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Maine Health Data Organization
HealthCost Definitions and Methodology
Below is a list of terms found on the HealthCost website and the
definitions we use. When you see the term used on the website you
will also see a question mark
If you move your mouse over the image (or use your screen reader), the definition will appear.
Exclusive Provider Organization (EPO) -
An Exclusive Provider Organization is a network of individual medical care providers, or groups of medical care providers, who have entered into written agreements with an insurer to provide health insurance to subscribers. In an EPO, medical care providers enter a mutually beneficial relationship with an insurer. The insurer reimburses an insured subscriber only if the medical expenses are derived from the designated network of medical care providers. The established network of medical care providers in turn provide subscribed patients medical services at significantly lower rates than what would have been under normal circumstances. In exchange for reduced rates of medical services, medical care providers get a steady stream of business. (Source: http://www.healthinsurance.info)
Facility refers to a hospital, surgical center, nursing home, hospice agency, home health agency or any other entity required to file a claim for all non-professional services rendered using an UB-04 claim.
Health Maintenance Organization (HMO) -
In a HMO policy patients typically select one primary care physician from within the HMO's network of contracted providers. The primary care physician will then refer you to any specialists that might be required. With an HMO you are limited to visiting doctors, hospitals, and clinics that are part of the provider network. There is no deductible, but you may or may not be responsible for a co-payment, depending on your coverage. If you choose to visit a provider from outside the HMO network, your insurance will not cover the fees. (Source: http://www.healthinsurance.info)
Also known as fee-for-service or traditional health insurance, indemnity health plans typically offer the most choice of doctors and hospitals; they require no utilization reviews, provider pre-certification, or specialist referrals. With traditional health insurance, you can visit any doctor or healthcare provider, change providers at any time, and enjoy national coverage. You will pay a premium for this type of freedom, as traditional plans are more costly for both individuals and employers than managed care plans. Many of these policies also require underwriting. In other words, a medical background and lifestyle check is typically conducted to determine if your plan enrollment will be accepted and if any pre-existing condition riders will be attached to your policy. (Source: http://www.healthinsurance.info)
Point of Service (POS) -
This managed plan aims to provide care at the lowest possible cost. For plan participants to get the most benefit from one of these plans, and to spend the least amount of their own money while doing so, they must follow certain rules like obtaining specialist referrals and seeing only in-network doctors. Participants pay monthly premiums and may also pay copays. Generally, these policies provide coverage for a wide range of services and treatments such as dental, vision, lab/x-ray, surgical, hospitalization, preventive care, prescription drugs, mental health, and skilled nursing. (Source: http://www.healthinsurance.info)
Preferred Provider Organization (PPO) -
The designated "preferred" medical care providers provide insured patients medical services at significantly lower rates than what would have been under normal circumstances. The PPO is mutually beneficial for insurers and medical care providers alike because the latter can get a steady stream of business in exchange for lower rates of services. Although restrictive, PPO allows subscribers more freedom than HMO subscribers. If a PPO member chooses to go to a non-network provider, he or she will still be reimbursed for the bills - although it may be a lower rate that may include higher deductibles or co-payments, lower reimbursement percentages, or a combination of these disadvantages. (Source: http://www.healthinsurance.info)
Professional refers to an individual physician or healthcare practitioner providing direct services to a patient.
Maine Health Data Organization has made every effort to ensure the reports
on this website are both statistically accurate and valuable.
Below is detailed information on the methodology used. It is our hope
that data on
this website will be used to support our mission of providing
useful and objective data to improve the health of Maine citizens.
About this website
The Maine HealthCost website has been developed
by the Maine Health Data Organization in accordance with its mandate to produce
reports related to health care facility and professional payments for services rendered
to Maine residents. The methodology used is described below and is similar to that
used on New Hampshire's HealthCost website.
The HealthCost website displays total payment information on procedures performed for
Maine citizens. In addition the HealthCost website also shows the separate facility (e.g. hospital) and professional (provider) claim parts; therefore, it is important to use the numbers in "Combined Payments" to compare data equitably. The total payment is dependent on a number of factors including, but not limited to: the
procedure provided, complexity of the specific event compared to other
events, the frequency and efficiency of the procedure performed at a facility, and payer and plan
negotiated rates for the facility.
In order to report total payments, we must acknowledge and
accommodate the various ways claims are produced and/or processed. For
example, one patient encounter at a facility being billed may require the creation of multiple professional claims
associated with a single facility claim, multiple facility claims, or
a single facility claim that includes all associated professional fees.
Other valid billing scenarios may also occur. Once all of the claims for a specific patient
encounter are found in the data, the events
are placed in a HealthCost staging table for further analysis.
In addition, the way in which procedures are performed needs to be
taken into consideration. For example, a total hip replacement will
typically be the major (most expensive) procedure in an event, but an
X-Ray for the hip replacement patient is typically
performed either during an emergency room event or an outpatient visit prior to the surgery.
For a total hip replacement, all procedures associated with that member and
date are considered. In the later case, X-Ray dollars may be a small
portion of the patient encounter. To accommodate this difference,
when searching for an X-Ray, the
professional and technical portions for the X-Ray are used and not
emergency or subsequent evaluation and management portions. By summarizing the events
this way, HealthCost displays information based on a single elective
Median vs. Mean
Even though HealthCost removes outliers that could drastically alter the
results, the median payment was determined to most accurately display an estimated
payment instead of the mean or average payment (the sum of all the given payments, divided by the total number of payments). This is because of the positively skewed
data that is common with health care data. Because of the bias towards the high end of the payment range,
the average would overestimate the dollars that someone would expect
to pay for a normal procedure, whereas the median (the middle number when the set is sorted in numerical order) puts more emphasis
on frequency and is therefore a better estimate of what payment
can be "expected". The following example is presented below to explain this rationale:
The "Lead Provider" is selected for each patient encounter based on the facility where
the claim(s) occurred. All professional claims associated with that event
are then attributed to that facility. In
the event that there are two facilities associated with a patient encounter, the lead
provider is determined by the highest dollars charged. In addition, it is possible to have a facility with
a presence in more than one zip code. For these facilities the address
associated with the largest number of claims is listed in all
After the HealthCost data is collected, there
are processes that attempt to ensure the validity of the median reported. This is
done in three steps: removing incomplete patient encounters (widows and orphans),
removing outliers, removing indeterminate procedures. If less than 5 events are
found, the patient encounter is removed from the report.
Due to the variability of the patient encounters and the complexity of how payments
are affected, HealthCost displays a column on each report showing
how precise the payment estimate is. The calculation of precision is first quantified
numerically by combining the coefficient of variance of charges for each facility in the report.
Next, the median of charges for the facility is compared to the median charges for each product
type offered by each payer for that facility. The two numbers are combined and are then
quartiles and the appropriate precision is assigned. If the variability
is low, the precision will be reported as "HIGH". This represents
how precise the estimate reported is to the payments you can expect,
based on the criteria selected.
Patient complexity is a risk assessment value that is also used in the production of HealthCost
This value portrays how "sick" the patients are at a given
facility for a specific procedure and uses a system of criteria to a weighted scoring system. A "sicker" patient would
be expected to pay more because their history has more complex or numerous
diagnoses. This value is calculated by looking at each patient's
age, gender and diagnostic history and assigning a "weight" to describe how sick they are (which correlates with how expensive their care will likely be). Then all patients' weights at a single facility are summed for a 12 month period and averaged. The range is then broken into 5 segments
using the 10th, 25th, 75th, 90th percentile breakpoints for the various levels of patient complexity or sickness. The
average weight for the patients having a procedure at a facility is then
compared to the breakpoints
and assigned to a "Very High", "High", "Medium", "Low" or "Very Low" category. Comparing
patients to one another in this way provides additional information so the payments reported are
evaluated in a fair and accurate manner.
Incomplete Encounters: Patient encounters that only include the facility portion ("widows")
or the professional portion ("orphans") are completely removed.
This is done because these encounters would inaccurately lower the
expected median. A certain level of widows and
orphans can be found in any all payer claims database.
Outliers: Even though Maine HealthCost displays the median payments and is therefore not as
affected by outliers, extreme patient encounters (either very low or very high paid dollar amount) could
tug the median higher or lower by one encounter each. To minimize the possible impact of this, the bottom cutoff percentile is set at
1% and the top is set at 5%. Since these patient encounters are decidedly not common,
any patient encounter that is outside of the cutoff range is removed.
Indeterminate Procedures: The final step is to remove any patient encounters that are
determined to be abnormal. An example
of an abnormal patient encounter is someone who enters into a hospital for a
breast scan and also has a breast augmentation. The result is a patient encounter that has more than
one high dollar procedure, each of which could be considered a
"lead procedure". Since the ancillary (or non-primary) payments cannot be accurately
divided between these "lead procedures", the entire encounter is removed.
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