Alternative medicine
Benjamin Sommers et al.
Health Affairs, October 2016, Pages 1816-1824
Abstract:
Changes in insurance coverage over time, or “churning,” may have adverse consequences, but there has been little evidence on churning since implementation of the major coverage expansions in the Affordable Care Act (ACA) in 2014. We explored the frequency and implications of churning through surveying 3,011 low-income adults in Kentucky, which used a traditional expansion of Medicaid; Arkansas, which chose a “private option” expansion that enrolled beneficiaries in private Marketplace plans; and Texas, which opted not to expand. We also compared 2015 churning rates in these states to survey data from 2013, before the coverage expansions. Nearly 25 percent of respondents in 2015 changed coverage during the previous twelve months — a rate lower than some previous predictions. We did not find significantly different churning rates in the three states over time. Common causes of churning were job-related changes and loss of eligibility for Medicaid or Marketplace subsidies. Churning was associated with disruptions in physician care and medication adherence, increased emergency department use, and worsening self-reported quality of care and health status. Even churning without gaps in coverage had negative effects. Churning remains a challenge for many Americans, and policies are needed to reduce its frequency and mitigate its negative impacts.
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Intertemporal Substitution in Health Care Demand: Evidence from the RAND Health Insurance Experiment
Haizhen Lin & Daniel Sacks
NBER Working Paper, November 2016
Abstract:
Nonlinear cost-sharing in health insurance encourages intertemporal substitution be- cause patients can reduce their out-of-pocket costs by concentrating spending in years when they hit the deductible. We test for such intertemporal substitution using data from the RAND Health Insurance Experiment, where people were randomly assigned either to a free care plan or to a cost-sharing plan which had coinsurance up to a maximum dollar expenditure (MDE). Hitting the MDE — leading to an effective price of zero — has a bigger effect on monthly health care spending and utilization than does being in free care, because people who hit the MDE face high future and past prices. As a result, we estimate that sensitivity to short-lasting price changes is about twice as large as sensitivity to long-lasting changes. These findings help reconcile conflicting estimates of the price elasticity of demand for health care, and suggest that high deductible health plans may be less effective than hoped in controlling health care spending.
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Dyfrig Hughes & Jannine Poletti-Hughes
PLoS ONE, October 2016
Background: Concerns about the high cost of orphan drugs has led to questions being asked about the generosity of the incentives for development, and associated company profits.
Methods: We conducted a retrospective, propensity score matched study of publicly-listed orphan companies. Cases were defined as holders of orphan drug market authorisation in Europe or the USA between 2000–12. Control companies were selected based on their propensity for being orphan drug market authorisation holders. We applied system General Method of Moments to test whether companies with orphan drug market authorization are valued higher, as measured by the Tobin’s Q and market to book value ratios, and are more profitable based on return on assets, than non-orphan drug companies.
Results: 86 companies with orphan drug approvals in European (4), USA (61) or both (21) markets were matched with 258 controls. Following adjustment, orphan drug market authorization holders have a 9.6% (95% confidence interval, 0.6% to 18.7%) higher return on assets than non-orphan drug companies; Tobin’s Q was higher by 9.9% (1.0% to 19.7%); market to book value by 15.7% (3.1% to 30.0%) and operating profit by 516% (CI 19.8% to 1011%). For each additional orphan drug sold, return on assets increased by 11.1% (0.6% to 21.3%), Tobin’s Q by 2.7% (0.2% to 5.2%), and market to book value ratio by 5.8% (0.7% to 10.9%).
Conclusions: Publicly listed pharmaceutical companies that are orphan drug market authorization holders are associated with higher market value and greater profits than companies not producing treatments for rare diseases.
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Financial Incentives, Hospital Care, and Health Outcomes: Evidence from Fair Pricing Laws
Michael Batty & Benedic Ippolito
American Economic Journal: Economic Policy, forthcoming
Abstract:
State laws that limit how much hospitals are paid by uninsured patients provide a unique opportunity to study how financial incentives of healthcare providers affect the care they deliver. We estimate the laws reduce payments from uninsured patients by 25–30 percent. Even though the uninsured represent a small portion of their business, hospitals respond by decreasing the amount of care delivered to these patients, without measurable effects on a broad set of quality metrics. The results show that hospitals can, and do, target care based on financial considerations, and suggest that altering provider financial incentives can generate more efficient care.
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State-Sponsored Health Insurance and State Economic and Employment Growth
Liam Malloy, Shanna Pearson-Merkowitz & Irwin Morris
Politics & Policy, October 2016, Pages 945–975
Abstract:
While there is a clear relationship between better health and better economic outcomes, the effects of increasing health insurance on the economy remain understudied. We employ two datasets, one on health insurance coverage in the contiguous 48 U.S. states and one for countries in the Organisation for Economic Co-operation and Development, to model the effect of expanding health insurance on state and country economic and employment growth over the last two decades. We find that increased health insurance coverage of the working age population, especially through government programs like Medicaid, is associated with faster gross domestic product and employment growth. However, we also find that these results may be contingent on controlling the per-enrollee cost of these programs. These findings are informative for future health insurance reforms both federally and in the U.S. states.
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Health insurance mandates in a model with consumer bankruptcy
Gilad Sorek & David Benjamin
Journal of Regulatory Economics, October 2016, Pages 233–250
Abstract:
We study insurance take-up choices by consumers who face medical expense risk and who know they can default on medical bills by filing for bankruptcy. For a given bankruptcy system, we explore the total and distributional welfare effects of health insurance mandates compared with the pre-mandate market equilibrium. We consider different combinations of premium subsidies and out-of-insurance penalties, confining attention to budget-neutral policies. We show that when insurance mandates are enforced only through penalties, the efficient take-up level may be incomplete. However, if mandates are also supported with premium subsidies, full insurance coverage is efficient and can also be Pareto improving. Such policies are consistent with the incentive structure for insurance take-up set in the ACA. Pareto improvement is possible because the legal requirement that medical providers dispense acute care on credit, together with the bankruptcy option, yields effective subsidies for medical care utilized by the uninsured. Those subsidy funds, however, can serve the initially uninsured better when they are given as ex ante subsidies on insurance premiums.
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Does Technology Substitute for Nurses? Staffing Decisions in Nursing Homes
Susan Lu, Huaxia Rui & Abraham Seidmann
Management Science, forthcoming
Abstract:
Over the past ten years, many healthcare organizations have made significant investments in automating their clinical operations, mostly through the introduction of advanced information systems. Yet the impact of these investments on staffing is still not well understood. In this paper, we study the effect of IT-enabled automation on staffing decisions in healthcare facilities. Using unique nursing home IT data from 2006 to 2012, we find that the licensed nurse staffing level decreases by 5.8% in high-end nursing homes but increases by 7.6% in low-end homes after the adoption of automation technology. Our research explains this by analyzing the interplay of two competing effects of automation: the substitution of technology for labor and the leveraging of complementarity between technology and labor. We also find that increased automation improves the ratings on clinical quality by 6.9% and decreases admissions of less profitable residents by 14.7% on average. These observations are consistent with the predictions of an analytical staffing model that incorporates technology adoption and vertical differentiation. Overall, these findings suggest that the impact of automation technology on staffing decisions depends crucially on a facility’s vertical position in the local marketplace.
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Innovation Under Regulatory Uncertainty: Evidence from Medical Technology
Ariel Stern
Harvard Working Paper, September 2016
Abstract:
This paper explores how the regulatory approval process affects innovation incentives in medical technologies. Prior studies have found early mover regulatory advantages for drugs. I find the opposite for medical devices, where pioneer entrants spend 34 percent (7.2 months) longer than follow-on entrants in regulatory approval. Back-of-the-envelope calculations suggest that the cost of a delay of this length is upwards of 7 percent of the total cost of bringing a new high-risk device to market. Considering potential explanations, I find that approval times are largely unrelated to technological novelty, but are meaningfully reduced by the publication of objective regulatory guidelines. Finally, I consider how the regulatory process affects small firms' market entry patterns and find that small firms are less likely to be pioneers in new device markets, a fact consistent with relatively higher costs of doing so for more financially constrained firms.
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Detecting Potential Overbilling in Medicare Reimbursement via Hours Worked
Hanming Fang & Qing Gong
American Economic Review, forthcoming
Abstract:
We propose a novel and easy-to-implement approach to detect potential overbilling based on the hours worked implied by the service codes physicians submit to Medicare. Using the Medicare Part B Fee-for-Service (FFS) Physician Utilization and Payment Data in 2012 and 2013 released by the Centers for Medicare and Medicaid Services, we construct estimates for physicians' hours spent on Medicare beneficiaries. We find that about 2,300 physicians, representing about 3 percent of those with 20 or more hours of Medicare Part B FFS services, have billed Medicare over 100 hours per week. We consider these implausibly long hours.
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Enforcement of the Emergency Medical Treatment and Labor Act, 2005 to 2014
Sophie Terp et al.
Annals of Emergency Medicine, forthcoming
Methods: We obtained a comprehensive list of all EMTALA investigations conducted between 2005 and 2014 directly from the Centers for Medicare & Medicaid Services (CMS) through a Freedom of Information Act request. Characteristics of EMTALA investigations and resulting citation for violations during the study period are described.
Results: Between 2005 and 2014, there were 4,772 investigations, of which 2,118 (44%) resulted in citations for EMTALA deficiencies at 1,498 (62%) of 2,417 hospitals investigated. Investigations were conducted at 43% of hospitals with CMS provider agreements, and citations issued at 27%. On average, 9% of hospitals were investigated and 4.3% were cited for EMTALA violation annually. The proportion of hospitals subject to EMTALA investigation decreased from 10.8% to 7.2%, and citations from 5.3% to 3.2%, between 2005 and 2014. There were 3.9 EMTALA investigations and 1.7 citations per million emergency department (ED) visits during the study period.
Conclusion: We report the first national estimates of EMTALA enforcement activities in more than a decade. Although EMTALA investigations and citations were common at the hospital level, they were rare at the ED-visit level. CMS actively pursued EMTALA investigations and issued citations throughout the study period, with half of hospitals subject to EMTALA investigations and a quarter receiving a citation for EMTALA violation, although there was a declining trend in enforcement. Further investigation is needed to determine the effect of EMTALA on access to or quality of emergency care.
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Susan Ettner et al.
Journal of Health Economics, December 2016, Pages 131–143
Abstract:
Interrupted time series with and without controls was used to evaluate whether the federal Mental Health Parity and Addiction Equity Act (MHPAEA) and its Interim Final Rule increased the probability of specialty behavioral health treatment and levels of utilization and expenditures among patients receiving treatment. Linked insurance claims, eligibility, plan and employer data from 2008-13 were used to estimate segmented regression analyses, allowing for level and slope changes during the transition (2010) and post-MHPAEA (2011-13) periods. The sample included 1,812,541 individuals ages 27-64 (49,968,367 person-months) in 10,010 Optum “carve-out” plans. Two-part regression models with Generalized Estimating Equations were used to estimate expenditures by payer and outpatient, intermediate and inpatient service use. We found little evidence that MHPAEA increased utilization significantly, but somewhat more robust evidence that costs shifted from patients to plans. Thus the primary impact of MHPAEA among carve-out enrollees may have been a reduction in patient financial burden.
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Competitive Effects of Scope of Practice Restrictions: Public Health or Public Harm?
Sara Markowitz et al.
NBER Working Paper, October 2016
Abstract:
The demand for health care and healthcare professionals is predicted to grow significantly over the next decade. Securing an adequate health care workforce is of primary importance to ensure the health and wellbeing of the population in an efficient manner. Occupational licensing laws and related restrictions on scope of practice (SOP) are features of the market for healthcare professionals and are also controversial. At issue is a balance between protecting the public health and removing anticompetitive barriers to entry and practice. In this paper, we examine the controversy surrounding SOP restrictions for certified nurse midwives (CNMs). We use the variation in SOP laws governing CNM practice that has occurred over time in a quasi-experimental design to evaluate the effect of the laws on the markets for CNMs and their services, and on related maternal and infant outcomes. We focus on SOP laws that pertain to physician oversight requirements and prescribing rules, and examine the effects of SOP laws in geographic areas designated as medically underserved. Our findings indicate that SOP laws are neither helpful nor harmful in regards to maternal behaviors and infant health outcomes, but states that allow CNMs to practice with no SOP-based barriers to care have lower rates of induced labor and Cesarean section births. We discuss the implications of these findings for the policy debate surrounding SOP restrictions and for health care costs.
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Emergency Department Return Visits Resulting in Admission: Do They Reflect Quality of Care?
John Cheng et al.
American Journal of Medical Quality, November/December 2016, Pages 541-551
Abstract:
Prior studies have suggested that emergency department (ED) return visits resulting in admission may be a more robust quality indicator than all 72-hour returns. The objective was to evaluate factors that contribute to admission within 72 hours of ED discharge. Each return visit resulting in admission was independently reviewed by 3 physicians. Analysis was by descriptive statistics. Of 45 071 ED discharges, 4.1% returned within 72 hours; 0.96% returned for related reasons and were admitted to wards (91.2%), intensive care units (6.5%), or operating rooms (1.2%). Management was acceptable in 92.6%, suboptimal in 7.4%. Admissions were illness (94.9%), patient (1.6%), and physician related (3.5%). Almost all admissions within 72 hours after ED discharge are illness related, including all intensive care unit admissions and the majority of operating room admissions. Deficiencies in ED care are rarely the reason for admission on return. ED return visits resulting in admission may not be reflective of ED quality of care.
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David Chin et al.
Health Affairs, October 2016, Pages 1867-1875
Abstract:
Public reporting and payment programs in the United States have embraced thirty-day readmissions as an indicator of between-hospital variation in the quality of care, despite limited evidence supporting this interval. We examined risk-standardized thirty-day risk of unplanned inpatient readmission at the hospital level for Medicare patients ages sixty-five and older in four states and for three conditions: acute myocardial infarction, heart failure, and pneumonia. The hospital-level quality signal captured in readmission risk was highest on the first day after discharge and declined rapidly until it reached a nadir at seven days, as indicated by a decreasing intracluster correlation coefficient. Similar patterns were seen across states and diagnoses. The rapid decay in the quality signal suggests that most readmissions after the seventh day postdischarge were explained by community- and household-level factors beyond hospitals’ control. Shorter intervals of seven or fewer days might improve the accuracy and equity of readmissions as a measure of hospital quality for public accountability.
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Ahmad Abdul-Aziz et al.
JAMA Cardiology, forthcoming
Importance: US hospitals receive financial penalties for excess risk–standardized 30-day readmissions and mortality in Medicare patients. Under current policy, readmission prevention is incentivized over 10-fold more than mortality reduction.
Objective: To determine how penalties for US hospitals would change if policy equally weighted 30-day readmissions and mortality.
Design, Setting, and Participants: Publicly available hospital-level data for fiscal year 2014 was obtained, including excess readmission ratio (ERR; risk-standardized predicted over expected 30-day readmissions) and 30-day mortality rates for heart failure, pneumonia, and acute myocardial infarction, as well as readmission penalties (as percent of Medicare Diagnosis Group payments). An excess mortality ratio (EMR) was calculated by dividing the risk-standardized predicted mortality by the national average mortality. Case-weighted aggregate ERR (ERRAGG) and EMR (EMRAGG) were calculated, and an excess combined outcome ratio (ECORAGG) was created by averaging ERRAGG and EMRAGG. We examined associations between readmission penalties, ERRAGG, EMRAGG, and ECORAGG. Analysis of variance was used to compare readmission penalties in hospitals with concordant (both ratios >1 or <1) and discordant performance by ERRAGG and ECORAGG.
Results: In 1963 US hospitals with complete data, readmission penalties closely tracked excess readmissions (r = 0.81; P < .001), but were minimally and inversely related with excess mortality (r = −0.12; P < .001) and only modestly correlated with excess combined readmission and mortality (r = 0.36; P < .001). Using hospitals with concordant ERRAGG and ECORAGG as the reference group, 17% of hospitals had an ECORAGG ratio less than 1 (ie, superior combined mortality/readmission outcome) with an ERRAGG ratio greater than 1, and received higher mean (SD) readmission penalties (0.41% [0.28%] vs 0.29% [0.37%]; P < .001); 16% of US hospitals had an ECORAGG ratio of greater than 1 (ie, inferior combined mortality/readmission outcome) with an ERRAGG ratio less than 1, and received minimal mean (SD) readmission penalties (0.08% [0.12%]; P < .001 for comparison with reference).
Conclusions and Relevance: In fiscal year 2014, financial penalties for one-third of US hospitals would have been substantially altered if 30-day readmission and mortality were considered equally important. Under most circumstances, patients would rather avoid death than rehospitalization. Current Medicare financial penalties do not meet the goals of aligning incentives and fairly reimbursing hospitals for patient-centered outcomes.
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John Hollingsworth et al.
Circulation: Cardiovascular Quality and Outcomes, forthcoming
Background: Patients undergoing coronary artery bypass grafting (CABG) must often see multiple providers dispersed across many care locations. To test whether teamwork (assessed with the bipartite clustering coefficient) among these physicians is a determinant of surgical outcomes, we examined national Medicare data from patients undergoing CABG.
Methods and Results: Among Medicare beneficiaries who underwent CABG between 2008 and 2011, we mapped relationships between all physicians who treated them during their surgical episodes, including both surgeons and nonsurgeons. After aggregating across CABG episodes in a year to construct the physician social networks serving each health system, we then assessed the level of physician teamwork in these networks with the bipartite clustering coefficient. Finally, we fit a series of multivariable regression models to evaluate associations between a health system’s teamwork level and its 60-day surgical outcomes. We observed substantial variation in the level of teamwork between health systems performing CABG (SD for the bipartite clustering coefficient was 0.09). Although health systems with high and low teamwork levels treated beneficiaries with comparable comorbidity scores, these health systems differed over several sociocultural and healthcare capacity factors (eg, physician staff size and surgical caseload). After controlling for these differences, health systems with higher teamwork levels had significantly lower 60-day rates of emergency department visit, readmission, and mortality.
Conclusions: Health systems with physicians who tend to work together in tightly-knit groups during CABG episodes realize better surgical outcomes. As such, delivery system reforms focused on building teamwork may have positive effects on surgical care.
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Why Don't Commercial Health Plans Use Prospective Payment?
Laurence Baker et al.
NBER Working Paper, October 2016
Abstract:
One of the key terms in contracts between hospitals and insurers is how the parties apportion the financial risk of treating unexpectedly costly patients. “Prospective” payment contracts give hospitals a lump-sum amount, depending on the medical condition of the patient, with limited adjustment for the level of services provided. We use data from the Medicare Prospective Payment System and commercial insurance plans covering the nonelderly through the Health Care Cost Institute to measure the extent of prospective payment in 303 metropolitan statistical areas during 2008-12. We report three key findings. First, commercial insurance payments are less prospective than Medicare payments. Second, the extent of prospective payment in commercial insurance varies more than in Medicare, both across hospitals and geographic areas. Third, differences in prospective payment across hospitals are positively associated with the extent of hospital competition, the share of the hospital’s commercially insured patients covered by managed-care insurance, and the share of the hospital’s patients covered by Medicare’s Prospective Payment System.
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ACOs Holding Commercial Contracts Are Larger And More Efficient Than Noncommercial ACOs
David Peiris et al.
Health Affairs, October 2016, Pages 1849-1856
Abstract:
Accountable care organizations (ACOs) have diverse contracting arrangements and have displayed wide variation in their performance. Using data from national surveys of 399 ACOs, we examined differences between the 228 commercial ACOs (those with commercial payer contracts) and the 171 noncommercial ACOs (those with only public contracts, such as with Medicare or Medicaid). Commercial ACOs were significantly larger and more integrated with hospitals, and had lower benchmark expenditures and higher quality scores, compared to noncommercial ACOs. Among all of the ACOs, there was low uptake of quality and efficiency activities. However, commercial ACOs reported more use of disease monitoring tools, patient satisfaction data, and quality improvement methods than did noncommercial ACOs. Few ACOs reported having high-level performance monitoring capabilities. About two-thirds of the ACOs had established processes for distributing any savings accrued, and these ACOs allocated approximately the same amount of savings to the ACOs themselves, participating member organizations, and physicians. Our findings demonstrate that ACO delivery systems remain at a nascent stage. Structural differences between commercial and noncommercial ACOs are important factors to consider as public policy efforts continue to evolve.
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Are Patients Patient? Choosing Emergency Care under Universal Healthcare
Diwas Singh, Sriram Venkataraman & Tongil 'TI' Kim
Emory University Working Paper, September 2016
Abstract:
We study a natural policy experiment - the Massachusetts healthcare reform law - to examine whether universal healthcare impacts patient choice. We assemble a novel data set that enables us to track the individual-level ED visits of previously uninsured patients over time. The data set allows us to examine whether obtaining insurance (as stipulated by the policy’s individual mandate) leads these newly insured patients to alter their hospital choice. We develop an econometric model of patient choice to characterize the drivers of ED volume redistribution and find that a large proportion of patients switch to a new hospital upon obtaining health insurance. In particular, safety-net hospitals (which have historically catered to the uninsured) lose market share of these newly insured patients. Our findings have significant implications for patients, hospitals, payers and policy makers.
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Scott Dresden et al.
Annals of Emergency Medicine, forthcoming
Methods: Using statewide hospital administrative data from 2011 through 2015 from 201 nonfederal Illinois hospitals for patients aged 18 to 64 years, mean monthly ED visits were compared before and after ACA implementation by disposition from the ED and primary payer. Visit data were combined with 2010 to 2014 census insurance estimates to compute payer-specific ED visit rates. Interrupted time-series analyses tested changes in ED visit rates and ED hospitalization rates by insurance type after ACA implementation.
Results: Average monthly ED visit volume increased by 14,080 visits (95% confidence interval [CI] 4,670 to 23,489), a 5.7% increase, after ACA implementation. Changes by payer were as follows: uninsured decreased by 24,158 (95% CI −27,037 to −21,279), Medicaid increased by 28,746 (95% CI 23,945 to 33,546), and private insurance increased by 9,966 (95% 6,241 to 13,690). The total monthly ED visit rate increased by 1.8 visits per 1,000 residents (95% CI 0.6 to 3.0). The monthly ED visit rate decreased by 8.7 visit per 1,000 uninsured residents (95% CI −11.1 to −6.3) and increased by 10.2 visit per 1,000 Medicaid beneficiaries (95% CI 4.4 to 16.1) and 1.3 visits per 1,000 privately insured residents (95% CI 0.6 to 1.9). After adjusting for baseline trends and season, these changes remained statistically significant. The total number of hospitalizations through the ED was unchanged.
Conclusion: ED visits by adults aged 18 to 64 years in Illinois increased after ACA health insurance expansion. The increase in total ED visits was driven by an increase in visits resulting in discharge from the ED. A large post-ACA increase in Medicaid visits and a modest increase in privately insured visits outpaced a large reduction in ED visits by uninsured patients. These changes are larger than can be explained by population changes alone and are significantly different from trends in ED use before ACA implementation.