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Friday, February 17, 2017

Life support

 

Did Medicaid Expansion Reduce Medical Divorce?

David Slusky & Donna Ginther

NBER Working Paper, February 2017

Abstract:
Prior to the Affordable Care Act, many state Medicaid eligibility rules had maximum asset levels. This was a problem when one member of a couple was diagnosed with a degenerative disease requiring expensive care. Draining the couple’s assets so that the sick individual could qualify for Medicaid would leave no resources for the retirement of the other member; thus divorce and separating assets was often the only option. The ACA’s Medicaid expansion removed all asset tests. Using a difference-in-differences approach on states that did and did not expand Medicaid, we find that the expansion decreased the prevalence of divorce by 5.6% among those 50-64, strongly suggesting that it reduced medical divorce.

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Is American Health Care Uniquely Inefficient? Evidence from Prescription Drugs

Margaret Kyle & Heidi Williams

NBER Working Paper, January 2017

Abstract:
Alan Garber and Jonathan Skinner (2008) famously conjectured that the US health care system was “uniquely inefficient” relative to other countries. We test this idea using cross-country data on prescription drug sales newly linked with an arguably objective measure of relative therapeutic benefits, or drug quality. Specifically, we investigate how higher and lower quality drugs diffuse in the US relative to Australia, Canada, Switzerland, and the UK. Our tabulations suggest that lower quality drugs diffuse more in the US relative to high quality drugs, compared to each of our four comparison countries – consistent with Garber and Skinner’s conjecture.

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The Long-Term Impact of Price Controls in Medicare Part D

Gigi Moreno et al.

Forum for Health Economics and Policy, forthcoming

Abstract:
Price controls for prescription drugs are once again at the forefront of policy discussions in the United States. Much of the focus has been on the potential short-term savings – in terms of lower spending – although evidence suggests price controls can dampen innovation and adversely affect long-term population health. This paper applies the Health Economics Medical Innovation Simulation, a microsimulation of older Americans, to estimate the long-term impacts of government price setting in Medicare Part D, using pricing in the Federal Veterans Health Administration program as a proxy. We find that VA-style pricing policies would save between $0.1 trillion and $0.3 trillion (US$2015) in lifetime drug spending for people born in 1949–2005. However, such savings come with social costs. After accounting for innovation spillovers, we find that price setting in Part D reduces the number of new drug introductions by as much as 25% relative to the status quo. As a result, life expectancy for the cohort born in 1991–1995 is reduced by almost 2 years relative to the status quo. Overall, we find that price controls would reduce lifetime welfare by $5.7 to $13.3 trillion (US$2015) for the US population born in 1949–2005.

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Antitrust Treatment of Nonprofits: Should Hospitals Receive Special Care?

Cory Capps, Dennis Carlton & Guy David

NBER Working Paper, February 2017

Abstract:
Nonprofit hospitals receive favorable tax treatment in exchange for providing socially beneficial activities. Extending this rationale would suggest that, insofar as suppression of competition would allow nonprofits to cross-subsidize care for needy populations, nonprofit hospital mergers should be evaluated differently than mergers of for-profit hospitals. However, this rationale rests upon the premise that nonprofit hospitals with greater market power provide more care to the needy. In this paper, we develop a theoretical model showing that the welfare implications of an antitrust policy that favors nonprofit hospitals depends on the link between market power and charity care provision. To test the link, we use three measures of charity care — two dollar-denominated and one based on service volume — to study charity care provision by for-profit and non-profit hospitals under different competition conditions. Using detailed California data from 2001 to 2011, we find no evidence that nonprofit hospitals are more likely than for-profit hospitals to provide more charity care, or to offer more unprofitable services, when competition falls. Overall, while some courts have given deference to defendants’ nonprofit status, our study finds no empirical evidence that such hospitals provide greater charity care as they have greater market power.

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Less Intense Postacute Care, Better Outcomes For Enrollees In Medicare Advantage Than Those In Fee-For-Service

Peter Huckfeldt et al.

Health Affairs, January 2017, Pages 91-100

Abstract:
Traditional fee-for-service (FFS) Medicare’s prospective payment systems for postacute care provide little incentive to coordinate care or control costs. In contrast, Medicare Advantage plans pay for postacute care out of monthly capitated payments and thus have stronger incentives to use it efficiently. We compared the use of postacute care in skilled nursing and inpatient rehabilitation facilities by enrollees in Medicare Advantage and FFS Medicare after hospital discharge for three high-volume conditions: lower extremity joint replacement, stroke, and heart failure. After accounting for differences in patient characteristics at discharge, we found lower intensity of postacute care for Medicare Advantage patients compared to FFS Medicare patients discharged from the same hospital, across all three conditions. Medicare Advantage patients also exhibited better outcomes than their FFS Medicare counterparts, including lower rates of hospital readmission and higher rates of return to the community. These findings suggest that payment reforms such as bundling in FFS Medicare may reduce the intensity of postacute care without adversely affecting patient health.

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Effect of Medicaid Expansion on Workforce Participation for People With Disabilities

Jean Hall et al.

American Journal of Public Health, February 2017, Pages 262-264

Objectives: To use data from the Health Reform Monitoring Survey (HRMS) to examine differences in employment among community-living, working-age adults (aged 18–64 years) with disabilities who live in Medicaid expansion states and nonexpansion states.

Methods: Analyses used difference-in-differences to compare trends in pooled, cross-sectional estimates of employment by state expansion status for 2740 HRMS respondents reporting a disability, adjusting for individual and state characteristics.

Results: After the Affordable Care Act (ACA), respondents in expansion states were significantly more likely to be employed compared with those in nonexpansion states (38.0% vs 31.9%; P = .011).

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Malpractice Claim Fears and the Costs of Treating Medicare Patients: A New Approach to Estimating the Costs of Defensive Medicine

James Reschovsky & Cynthia Saiontz-Martinez

Health Services Research, forthcoming

Data Sources: We use a 2008 national physician survey linked to respondents’ elderly Medicare patients’ claims data.

Study Design: Using a sample of survey respondent/beneficiary dyads stratified by physician specialty, we estimated cross-sectional regressions of annual costs on patient covariates and a medical malpractice fear index formed from five validated physician survey questions. Defensive medicine costs were calculated as the difference between observed patient costs and those under hypothetical alternative levels of malpractice concern, and then aggregated to estimate average defensive medicine costs per beneficiary.

Data Collection Methods: The physician survey was conducted by mail. Patient claims were linked to survey respondents and reweighted to approximate the elderly Medicare beneficiary population.

Principal Findings: Higher levels of the malpractice fear index were associated with higher patient spending. Based on the measured associations, we estimated that defensive medicine accounted for 8 to 20 percent of total costs under alternative scenarios. The highest estimate is associated with a counterfactual of no malpractice concerns, which is unlikely to be socially optimal as some extrinsic incentives to avoid medical errors are desirable. Among specialty groups, primary care physicians contributed the most to defensive medicine spending. Higher costs resulted mostly from more hospital admissions and greater postacute care.

Conclusions: Although results are based on measured associations between malpractice fears and spending, and may not reflect the true causal effects, they suggest defensive medicine likely contributes substantial additional costs to Medicare.

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Price-Linked Subsidies and Health Insurance Markups

Sonia Jaffe & Mark Shepard

NBER Working Paper, January 2017

Abstract:
Subsidies in many health insurance programs depend on prices set by competing insurers – as prices rise, so do subsidies. We study the economics of these “price-linked” subsidies compared to “fixed” subsidies set independently of market prices. We show that price-linked subsidies weaken price competition, leading to higher markups and subsidy costs for the government. We argue that price-linked subsidies make sense only if (1) there is uncertainty about costs/prices, and (2) optimal subsidies increase as prices rise. We propose two reasons why optimal health insurance subsidies may rise with prices: doing so both insures consumers against cost risk and indirectly links subsidies to market-wide shocks affecting the cost of “charity care” used by the uninsured. We evaluate these tradeoffs empirically using a structural model estimated with data from Massachusetts’ health insurance exchange. Relative to fixed subsidies, price-linking increase prices by up to 5%, and by 5-10% when we simulate markets with fewer insurers. For levels of cost uncertainty that are reasonable in a mature market, we find that the losses from higher prices outweigh the benefits of price-linking.

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Beyond Health Effects? Examining the Social Consequences of Community Levels of Uninsurance Pre-ACA

Tara McKay & Stefan Timmermans

Journal of Health and Social Behavior, forthcoming

Abstract:
The lack of health insurance is traditionally considered a problem faced by individuals and their families. However, because of the geographically bounded organization and funding of healthcare in the United States, levels of uninsurance in a community may affect everyone living there. Health economists have examined how the effects of uninsurance spillover from the uninsured to the insured, negatively affecting healthcare access and quality for the insured. We extend research on uninsurance into the domain of sociologists by theorizing how uninsurance might exacerbate social inequalities and undermine social cohesion within communities. Using data from the Los Angeles Family and Neighborhood Survey, we show that individuals living in communities with higher levels of uninsurance report lower social cohesion net of other individual and neighborhood factors and discuss implications for implementation of the Affordable Care Act.

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Variation in the Ratio of Physician Charges to Medicare Payments by Specialty and Region

Ge Bai & Gerard Anderson

Journal of the American Medical Association, 17 January 2017, Pages 315-318

"Nearly all physicians charge more than the Medicare program actually pays (herein referred to as 'excess charges'), with complete discretion to determine the amount charged. High excess charges can impose financial burdens on uninsured patients and privately insured patients using out-of-network physicians...Physician charge-to-Medicare payment ratio ranged between 1.0 and 101.1 across individual physicians, with a median of 2.5 (interquartile range [IQR], 1.8-3.6). The ratio varied across specialties, with anesthesiology having the highest median (5.8 [IQR, 4.5-7.9]) and general practice having the lowest (1.6 [IQR, 1.3-2.2]). The ratio also varied across states (Table 2), with state median ranging between 2.0 (IQR, 1.5-3.1 for Michigan) and 3.8 (IQR, 2.9-6.5 for Wisconsin)...Physician excess charge was higher for specialties in which patients have fewer opportunities to choose a physician or be informed of the physician’s network status (eg, anesthesiology)."

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Nudging Leads Consumers In Colorado To Shop But Not Switch ACA Marketplace Plans

Keith Marzilli Ericson et al.

Health Affairs, February 2017, Pages 311-319

Abstract:
The Affordable Care Act (ACA) dramatically expanded the use of regulated marketplaces in health insurance, but consumers often fail to shop for plans during open enrollment periods. Typically these consumers are automatically reenrolled in their old plans, which potentially exposes them to unexpected increases in their insurance premiums and cost sharing. We conducted a randomized intervention to encourage enrollees in an ACA Marketplace to shop for plans. We tested the effect of letters and e-mails with personalized information about the savings on insurance premiums that they could realize from switching plans and the effect of generic communications that simply emphasized the possibility of saving. The personalized and generic messages both increased shopping on the Marketplace’s website by 23 percent, but neither type of message had a significant effect on plan switching. These findings show that simple “nudges” with even generic information can promote shopping in health insurance marketplaces, but whether they can lead to switching remains an open question.

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Causes and Consequences of Fragmented Care Delivery: Theory, Evidence, and Public Policy

Leila Agha, Brigham Frandsen & James Rebitzer

NBER Working Paper, January 2017

Abstract:
Fragmented health care occurs when care is spread out across a large number of poorly coordinated providers. We analyze care fragmentation, an important source of inefficiency in the US healthcare system, by combining an economic model of regional practice styles with an empirical study of Medicare enrollees who move across regions. Roughly sixty percent of cross-regional variation in care fragmentation is independent of patients’ clinical needs or preferences for care. A one standard deviation increase in regional fragmentation is associated with a 10% increase in utilization. Our analysis also identifies conditions under which anti-fragmentation policies can improve efficiency.

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The Extraregulatory Effect of Nurse Practitioner Scope-of-Practice Laws on Physician Malpractice Rates

Benjamin McMichael, Barbara Safriet & Peter Buerhaus

Medical Care Research and Review, forthcoming

Abstract:
Patients can hold physicians directly or vicariously liable for the malpractice of nurse practitioners under their supervision. Restrictive scope-of-practice laws governing nurse practitioners can ease patients’ legal burdens in establishing physician liability. We analyze the effect of restrictive scope-of-practice laws on the number of malpractice payments made on behalf of physicians between 1999 and 2012. Enacting less restrictive scope-of-practice laws decreases the number of payments made by physicians by as much as 31%, suggesting that restrictive scope-of-practice laws have a salient extraregulatory effect on physician malpractice rates. The effect of enacting less restrictive laws varies depending on the medical malpractice reforms that are in place, with the largest decrease in physician malpractice rates occurring in states that have enacted fewer malpractice reforms. Relaxing scope-of-practice laws could mitigate the adverse extraregulatory effect on physicians identified in this study and could also lead to improvements in access to care.

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Dermatologist-level classification of skin cancer with deep neural networks

Andre Esteva et al.

Nature, 2 February 2017, Pages 115–118

Abstract:
Skin cancer, the most common human malignancy, is primarily diagnosed visually, beginning with an initial clinical screening and followed potentially by dermoscopic analysis, a biopsy and histopathological examination. Automated classification of skin lesions using images is a challenging task owing to the fine-grained variability in the appearance of skin lesions. Deep convolutional neural networks (CNNs) show potential for general and highly variable tasks across many fine-grained object categories. Here we demonstrate classification of skin lesions using a single CNN, trained end-to-end from images directly, using only pixels and disease labels as inputs. We train a CNN using a dataset of 129,450 clinical images — two orders of magnitude larger than previous datasets — consisting of 2,032 different diseases. We test its performance against 21 board-certified dermatologists on biopsy-proven clinical images with two critical binary classification use cases: keratinocyte carcinomas versus benign seborrheic keratoses; and malignant melanomas versus benign nevi. The first case represents the identification of the most common cancers, the second represents the identification of the deadliest skin cancer. The CNN achieves performance on par with all tested experts across both tasks, demonstrating an artificial intelligence capable of classifying skin cancer with a level of competence comparable to dermatologists. Outfitted with deep neural networks, mobile devices can potentially extend the reach of dermatologists outside of the clinic. It is projected that 6.3 billion smartphone subscriptions will exist by the year 2021 and can therefore potentially provide low-cost universal access to vital diagnostic care.

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The Impact of the Affordable Care Act Young Adult Provision on Childbearing, Marriage, and Tax Filing Behavior: Evidence from Tax Data

Bradley Heim, Ithai Lurie & Kosali Simon

NBER Working Paper, January 2017

Abstract:
We use panel U.S. tax data spanning 2008-2013 to study the impact of the Affordable Care Act (ACA) young adult provision on two important demographic outcomes—childbearing and marriage. The impact on childbearing is theoretically ambiguous, as gaining insurance may increase access to contraceptive services, while also reducing the out-of-pocket costs of childbirth. The impact on marriage is also ambiguous, as marriage rates may decrease when young adults have less need for dependent health insurance through a spouse, but may increase when they are now allowed to stay on their parent’s plans even if they are married. Changes in childbearing and marriage can, in turn, lead to changes in the likelihood of filing a tax return. Since W-2 forms record access to employer-provided fringe benefits, we were able to examine the impact of the coverage expansion by focusing on young adults whose parents have access to benefits. We compare those who are slightly younger than the age threshold to those who are slightly older. Our results suggest that the ACA young adult provision led to a modest decrease in childbearing and marriage rates, though the propensity to file a tax return did not change significantly.

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How Vertical Integration Affects the Quantity and Cost of Care for Medicare Beneficiaries

Thomas Koch, Brett Wendling & Nathan Wilson

Journal of Health Economics, forthcoming

Abstract:
Health systems are employing physicians in growing numbers. The implications of this trend are poorly understood and controversial. We use rich data from the Centers for Medicare and Medicaid Services to examine the effects of a set of physician acquisitions by hospital systems on outpatient utilization and spending. We find that financial integration systematically produces economically large changes in the acquired physicians’ behavior, but has less consistent effects at the acquiring system level.

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Projected Coding Intensity In Medicare Advantage Could Increase Medicare Spending By $200 Billion Over Ten Years

Richard Kronick

Health Affairs, February 2017, Pages 320-327

Abstract:
Over the past decade, the average risk score for Medicare Advantage (MA) enrollees has risen steadily relative to that for fee-for-service Medicare beneficiaries, by approximately 1.5 percent per year. The Centers for Medicare and Medicaid Services (CMS) uses patient demographic and diagnostic information to calculate a risk score for each beneficiary, and these risk scores are used to determine payment to MA plans. The increase in relative MA risk scores is largely the result of successful efforts by MA plans to identify additional diagnoses, also known as coding intensity, and not of changes in enrollees’ true health. In this article I estimate the effects of coding intensity on Medicare spending over the next decade. Under the moderately conservative assumption that coding intensity will decelerate, Medicare expenditures are expected to increase by approximately $200 billion. CMS has implemented a variety of strategies since 2010 that lessened the impact of coding intensity on Medicare spending; it has a variety of policy responses at its disposal to mitigate the impact going forward. The problem could be largely solved if CMS adjusted for coding intensity using the principle that MA beneficiaries are no healthier and no sicker than demographically similar fee-for-service Medicare beneficiaries, returning to the budget-neutrality approach that was introduced in 2004 and later abandoned.

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The Impact of Minimum Quality Standard Regulations on Nursing Home Staffing, Quality, and Exit Decisions

John Bowblis & Andrew Ghattas

Review of Industrial Organization, February 2017, Pages 43–68

Abstract:
The regulation of nursing homes in the U.S. often includes mandates that require a minimum nurse staffing level. In this paper, we exploit new minimum nurse staffing regulations by the states of New Mexico and Vermont that were implemented in the early 2000s to determine how nursing homes responded in terms of staffing, quality, and the decision to exit the market. Our identification strategy exploits the fact that some nursing homes had pre-regulatory staffing levels near the new requirement and did not need to change staffing levels. We compare these nursing homes to a group that faced binding constraints (low-staffed) and those that were significantly over the constraint (high-staffed). Low-staffed nursing homes increase staffing levels but also use less expensive nurse types to satisfy the new standard. High-staffed nursing homes decrease staffing and use fewer contracted staff. Overall, dispersion in staffing is reduced, but we find little effect by pre-regulatory staffing level on non-staffing measures of quality and the decision to exit the market.

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Benchmarks for Reducing Emergency Department Visits and Hospitalizations Through Community Health Workers Integrated Into Primary Care: A Cost-Benefit Analysis

Sanjay Basu et al.

Medical Care, February 2017, Pages 140–147

Background: Uncertainty about the financial costs and benefits of community health worker (CHW) programs remains a barrier to their adoption.

Objectives: To determine how much CHWs would need to reduce emergency department (ED) visits and associated hospitalizations among their assigned patients to be cost-neutral from a payer’s perspective.

Research Design: Using a microsimulation of patient health care utilization, costs, and revenues, we estimated what portion of ED visits and hospitalizations for different conditions would need to be prevented by a CHW program to fully pay for the program’s expenses. The model simulated CHW programs enrolling patients with a history of at least 1 ED visit for a chronic condition in the prior year, utilizing data on utilization and cost from national sources.

Results: CHWs assigned to patients with uncontrolled hypertension and congestive heart failure, as compared with other common conditions, achieve cost-neutrality with the lowest number of averted visits to the ED. To achieve cost-neutrality, 4–5 visits to the ED would need to be averted per year by a CHW assigned a panel of 70 patients with uncontrolled hypertension or congestive heart failure — approximately 3%–4% of typical ED visits among such patients, respectively. Most other chronic conditions would require between 7% and 12% of ED visits to be averted to achieve cost-savings.

Conclusion: Offsetting costs of a CHW program is theoretically feasible for many common conditions. Yet the benchmark for reducing ED visits and associated hospitalizations varies substantially by a patient’s primary diagnosis.

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Health Care Use And Spending Patterns Vary By Wage Level In Employer-Sponsored Plans

Bruce Sherman et al.

Health Affairs, February 2017, Pages 250-257

Abstract:
Employees face an increasing financial burden for health services as health care costs increase relative to earnings. Yet little is known about health care utilization patterns relative to employee wages. To better understand this association and the resulting implications, we examined patterns of health care use and spending by wage category during 2014 among 42,936 employees of four self-insured employers enrolled in a private health insurance exchange. When demographics and other characteristics were controlled for, employees in the lowest-wage group had half the usage of preventive care (19 percent versus 38 percent), nearly twice the hospital admission rate (31 individuals per 1,000 versus 17 per 1,000), more than four times the rate of avoidable admissions (4.3 individuals per 1,000 versus 0.9 per 1,000), and more than three times the rate of emergency department visits (370 individuals per 1,000 versus 120 per 1,000) relative to top-wage-group earners. Annual total health care spending per patient was highest in both the lowest-wage ($4,835) and highest-wage ($5,074) categories relative to the middle two wage groups ($3,952 and $3,987, respectively). These findings provide new insights about wage-associated variations in health care use and spending in employer-sponsored plans. For policy makers, these findings can inform employer benefit design strategies and research priorities, to encourage effective use of health care services.

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Healthcare Spending and Utilization in Public and Private Medicare

Vilsa Curto et al.

NBER Working Paper, January 2017

Abstract:
We compare healthcare spending in public and private Medicare using newly available claims data from Medicare Advantage (MA) insurers. MA insurer revenues are 30 percent higher than their healthcare spending. Healthcare spending is 25 percent lower for MA enrollees than for enrollees in traditional Medicare (TM) in the same county with the same risk score. Spending differences between MA and TM are similar across sub-populations of enrollees and sub-categories of care, with similar reductions for "high value" and "low value" care. Spending differences primarily reflect differences in healthcare utilization; spending per encounter and hospital payments per admission are very similar in MA and TM. Geographic variation in MA spending is about 20 percent higher than in TM, but geographic variation in hospital prices is about 20 percent lower. We present evidence consistent with MA plans encouraging substitution to less expensive care, such as primary rather than specialist care, and outpatient rather than inpatient surgery, and with employing various types of utilization management. Some of the overall spending differences between MA and TM may be driven by selection on unobservables, and we report a range of estimates of this selection effect using mortality outcomes to proxy for selection.

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Internal Governance and Performance: Evidence From When External Discipline is Weak

Jonathan Kalodimos

Journal of Corporate Finance, April 2017, Pages 193–216

Abstract:
The effect of internal governance on performance is potentially economically significant but may be difficult to identify because of confounding external disciplinary mechanisms and the endogenous choice of internal governance. This study addresses those difficulties by using nonprofit hospitals as an economic environment with muted external disciplinary mechanisms and instrumenting for internal governance using governance spillovers of geographically local public firms. Using patient heart attack survival as a measure of performance, a one standard deviation increase in strength of internal governance reduces the probability of death by 0.89 percentage points after controlling for patient characteristics.

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Evaluating Measures of Hospital Quality

Joseph Doyle, John Graves & Jonathan Gruber

NBER Working Paper, February 2017

Abstract:
In response to unsustainable growth in health care spending, there is enormous interest in reforming the payment system to “pay for quality instead of quantity.” While quality measures are crucial to such reforms, they face major criticisms largely over the potential failure of risk adjustment to overcome endogeneity concerns. In this paper we implement a methodology for estimating the causal relationship between hospital quality measures and patient outcomes. To compare similar patients across hospitals in the same market, we exploit ambulance company preferences as an instrument for patient assignment. We find that a variety of measures used by insurers to measure provider quality are successful: assignment to a higher-scoring hospital results in better patient outcomes. We estimate that a two-standard deviation improvement in a composite quality measure based on existing data collected by CMS is causally associated with reductions in readmissions and mortality of roughly 15%.

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Comparison of Medicaid Payments Relative to Medicare Using Inpatient Acute Care Claims from the Medicaid Program: Fiscal Year 2010–Fiscal Year 2011

Devin Stone, Bridget Dickensheets & John Poisal

Health Services Research, forthcoming

Objective: To compare Medicaid fee-for-service (FFS) inpatient hospital payments to expected Medicare payments.

Data Sources: Medicaid and Medicare claims data, Medicare's MS-DRG grouper and inpatient prospective payment system pricer (IPPS pricer).

Principal Findings: Average inpatient hospital claim payments for Medicaid were 68.8 percent of what Medicare would have paid in fiscal year 2010, and 69.8 percent in fiscal year 2011. Including Medicaid disproportionate share hospital (DSH), graduate medical education (GME), and supplemental payments reduces a substantial proportion of the gap between Medicaid and Medicare payments.

Conclusions: Medicaid payments relative to expected Medicare payments tend to be lower and vary by state Medicaid program, length of stay, and whether payments made outside of the Medicaid claims process are included.

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ACOs Serving High Proportions Of Racial And Ethnic Minorities Lag In Quality Performance

Valerie Lewis et al.

Health Affairs, January 2017, Pages 57-66

Abstract:
Accountable care organizations (ACOs) are intended, in part, to improve health care quality. However, little is known about how ACOs may affect disparities or how providers serving disadvantaged patients perform under Medicare ACO contracts. We analyzed racial and ethnic disparities in health care outcomes among ACOs to investigate the association between the share of an ACO’s patients who are members of racial or ethnic minority groups and the ACO’s performance on quality measures. Using data from Medicare and a national survey of ACOs, we found that having a higher proportion of minority patients was associated with worse scores on twenty-five of thirty-three Medicare quality performance measures, two disease composite measures, and an overall quality composite measure. However, ACOs serving a high share of minority patients were similar to other ACOs in most observable characteristics and capabilities, including provider composition, services, and clinical capabilities. Our findings suggest that ACOs with a high share of minority patients may struggle with quality performance under ACO contracts, especially during their early years of participation — maintaining or potentially exacerbating current inequities. Policy makers must consider how to refine ACO programs to encourage the participation of providers that serve minority patients and to reward performance appropriately.

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The Effect of State Medicaid Expansions on Prescription Drug Use: Evidence from the Affordable Care Act

Ausmita Ghosh, Kosali Simon & Benjamin Sommers

NBER Working Paper, January 2017

Abstract:
This study provides a national analysis of how the 2014 Affordable Care Act (ACA) Medicaid expansions have affected aggregate prescription drug utilization. Given the prominent role of prescription medications in the management of chronic conditions, as well as the high prevalence of unmet health care needs in the population newly eligible for Medicaid, the use of prescription drugs represents an important measure of the ACA’s policy impact. Prescription drug utilization also provides insights into whether insurance expansions have increased access to physicians, since obtaining these medications requires interaction with a health care provider. We use 2013-2015 data from a large, nationally representative, all-payer pharmacy transactions database to examine effects on overall prescription medication utilization as well as effects within specific drug classes. Using a differences-in-differences (DD) regression framework, we find that within the first 15 months of expansion, Medicaid-paid prescription utilization increased by 19 percent in expansion states relative to states that did not expand; this works out to approximately seven additional prescriptions per year per newly enrolled beneficiary. The greatest increases in Medicaid prescriptions occurred among diabetes medications, which increased by 24 percent. Other classes of medication that experienced relatively large increases include contraceptives (22 percent) and cardiovascular drugs (21 percent), while several classes more consistent with acute conditions such as allergies and infections experienced significantly smaller increases. As a placebo test, we examine Medicare-paid prescriptions and find no evidence of a post-ACA effect. Both expansion and non-expansion states followed statistically similar trends in Medicaid prescription utilization in the pre-policy era, offering support for our DD approach. We did not observe reductions in uninsured or privately insured prescriptions, suggesting that increased utilization under Medicaid did not substitute for other forms of payment. Within expansion states, increases in prescription drug utilization were larger in geographical areas with higher uninsured rates prior to the ACA. Finally, we find some suggestive evidence that increases in prescription drug utilization were greater in areas with larger Hispanic and black populations.

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Spending On Care After Surgery Driven By Choice Of Care Settings Instead Of Intensity Of Services

Lena Chen et al.

Health Affairs, January 2017, Pages 83-90

Abstract:
The rising popularity of episode-based payment models for surgery underscores the need to better understand the drivers of variability in spending on postacute care. Examining postacute care spending for fee-for-service Medicare beneficiaries after three common surgical procedures in the period 2009–12, we found that it varied widely between hospitals in the lowest versus highest spending quintiles for postacute care, with differences of 129 percent for total hip replacement, 103 percent for coronary artery bypass grafting (CABG), and 82 percent for colectomy. Wide variation persisted after we adjusted for the intensity of postacute care. However, the variation diminished considerably after we adjusted instead for postacute care setting (home health care, outpatient rehabilitation, skilled nursing facility, or inpatient rehabilitation facility): It decreased to 16 percent for hip replacement, 4 percent for CABG, and 21 percent for colectomy. Health systems seeking to improve surgical episode efficiency should collaborate with patients to choose the highest-value postacute care setting.

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Lower- Versus Higher-Income Populations In The Alternative Quality Contract: Improved Quality And Similar Spending

Zirui Song et al.

Health Affairs, January 2017, Pages 74-82

Abstract:
As population-based payment models become increasingly common, it is crucial to understand how such payment models affect health disparities. We evaluated health care quality and spending among enrollees in areas with lower versus higher socioeconomic status in Massachusetts before and after providers entered into the Alternative Quality Contract, a two-sided population-based payment model with substantial incentives tied to quality. We compared changes in process measures, outcome measures, and spending between enrollees in areas with lower and higher socioeconomic status from 2006 to 2012 (outcome measures were measured after the intervention only). Quality improved for all enrollees in the Alternative Quality Contract after their provider organizations entered the contract. Process measures improved 1.2 percentage points per year more among enrollees in areas with lower socioeconomic status than among those in areas with higher socioeconomic status. Outcome measure improvement was no different between the subgroups; neither were changes in spending. Larger or comparable improvements in quality among enrollees in areas with lower socioeconomic status suggest a potential narrowing of disparities. Strong pay-for-performance incentives within a population-based payment model could encourage providers to focus on improving quality for more disadvantaged populations.

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ACO-Affiliated Hospitals Reduced Rehospitalizations From Skilled Nursing Facilities Faster Than Other Hospitals

Ulrika Winblad et al.

Health Affairs, January 2017, Pages 67-73

Abstract:
Medicare’s more than 420 accountable care organizations (ACOs) provide care for a considerable percentage of the elderly in the United States. One goal of ACOs is to improve care coordination and thereby decrease rates of rehospitalization. We examined whether ACO-affiliated hospitals were more effective than other hospitals in reducing rehospitalizations from skilled nursing facilities. We found a general reduction in rehospitalizations from 2007 to 2013, which suggests that all hospitals made efforts to reduce rehospitalizations. The ACO-affiliated hospitals, however, were able to reduce rehospitalizations more quickly than other hospitals. The reductions suggest that ACO-affiliated hospitals are either discharging to the nursing facilities more effectively compared to other hospitals or targeting at-risk patients better, or enhancing information sharing and communication between hospitals and skilled nursing facilities. Policy makers expect that reducing readmissions to hospitals will generate major savings and improve the quality of life for the frail elderly. However, further work is needed to investigate the precise mechanisms that underlie the reduction of readmissions among ACO-affiliated hospitals.

By KEVIN LEWIS | 09:00:00 AM