1. THE COMMONWEALTH FUND Matching Revenue Flows With Population Needs: The Challenge of Payment Variation Across Providers and Payers and Over Time Stuart Guterman Vice President, Payment and System Reform Executive Director, Commission on a High Performance Health System The Commonwealth Fund Alliance for Health Reform Hill Briefing Washington, DC April 13, 2012

2. THE COMMONWEALTH FUND 2 Variation in Prices for Colonoscopy, Mammogram and MRI Across Payers and Providers in New Hampshire Source: CMWF analysis of data (July 2011) retrieved at http://www.nhhealthcost.org/costByProcedure.aspx What Insurance Pays to Health Care Providers Across New Hampshire Per Procedure ColonoscopyMammogramMRI (back) (Outpatient) Insurer A $1,430 – $5,012$248 - $673$642 – $3,211 Insurer B $1,171 - $3,671$202 - $621$867 – $2,689 Insurer C $1,181 - $3,839$256 - $826$821 – $3,174

3. Potentially Avoidable Hospital Use & Cost 3 SOURCE: Commonwealth Fund Local Scorecard on Health System Performance, 2012 HRR = hospital referral region DATA: Commercial – 2009 Thomson Reuters MarketScan Database, analysis by M.Chernew, Harvard Medical School. Medicare – 2008 Medicare claims as reported by IOM. Ratio lower than 1.0 indicate percent lower than average; ratio higher than 1.0 indicate percent higher than average. Median spending determined separately for the commercially insured and Medicare populations Commercially Insured and Medicare Spending per Enrollee, Relative to U.S. Median Spending for each population

4. THE COMMONWEALTH FUND 4 Annual Rates of Increase in Hospital Costs per Case and Medicare, Medicaid, and Private Payment Rates, 1988-2008 Source: Commonwealth Fund analysis of American Hospital Association Annual Survey data.

5. THE COMMONWEALTH FUND Today’s Panelists Steven Safyer, M.D.—President and CEO of Montefiore Medical Center, New York, NY Gregory Reicks, D.O.—President, Mesa County Physicians IPA, Grand Junction, CO John Colmers—Chairman, Maryland Health Services Cost Review Commission Jim Bentley-Health Policy Consultant, Silver Spring, Maryland 5

6. THE COMMONWEALTH FUND Questions for the Panel How do you match the flows of revenue from different sources with the needs of the population to be served? –Medicare, Medicaid, privately insured? –The uninsured? How do you deal with the changes over time in the flows of revenue from different sources? What lessons can be learned from your experience that could be applied to other areas/circumstances? What implications does your experience have for federal policy? 6