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A critical part of the target program is granular analysis of the health care system’s overall performance and the factors driving costs in the state. These cost growth driver analyses supplement the analyses of target performance (see Exhibit 6). They provide the basis for identifying the greatest opportunities for mitigating cost growth and getting stakeholders to accept and promote these strategies. This section describes key considerations for analyzing health care cost growth drivers in the state and using the results to pinpoint opportunities for individual or coordinated action to mitigate cost growth.
EXHIBIT 6. Description of Analyses Needed
States should perform two complementary types of analysis to find areas of opportunity to mitigate cost growth:
Producing these analyses will serve as the foundation for future action to mitigate cost growth.
Having a framework to identify types of analyses states should produce is helpful for prioritizing and focusing attention on analyses that generate the greatest value. The Peterson-Milbank Program for Sustainable Health Care Costs developed an analytic framework that states can use to design their cost growth driver analyses.1 The Peterson-Milbank brief also provides suggestions on how to approach certain analyses and examples of analyses that states have undertaken. The framework (Exhibit 7) is organized around three major questions:
Many of the data sources discussed in the Establishing the Target Methodology and Value section of this playbook — APCD, state employee health benefit claims, MMIS, insurer rate filings — can be used for cost growth driver analyses. States can also use data from the following sources to better understand cost trends:
States need to share results of the cost driver analyses in ways that are easy to understand. States will need to balance supplying enough detail to demonstrate credibility of the analyses and keeping the key takeaways simple. In identifying the key takeaways from cost driver analyses, it is useful to ask the following questions:
In presenting results, states should consider visualization tools that clearly show patterns and trends affecting high and rising health care costs. These data dashboards will help build confidence and buy-in among stakeholders. The Public-Private Stakeholder Engagement section of this playbook provides ideas on where and how to communicate this information.
States can take steps to translate data from cost driver analyses into policy action. States can directly pursue state policies, such as through legislative or regulatory pathways that address drivers of cost growth. A broad group of supporters, like a steering committee or board consisting of multiple stakeholders, could make recommendations to the governor or legislature. States could also facilitate market-based solutions, for example, by gathering competing stakeholders together to show support for and reach agreement on private market solutions.
Even before collecting data to measure target performance data, Connecticut analyzed its APCD to understand the primary drivers of cost growth in the state. Initial analyses showed year-over-year hospital cost growth was particularly high relative to professional services. More detailed analysis pointed to prices as the primary driver of increases in hospital spending. Further analysis showed that hospital discharges were concentrated in a few systems, and that spending on hospitals with the highest inpatient costs grew fastest while spending on those with the lowest costs grew slowest.
Connecticut shared and disseminated this information widely. This process led to engagement of all stakeholders, including the hospitals, and elevated discussions on the impact of hospital prices on the state’s ability to meet the target.
While Connecticut has increased awareness of hospitals as the leading contributors to commercial cost growth, how the state will take corrective action remains to be seen. Nevertheless, by raising awareness of the issue, Connecticut has “primed the pump” for future policy action.
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