mmpc - National Indian Health Board

Medical Cost Index
Methods
Payments were adjusted using the Medical Cost Index used by the IHS in computing what it would
cost to provide equitable services across the 12 IHS Areas
(http://www.ihs.gov/NonMedicalPrograms/lnf/): This Medical Cost Index is calculated from the
Health Care portion of the Cost of Living Index (COLI) published by the Council for Community and
Economic Research (C2ER). Indices of regional differences of health care prices are published by
C2ER for select counties and metro-areas (www.coli.org/Method.asp).
Table 8. Indices of regional differences in health care costs for the IHS Areas calculated by IHS for 2009 using the
health care portion of the COLI of the Council for Community and Economic Research.
IHS Area
13
Health Care Cost
of Living Index
Scaled
Alaska 1.31
Portland 1.13
California 1.08
Aberdeen 1.02
Billings 1.01
Nashville 1.00
Navajo 0.99
Phoenix 0.99
Tucson 0.99
Bemidji 0.98
Albuquerque 0.97
Oklahoma 0.94
The Health Care portion of their COLI is designed to provide the best possible means to compare
cost of living differences in these areas based on the price of consumer goods and services, but the
index has a number of limitations. The data is voluntarily provided by designated organizations.
The C2ER states that all price data are obtained from sources deemed reliable and that the C2ER
stringently reviews all prices reported, and attempts to eliminate errors and noncompliance with
pricing specifications. Still they issue a disclaimer that, ‘no representation is made as to the complete
accuracy thereof.’ In addition there are certain definitional limitations such as that the health care
purchases priced are those appropriate for “professional and managerial households in the top
income quintile,” while Medicaid programs purchase for households in the lowest income quintile of
their state. Certainly the greatest limitation is that the price variation largely reflects variation in
urban health care prices, which is but an undetermined fraction of the health care purchased by
Medicaid for residents of the generally rural CHSDA counties of the IHS Areas.
We used the health care C2ER COLI because it was recommended that the IHS use the health care
COLI in the calculation of the IHS Federal Disparities Index by its Contract Health Service
workgroup. The workgroup of tribal and technical advisors to the IHS believed it was best available
index that could reflect macro differences in health care prices among regions. The determination
of the Health Care COLI for the 12 IHS Areas is done by the IHS.