Incorporating medical claims data in the Consumer Price Index

In this article, we examine the possibility of including medical insurance claims data in the calculation of medical price indexes. Our analysis indicates that indexes supplemented with claims data more accurately reflect changes in prices for physicians’ services and outpatient hospital services. In addition, we identify both advantages and disadvantages of using claims data in index construction. The use of medical insurance claims data in the construction of medical price indexes presents many opportunities and challenges for the U.S. Bureau of Labor Statistics (BLS). This article describes a new methodology for incorporating claims data into traditionally collected data for the Consumer Price Index (CPI) for physicians’ services and the CPI for outpatient hospital services. We address the current state of CPI data collection for medical care and describe the claims data, their sampling and representativeness, the methodologies used to construct price indexes with the data, our initial results, and the next steps for this project.