By Aaron Bloschichak, Anna Milewski, Katie Martin on Thursday, 16 January 2020
Category: Briefs

CMS-specified shoppable services accounted for 12% of 2017 health care spending among individuals with employer-sponsored insurance

​ ​% Total Medical Spending ​% Out-of-Pocket Medical Spending ​​% Medical Charges​% Medical  Utilization
​All Medical Care ​11.8 ​15.6 ​12.3​17.2
​Inpatient Care​7.95.6​8.0​4.8
​Outpatient Care​13.1​16.5​13.7​17.2

In response to high and growing health care spending, policymakers have proposed improving price transparency as a solution. Several such proposals rely on consumers taking action on publicly available information for shoppable services – generally, non-emergency services that a person could choose more deliberately.

In 2021, hospitals will be required to display, in a consumer-friendly manner, standard charges for at least 300 shoppable services. The Centers for Medicare & Medicaid Services (CMS) defines a shoppable service as "a service package that can be scheduled by a healthcare consumer in advance." In the implementing regulation, CMS specifies 70 services for which hospitals must make price information available for if they provide them (the remaining 230 will be selected by hospitals). These services are defined by diagnosis-related group (DRG) and Current Procedural Terminology (CPT) / Healthcare Common Procedure Coding System (HCPCS) codes.

Our analysis shows that the 70 CMS-specified shoppable services totaled 12 percent of 2017 medical spending (excluding prescription drug spending from the denominator) among individuals with employer-sponsored insurance. These services made up 16 percent of out-of-pocket medical spending (see table).

As these 70 services (74 codes) accounted for just over one fifth of the services hospitals will have to report (300), we also updated our previous, broad analysis of shoppable services which includes 429 codes. We estimate that approximately 36 percent of 2017 total spending (including prescription drug spending) and 43 percent of out-of-pocket spending was attributed to shoppable services. This is in comparison to our 2016 analysis of 2011 employer-sponsored insurance data that found that, at most, 43 percent of total health care spending (including prescription drug spending) was spent on shoppable services and just under half (approximately 47 percent) of out-of-pocket spending was on shoppable services.

This lower estimate of spending on shoppable services in 2017 compared to 2011 is likely driven by the growth in spending on point-of-sale drug prices (drug spending rose 25% between 2013 to 2017) and an increase in rebates as a share of pharmacy spending for commercial health insurance plans. Additionally, new medical services may have been introduced between 2011 and 2017, some of which may be considered shoppable. 

This analysis, like those that preceded it, suggest that, while the amount of total health care spending that is shoppable is not trivial, is does limit the potential impact of consumer-focused initiatives.