U.S. regional map For more than35 years, Maryland has operated the nation's only all-payerhospital rate regulation program. Is that why its health care costsare so low?  (Image: Shutterstock)

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Although price is the driver of both higher and lower health care costs in some geographies, utilization makes the difference in overallcosts in other states, according to the third annual benchmarkreport, “Healthcare Affordability — Data is the Spark,Collaboration is the Fuel,” by the Network for RegionalHealthcare Improvement, a national organization representing morethan 30 member regional health improvement collaboratives.

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In each of the three benchmark reports, Maryland had the lowest cost of theregions. In the most recent year, the total cost index varied from20 percent below the benchmark for Maryland, to 19 percent abovethe benchmark for Colorado, the highest-cost region.

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Related: Employee benefits vary by region–here's what'spopular where you are

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“The data shuts down anecdotal conversations and opens peoples'eyes,” says Jonathan Mathieu, vice president of data and deliveryat the Center for Improving Value in Health Care (CIVHC), thecollaborative serving Colorado.

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CIVHC worked with legislators to help inform the development ofseveral bills aimed at increasing health care transparency in the state,according to the report. A key piece of legislation passed thatrequires every freestanding outpatient facility — freestandingemergency departments, urgent care centers, imaging centers andothers — to bill using its own unique national provideridentifier.

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“This change will give CIVHC the ability to identify thesevarious facilities in its dataset rather than have the careprovided by those facilities look as though it were provided by ahospital or another facility,” the authors write. “The additionaldata will allow CIVHC to conduct valuable analyses on the care, andthe cost of care, delivered by these facilities.”

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Ben Steffen, Executive Director of the Maryland Health CareCommission, told the report's authors that the results showingMaryland as the lowest cost are not surprising. For more than 35years, Maryland has operated the nation's only all-payer hospitalrate regulation program, and in 2014, the program was expanded.

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Under the new model, the state agreed to limit all-payer percapita hospital growth, including inpatient and outpatient care, to3.58 percent. In addition, Maryland agreed to limit annual Medicareper capita hospital cost growth to a rate lower than the nationalannual per capita growth rate per year for 2015-2018. This year,the program was expanded to physicians and nursing homes andextended until 2023.

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The total cost of care methodology is different from themethodology used by the Centers for Medicare and Medicaid Services,Steffen said. However, the results from the project may point tothe all-payer model having a positive impact for thecommercially-insured as well.

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Utilization rates impacting health care costs also vary acrossstates, according to the report. For example, in all three sets ofresults, Oregon prices, outside of pharmacy costs, have consistently been higherthan the benchmark while resource use has been lower. In contrast,in St. Louis, prices have consistently been shown to be lower thanother regions. However, resource use in St. Louis has consistentlybeen higher, ultimately driving up health care costs.

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“The cost of living here is so much more reasonable than a lotof places so you wouldn't expect our costs to be as high, but theother side of cost is utilization,” Louise Probst, executivedirector of the Midwest Health Initiative, told the authors. “InSt. Louis, we tend to have a slightly older population and higherrates of utilization than other markets.”

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MHI invited employers to join representatives of the region'sleading provider groups for a joint discussion. At the event, MHIshared how each of the groups performed on the total cost of care,utilization and quality measures compared to each other and aregional benchmark.

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“Everybody can learn together.” Probst said. “Only by allstakeholders coming together to discuss trusted information can wedeliver on the promise of higher-value, safer, and more affordablehealthcare in our community.”

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Katie Kuehner-Hebert

Katie Kuehner-Hebert is a freelance writer based in Running Springs, Calif. She has more than three decades of journalism experience, with particular expertise in employee benefits and other human resource topics.