  Due to rapidly rising healthcare costs worldwide, there is significant
interest in controlling them. An important aspect concerns price transparency,
as preliminary efforts have demonstrated that patients will shop for lower
costs, driving efficiency. This requires the data to be made available, and
models that can predict healthcare costs for a wide range of patient
demographics and conditions. We present an approach to this problem by
developing a predictive model using machine-learning techniques. We analyzed
de-identified patient data from New York State SPARCS (statewide planning and
research cooperative system), consisting of 2.3 million records in 2016. We
built models to predict costs from patient diagnoses and demographics. We
investigated two model classes consisting of sparse regression and decision
trees. We obtained the best performance by using a decision tree with depth 10.
We obtained an R-square value of 0.76 which is better than the values reported
in the literature for similar problems.
