical Center (62) Lahey Hospital and Medical Center (60) Mount Auburn Hospital (53) Saint Vincent Hospital (50) Carney Hospital (34) Cambridge Health Alliance (16) Boston Children's Hospital (93) Dana-Farber Cancer Institute (90) Other Specialty Hospitals Shriners Hospitals for Children - Boston (88) Shriners Hospitals for Children- Springfield (79) New England Baptist Hospital (46) Massachusetts Eye and Ear Infirmary (44) Composite RP Percentile (Blended) 0% 2% 4% 6% 8% 10% 12% 14% 16% Percentof Total CommercialHospitalPayments Note: Composite RP percentile for each hospitalisequal to the simple average of all payers Blended RP percentiles for that hospital. Blended denotes that inpatient and outpatientRP results are combined. An asterisk at the end of the hospitalname label denotes a geographicallyisolated facility,defined as a sole acute hospitalwithina 20-mile radius.

Higher-priced hospitals tended to represent a larger share of all payments to acute hospitals Figure8b: AcuteHospitals Shareof TotalCommercialHospitalPayments,2013 Nantucket Cottage Hospital (91)* Cooley Dickinson Hospital (76) North Adams Regional Hospital (71)* South Shore Hospital (71) Newton-Wellesley Hospital (67) Jordan Hospital (47) Hospitals are grouped by cohort, then listed in order of descending composite RP percentile (values in parentheses; see note below). Hallmark Health (47) Milford Regional Medical Center (45) MetroWest Medical Center (44) Community Hospitals Beth Israel Deaconess Hospital - Needham (43) Nashoba Valley Medical Center (43) Norwood Hospital (43) Winchester Hospital (41) Baystate Mary Lane Hospital (40) Emerson Hospital (40) Northeast Hospital (39) Saints Medical Center (37) Lowell General Hospital (32) Anna Jaques Hospital (23) Beth Israel Deaconess Hospital - Milton (14) Composite RP Percentile (Blended) 0% 2% 4% 6% 8% 10% 12% 14% 16% Percentof Total CommercialHospitalPayments Note: Composite RP percentile for each hospitalisequal to the simple average of all payers Blended RP percentiles for that hospital. Blended denotes that inpatient and outpatientRP results are combined. An asterisk at the end of the hospitalname label denotes a geographicallyisolated facility,defined as a sole acute hospitalwithin a 20-mile radius.

Higher-priced hospitals tended to represent a larger share of all payments to acute hospitals Figure8c: AcuteHospitals Shareof TotalCommercialHospitalPayments,2013 Martha's Vineyard Hospital (91)* Cape Cod Hospital (81)* North Shore Medical Center (75) Falmouth Hospital (74)* Baystate Franklin Medical Center (69)* Fairview Hospital (64)* Sturdy Memorial Hospital (63) Hospitals are grouped by cohort, then listed in order of descending composite RP percentile (values in parentheses; see note below). Southcoast Hospitals Group (57) Saint Anne's Hospital (49) HealthAlliance Hospital (48) Good Samaritan Medical Center (46) Community, Disproportionate ShareHospitals (DSH) Harrington Memorial Hospital (45)* Clinton Hospital (41) Holy Family Hospital (36) Marlborough Hospital (36) Signature Healthcare Brockton Hospital (34) Lawrence General Hospital (28) Wing Memorial Hospital and Medical Center (28) Holyoke Medical Center (24) Morton Hospital (24) Athol Memorial Hospital (19)* Merrimack Valley Hospital (19) Heywood Hospital (17) Mercy Medical Center (17) Quincy Medical Center (15) Noble Hospital (12) Composite RP Percentile (Blended) 0% 2% 4% 6% 8% 10% 12% 14% 16% Percentof Total CommercialHospitalPayments Note: Composite RP percentile for each hospitalisequal to the simple average of all payers Blended RP percentiles for that hospital. Blended denotes that inpatient and outpatientRP results are combined. An asterisk at the end of the hospitalname label denotes a geographicallyisolated facility,defined as a sole acute hospitalwithin a 20-mile radius.

Physician Groups

More than three-quarters of payments were clustered among the higher-priced physician groups, though the share of payments to these providers declined slightly in the last three years. Figure9: Distributionof Physician GroupPayments,by RelativePrice Quartile,2010-2012 76.7% payments ($3.98 b.) 23.3% payments ($1.21 b.) 2012 4.7% 18.6% 23.4% 53.3% 81.1% payments ($4.25 b.) 18.9% payments ($0.99 b.) 2011 5.6% 13.2% 28.2% 52.9% 82.6% payments ($3.97 b.) 17.4% payments ($0.84 b.) 2010 5.5% 11.9% 26.9% 55.7% Q1 Q2 Q3 Q4 (highest RP) (lowest RP) Note: This figure includesonly paymentsmade to physiciangroupsthat were includedin the relative price calculation after thresholdswere applied, accounting for 87% of total commercial payments to physiciangroups. An additional$0.77 billionwas paid to individualphysiciansandgroups for which relative prices were not computed. Celticare and Cigna are excluded from 2011 and 2012, to align with 2010 data as reported. PhysicianGroup RP data reported by Cigna and Celticare were not included in 2010 because of data qualityconcerns. Percentages may not sum to 100% because ofrounding.

Physician group prices clustered near the network median price in most payersnetworks. For HPHC and Tufts, roughly half of total payments to physician groups were concentrated among the three highest-priced physician groups. Figure10: Distribution of Physician GroupRelative Prices, by Payer, 2012 (Top 6 commercialpayers,rankedby shareof physician grouppayments) Number of physician groups (N) and percent of total network payments, within each relative price interval N=5 5% N=8 28% N=7 45% N=3 21% BlueCrossBlueShield of Massachusetts (52%) N=5 1% N=11 9% N=10 37% N=3 52% Harvard Pilgrim Health Care (22%) N=6 2% N=10 9% N=11 41% N=3 48% Tufts Health Plan (12%) N=4 5% N=11 80% N=2 3% N=4 12% Fallon (3%) N=10 28% N=4 66% N=1 <1% N=4 6% Health New England (3%) N=11 12% N=11 36% N=3 12% N=5 40% Aetna (2%) Relative Price 0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 2 2.2 2.4 2.6 2.8 3 3.2 3.4 3.6 Note: Percentages may not sum to 100% because of rounding.

Seventy percent of all physician payments from commercial payers went to system-affiliated physician groups in 2012. Partners-affiliated physician groups received the largest share (26%), more than double the share of the next largest system, Atrius (11%). Figure11: Distributionof Physician GroupPayments,by System Affiliation,2012 Partners(PCHI) 26% Unaffiliated 29% Atrius 11% OtherAffiliated 14% Steward 8% BIDCO NEQCA 6% Note: Other Affiliated includesphysiciangroupsaffiliatedwith the followinghealth systems: Baystate Health, Berkshire Health System, Circle Health, Lahey Health, UMass,and Vanguard(now Tenet, asof November, 2013).

System-affiliated physician groups tended to have prices that were above the network median for all payers, whereas most unaffiliated physician groups had prices that fell below the network median. Figure12: Physician GroupCompositeRP Percentile(Blended),Top 30 Physician Groups, by System Affiliation,2012 100th Partners (PCHI) (N=1, 26%) Atrius (N=2, 11%) 90th Steward (N=1, 8%) 80th NEQCA(N=2, 6%) 70th BIDCO (N=1, 6%) 60th Other Affiliated (N=7, 14%) 96% 49% Within each category, percent of payments to physician groups with composite RP percentile higher than the median (50th percentile) 50th Unaffiliated (N=16, 29%) 40th 30th 20th 10th Number of physician groups in each category; percent of total physician group payments attributed to each category 0th Affiliated (N=14, 71%) Unaffiliated (N=16, 29%) Note: Composite RP percentile for each physiciangroup is equal to the simple average of all payers RP percentiles for that group. Other Affiliated includesphysiciangroupsaffiliatedwith the followinghealth systems: UMass, Baystate, Lahey Health, Circle Health, Berkshire, and Vanguard(now Tenet, as of November, 2013). This figure depicts the Top 30 physiciangroups,according to share of total physicianpayments across allpayers.

Higher-priced physician groups tended to represent a larger share of all payments to physicians Figure13: Physician Groups Shareof TotalCommercialPhysician GroupPayments,2012 The Childrens Hospital Corporation (93) Partners Community HealthCare, Inc (PHO) (89) Atrius Health (84) Reliant Medical Group (72) Physician groups are liste des RP in p no Beth Israel Deaconess Care Organization (BIDCO)(68) Highland Healthcare Assoc IPA Inc (67) d in order of cending compos ite des RP percentile (values arentheses; see MWA PC DBA Riverbend Medical Group (64) Lowell General PHO (60) Valley Medical Group, PC(59) note below). New England Quality Care Alliance (NEQCA) (59) Baycare Health Partners, Inc (59) Northeast PHO (NEPHO) (58) Steward Network Services, Inc (58) UMass Memorial Health Care (56) Acton Medical Associates (51) Hampden County Physician Associates, LLC (50) Anaesthesia Associates of Massachusetts, PC (48) Lahey Hospital & Medical Center (45) Mount Auburn Cambridge IPA (44) South Shore Physician Hospital Organization (SSPHO)(43) Sturdy Hospital Physicians (Physician Group) (41) Central Massachusetts Independent Physician Assoc (CMIPA)(39) Boston Medical Center Mgt Service (36) Signature Healthcare Brockton Hospital Physician Hospital Organization, Inc (34) Physicians Of Cape Cod Inc (34) Southcoast Primary Care, LLC (32) New England Baptist Health Services, Inc (32) Berkshire Health Systems (31) Heywood Physician Hospital Organization (29) Cooley Dickinson Physician Hospital Organization, Inc (27) 0% 5% 10% 15% 20% 25% 30% Composite RP percentile(Blended) Percent of Total Commercial PhysicianGroup Payments Note: Composite RP percentile for each physiciangroup is equal to the simple average of all payers RP percentiles for that physiciangroup. This figure depicts the Top 30 physiciangroups,according to share of total physicianpayments across allpayers.