OCA outlines hospital measurement method; hospitals and some systems press for data transparency and corrections

The Office of Health Care Affordability (OCA) presented its approach for measuring hospital spending and monitoring hospitals against the statewide spending target, and said it would combine inpatient unit‑price measures with an adjusted outpatient price per visit. OCA staff said hospital inpatient spending will be calculated as net inpatient revenue per case‑mix adjusted discharge and outpatient spending as net outpatient revenue per adjusted outpatient visit, using HCAI hospital financial disclosures and an ‘‘outpatient intensity adjustment’’ derived from claims and encounter data.

Why it matters: The measurement approach will be used to identify high‑cost hospitals and to inform sector targets. Hospital trade groups and some hospitals asked for transparency about the outpatient intensity adjustment’s data source and method, saying the Healthcare Payments Database (HPD) is a new, partially voluntary source for some payers and that combining hospital‑reported and payer‑reported data introduces potential incompleteness or mismatch.

What OCA proposed: OCA said the hospital measure will report both inpatient and outpatient components and will provide a combined hospital measure for monitoring while disaggregating by inpatient/outpatient and by payer type. Staff plans to reconvene the hospital measurement work group over the summer to finalize the outpatient intensity adjustment factor and data validation strategy.

Stakeholder concerns and requests: Jenny Nguyen of the California Hospital Association told OCA the HPD is “a new and untested data source” for outpatient intensity adjustment and asked that OCA share the proposed data sources with the work group before finalizing methods. Angus Cochrane of Washington Health (a Fremont district hospital) said his hospital will resubmit HCAI financial filings where they previously miscategorized certain self‑insured employee benefit costs and asked OCA to publicly note the agency is working to reconcile that hospital’s reporting. Public commenters and hospital leaders also asked OCA for transparent methods and the ability to validate results.

Coding correction context: The Board’s earlier discussion of a coding correction in the payment‑to‑cost ratio (therapeutic radiology revenue center omitted in initial code) reinforced calls for clear, transparent quality controls. OCA reported the correction did not change the set of hospitals labeled “high cost.”

Next steps: OCA will reconvene the hospital spending and measurement work group this summer, finalize the outpatient intensity adjustment methodology, and continue validation of HCAI financial submissions. Staff said it will report back to the Board with validated measures and an approach to combining inpatient and outpatient results for monitoring.