Measuring Prices in Health Care Markets Using Commercial Claims Data

Objective

To compare methods of price measurement in health care markets.

Data Sources

Truven Health Analytics MarketScan commercial claims.

Study Design

We constructed medical prices indices using three approaches: (1) a “sentinel” service approach based on a single common service in a specific clinical domain, (2) a market basket approach, and (3) a spending decomposition approach. We constructed indices at the Metropolitan Statistical Area level and estimated correlations between and within them.

Principal Findings

Price indices using a spending decomposition approach were strongly and positively correlated with indices constructed from broad market baskets of common services ( > 0.95). Prices of single common services exhibited weak to moderate correlations with each other and other measures.

Conclusions

Market‐level price measures that reflect broad sets of services are likely to rank markets similarly. Price indices relying on individual sentinel services may be more appropriate for examining specialty‐ or service‐specific drivers of prices.