Medical problems
US Hospitals Are Still Using Chargemaster Markups To Maximize Revenues
Ge Bai & Gerard Anderson
Health Affairs, September 2016, Pages 1658-1664
Abstract:
Many hospital executives and economists have suggested that since Medicare adopted a hospital prospective payment system in 1985, prices on the hospital chargemaster (an exhaustive list of the prices for all hospital procedures and supplies) have become irrelevant. However, using 2013 nationally representative hospital data from Medicare, we found that a one-unit increase in the charge-to-cost ratio (chargemaster price divided by Medicare-allowable cost) was associated with $64 higher patient care revenue per adjusted discharge. Furthermore, hospitals appeared to systematically adjust their charge-to-cost ratios: The average ratio ranged between 1.8 and 28.5 across patient care departments, and for-profit hospitals were associated with a 2.30 and a 2.07 higher charge-to-cost ratio than government and nonprofit hospitals, respectively. We also found correlation between the proportion of uninsured patients, a hospital’s system affiliation, and its regional power with the charge-to-cost ratio. These findings suggest that hospitals still consider the chargemaster price to be an important way to enhance revenue. Policy makers might consider developing additional policy tools that improve markup transparency to protect patients from unexpectedly high charges for specific services.
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Silver Spoons and Platinum Plans: How Childhood Environment Affects Adult Healthcare Decisions
Chiraag Mittal & Vladas Griskevicius
Journal of Consumer Research, forthcoming
Abstract:
Can socioeconomic status in childhood influence desire for health coverage in adulthood? We develop and test a model that yielded two sets of findings across five experiments. First, people who grew up poor were generally less interested in health coverage compared to those who grew up wealthy. This effect was independent of people’s current level of socioeconomic status, emerged most strongly when adults were experiencing financial threat, and was mediated by differences in willingness to take risks between people from poor versus wealthy childhoods. Second, we show that this effect reverses when people are provided with base-rate information about disease. When information about the average likelihood of getting sick is made available, people who grew up poor were consistently more likely to seek health coverage than people who grew up wealthy. This effect was again strongest when people felt a sense of financial threat, and it was driven by people from poor versus wealthy childhoods differing in their perceptions of the likelihood of becoming sick. Overall, we show how, why, and when childhood socioeconomic status influences desire for health coverage.
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Megan Johnson Shen & Jordan LaBouff
Journal of Social and Political Psychology, Fall 2016, Pages 493-520
Abstract:
Political rhetoric surrounding Universal Health Care in the United States typically deals only with differences in political ideology. Research on symbolic racism, however, indicates that subtle racial prejudice may also predict attitudes toward policies like universal health care that are assumed to benefit racial minorities. This subtle racial prejudice hypothesis was supported across three studies conducted in the U.S. A measure of attitudes toward universal health care was found to be a reliable, single-dimension measure associated with political ideology (Pilot Study). Subtle racial prejudice (as measured by the Modern Racism Scale) predicted opposition to universal health care, even when statistically controlling for political ideology and attitudes toward the poor (Study 1). Moreover, reading about a Black individual (compared to a White individual) receiving universal health care benefits reduced support for universal health care, even when statistically controlling for political ideology and right-wing authoritarianism (Study 2). Being a person who takes advantage of the system (e.g., free rides) was a significant predictor of universal health care attitudes while race was not (Study 3). This work demonstrates that subtle racial prejudice plays a critical role in predicting universal health care attitudes among U.S. citizens, reflecting a long-standing history of associations between subtle racial prejudice and opposition to governmental assistance programs in the U.S.
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Getting Crowded: Second-Order Effects of Medicaid Expansion Refusal
Cameron McNeill Ellis & Joshua Frederick
University of Georgia Working Paper, September 2016
Abstract:
The Patient Protection and Affordable Care Act (PPACA) is one of the most debated, and dividing, pieces of legislation in recent memory. One of the main elements of the PPACA is the mandatory expansion of Medicaid eligibility to 138% of the poverty line and the inclusion of childless adults. Immediately following the law's passage, a number of states sued for the law to be ruled unconstitutional. While the majority of the law held up to judicial scrutiny, the Supreme Court did rule that the mandatory expansion violated states' rights and thus states could opt out. Nearly all of the debate has focused on the direct effects of the newly covered, but there are also important secondary effects to consider. If the newly-eligible portion differs from the general populace then an expansion of Medicaid can affect the private market for health insurance. In this paper, we use policy-level data from the Health Insurance Exchanges and a difference in differences strategy to identify and estimate the effects of Medicaid expansion on the private health insurance market. We find that expanding Medicaid reduces average monthly premiums by $32.40; a decrease of 11.86%.
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Diane Alexander & Janet Currie
NBER Working Paper, August 2016
Abstract:
There is continuing controversy about the extent to which publicly insured children are treated differently than privately insured children, and whether differences in treatment matter. We show that on average, hospitals are less likely to admit publicly insured children than privately insured children who present at the ER and the gap grows during high flu weeks, when hospital beds are in high demand. This pattern is present even after controlling for detailed diagnostic categories and hospital fixed effects, but does not appear to have any effect on measurable health outcomes such as repeat ER visits and future hospitalizations. Hence, our results raise the possibility that instead of too few publicly insured children being admitted during high flu weeks, there are too many publicly and privately insured children being admitted most of the time.
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Damage Caps and the Labor Supply of Physicians: Evidence from the Third Reform Wave
Myungho Paik, Bernard Black & David Hyman
American Law and Economics Review, forthcoming
Abstract:
Nine states adopted caps on non-economic damages during the third medical malpractice reform wave from 2002–05, joining twenty-two other states with caps on non-economic or total damages. We study the effects of these reforms on physician supply. Across a variety of difference-in-differences (DiD), triple differences, and synthetic control methods, in both state- and county-level regressions, we find, with tight confidence intervals, no evidence that cap adoption leads to an increase in total patient care physicians, or in specialties that face high liability risk (with a possible exception for plastic surgeons), or in rural physicians.
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Use of foreign-educated nurses and patient satisfaction in U.S. hospitals
Olena Mazurenko & Nir Menachemi
Health Care Management Review, October/December 2016, Pages 306–315
Data Sources/Study Setting: We utilized data from the Hospital Consumer Assessment of Healthcare Providers and Systems to measure patient satisfaction and data from the American Hospital Association regarding the utilization of foreign-educated RNs in 2012.
Methodology/Approach: In this study, a cross-sectional design with propensity score adjustment to examine the relationship between use of foreign-educated nurses and 10 patient satisfaction outcome measures. Control variables include hospital size, ownership, geographic location, teaching status, system membership, a high-technology index, and U.S. region based on census categories.
Findings: The utilization of foreign-educated RNs was negatively and significantly related to six patient satisfaction measures. Specifically, hospitals with foreign-educated RNs scored, on average, lower on measures related to nurse communication (β = −0.649, p = .01), doctor’s communication (β = −0.837, p ≤ .001), communication about administered drugs (β = −0.539, p = .81), and communication about what to do during their recovery at home (β = −0.571, p = .01). Moreover, hospitals utilizing foreign-educated RNs scored, on average, lower on overall satisfaction measures including rating the hospital as 9 or 10 overall (β = −1.20, p = .005), and patients would definitely recommend the hospital (β = −1.32, p = .006).
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Productivity and Quality in Health Care: Evidence from the Dialysis Industry
Paul Grieco & Ryan McDevitt
Review of Economic Studies, forthcoming
Abstract:
We show that healthcare providers face a tradeoff between increasing the number of patients they treat and improving their quality of care. To measure the magnitude of this quality-quantity tradeoff, we estimate a model of dialysis provision that explicitly incorporates a center's unobservable and endogenous choice of treatment quality while allowing for unobserved differences in productivity across centers. We find that a center that reduces its quality standards such that its expected rate of septic infections increases by 1 percentage point can increase its patient load by 1.6 percent, holding productivity, capital, and labor fixed; this corresponds to an elasticity of quantity with respect to quality of -0.2. Notably, our approach provides estimates of productivity that control for differences in quality, whereas traditional methods would misattribute lower-quality care to greater productivity.
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Is American Pet Health Care (Also) Uniquely Inefficient?
Liran Einav, Amy Finkelstein & Atul Gupta
NBER Working Paper, September 2016
Abstract:
We document four similarities between American human healthcare and American pet care: (i) rapid growth in spending as a share of GDP over the last two decades; (ii) strong income-spending gradient; (iii) rapid growth in the employment of healthcare providers; and (iv) similar propensity for high spending at the end of life. We speculate about possible implications of these similar patterns in two sectors that share many common features but differ markedly in institutional features, such as the prevalence of insurance and of public sector involvement.
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Employment-based health insurance and misallocation: Implications for the macroeconomy
David Chivers, Zhigang Feng & Anne Villamil
Review of Economic Dynamics, forthcoming
Abstract:
Most working-age Americans obtain health insurance through the workplace. U.S. law requires employers to use a common price, but the value of insurance varies with idiosyncratic health risk. Hence, linking employment and health insurance creates a wedge between the marginal cost and benefit of insurance. We study the impact of this wedge on occupational choice and welfare in a general equilibrium model. Agents face idiosyncratic health expenditure shocks, have heterogeneous managerial and worker productivity, and choose whether to be workers or entrepreneurs. First, we consider a private insurance indemnity policy that removes the link between employment and health insurance, so only ability matters for occupational choice. By construction, this is the most efficient policy. We find a welfare gain of 2.28% from decoupling health insurance and employment. Second, we tighten the link by increasing employment-based health insurance from the current U.S. level of 62% to 100%, and find a welfare loss of – 0.61%.
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Decline in Consultant Availability in Massachusetts Emergency Departments: 2005 to 2014
Jason Sanders et al.
Annals of Emergency Medicine, October 2016, Pages 461–466
Methods: We surveyed ED directors in Massachusetts in 2006 (n=61 EDs), 2009 (n=63), and 2015 (n=63) about ED characteristics in the previous year, including specialty-specific consultant availability in person (yes/no) and continuous consultant availability (yes/no). We tested trends in consultant availability (P for trend) and used multivariable logistic regression to calculate odds of continuous availability in 2014 versus 2005.
Results: Response rates were greater than 80% each year. From 2005 to 2014, there was an increase in the median number of annual ED visits from 32,025 (interquartile range [IQR] 23,000 to 50,000) to 42,000 (IQR 26,000 to 59,300), number of full-time attending physicians from 11 (IQR 8 to 16) to 12 (IQR 8 to 22), and number of full-time ED nurses from 27 (IQR 17 to 54) to 42 (IQR 25 to 65). In adjusted models, there was a significantly reduced odds of consultant availability in 2014 versus 2005 for general surgery (odds ratio [OR] 0.05; 95% confidence interval [CI] 0.01 to 0.35), neurology (OR 0.39; 95% CI 0.17 to 0.86), obstetrics/gynecology (OR 0.40; 95% CI 0.16 to 0.97), orthopedics (OR 0.34; 95% CI 0.13 to 0.89), pediatrics (OR 0.19; 95% CI 0.06 to 0.54), plastic surgery (OR 0.10; 95% CI 0.03 to 0.32), and psychiatry (OR 0.25; 95% CI 0.12 to 0.52).
Conclusion: In Massachusetts EDs between 2005 and 2014, ED consultant availability significantly declined despite accounting for other ED characteristics.
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Kevin Callison & Paul Sicilian
Public Finance Review, forthcoming
Abstract:
A greater level of government involvement in the financing of health care is generally viewed unfavorably by organizations monitoring economic freedom. However, increased government provision of health insurance could be associated with improved economic freedom through enhanced labor market mobility. For example, job-lock alleviation accompanying a public insurance expansion could lead to increased innovation or a higher likelihood of self-employment. In this article, we use the Affordable Care Act (ACA)’s recent Medicaid expansions to examine the effect of an increase in public health insurance provision on labor market outcomes by gender and race/ethnicity. Our results lend support to the notion that state Medicaid expansions are associated with improved labor market autonomy for white men and white women; however, we find mixed results for black and Hispanic men and women. Notably, our findings cast doubt on earlier claims that the ACA would lead to large reductions in labor force participation and employment.
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Garret Johnson et al.
Health Affairs, September 2016, Pages 1707-1715
Abstract:
Recent increases in Medicare Advantage enrollment may have caused lower spending growth in the fee-for-service (FFS) Medicare population. We identified the counties of largest Medicare Advantage growth and determined if increased enrollment was associated with reduced FFS Medicare spending growth in those counties. We found that 73 percent of counties experienced at least a 5-percentage-point increase in Medicare Advantage penetration between 2007 and 2014, with the most growth occurring in larger and poorer counties in the Northeast and South. The association between Medicare Advantage growth and FFS Medicare costs varied depending on baseline Medicare Advantage penetration: In counties with low baseline penetration, Medicare Advantage growth did not have a significant effect on per capita FFS Medicare spending, whereas in counties in the highest quartile of baseline Medicare Advantage penetration, it was associated with a significant decrease in FFS Medicare spending growth ($154 annually per 10-percentage-point increase in Medicare Advantage). These findings suggest that Medicare Advantage growth may be playing a role in moderating FFS Medicare costs.
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Employment Effects of the ACA Medicaid Expansions
Pauline Leung & Alexandre Mas
NBER Working Paper, August 2016
Abstract:
We examine whether the recent expansions in Medicaid from the Affordable Care Act reduced “employment lock” among childless adults who were previously ineligible for public coverage. We compare employment in states that chose to expand Medicaid versus those that chose not to expand, before and after implementation. We find that although the expansion increased Medicaid coverage by 3.0 percentage points among childless adults, there was no significant impact on employment.
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Susan Feng Lu & Lauren Xiaoyuan Lu
Management Science, forthcoming
Abstract:
During the 2000s, over a dozen U.S. states passed laws that prohibit healthcare employers from mandating overtime for nurses. Using a nationwide panel data set from 2004 to 2012, we find that these mandatory overtime laws reduced the service quality of nursing homes, as measured by an increase in deficiency citations. This outcome can be explained by two undesirable changes in the staffing hours of registered nurses: decreased hours of permanent nurses and increased hours of contract nurses per resident day. We observe that the increase in deficiency citations concentrates in the domains of administration and quality of care rather than quality of life, and the severity levels of the increased citations tend to be minor rather than major. We also find that the laws’ negative effect on quality is more severe in nursing homes with higher percentages of Medicare-covered residents. These observations are consistent with the predictions of a stochastic staffing model that incorporates demand uncertainty and operational flexibility. Furthermore, we rule out an alternative hypothesis that the quality decline is induced by an increase in nurse wages.
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Marketplace Plan Payment Options for Dealing with High-Cost Enrollees
Timothy Layton & Thomas McGuire
NBER Working Paper, August 2016
Abstract:
Two of the three elements of the ACA’s “premium stabilization program,” reinsurance and risk corridors, are set to expire in 2017, leaving risk adjustment alone to protect plans against risk of high-cost cases. This paper considers potential modifications of the HHS risk adjustment methodology to maintain plan protection against risk from high-cost cases within the current regulatory framework. We show analytically that modifications of the transfer formula and of the risk adjustment model itself are mathematically equivalent to a conventional actuarially fair reinsurance policy. Furthermore, closely related modifications of the transfer formula or the risk adjustment model can improve on conventional reinsurance by figuring transfers or estimating risk adjustment model weights recognizing the presence of a reinsurance function. In the empirical section, we estimate risk adjustment models with an updated and selected version of the data used to calibrate the federal payment models, and show, using simulation methods, that proposed modifications improve fit at the person level and protect small insurers against high-cost risk better than conventional reinsurance. We simulate various “attachment points” for the reinsurance equivalent policies and quantify the tradeoffs of higher and lower attachment points.
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New Anticancer Drugs Associated With Large Increases In Costs And Life Expectancy
David Howard et al.
Health Affairs, September 2016, Pages 1581-1587
Abstract:
Spending on anticancer drugs has risen rapidly over the past two decades. A key policy question is whether new anticancer drugs offer value, given their high cost. Using data from the Surveillance, Epidemiology, and End Results (SEER)–Medicare database, we assessed the value of new cancer treatments in routine clinical practice for patients with metastatic breast, lung, or kidney cancer or chronic myeloid leukemia in the periods 1996–2000 and 2007–11. We found that there were large increases in medical costs, but also large gains in life expectancy. For example, among patients with breast cancer who received physician-administered drugs, lifetime costs — including costs for outpatient and inpatient care — increased by $72,000 and life expectancy increased by thirteen months. Changes in life expectancy and costs were much smaller among patients who did not receive these drugs.
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A Doctor Will See You Now: Physician-Patient Relationships and Clinical Decisions
Erin Johnson et al.
NBER Working Paper, September 2016
Abstract:
We estimate the effect of physician-patient relationships on clinical decisions in a setting where the treating physician is as good as randomly assigned. OBs are 25% (4 percentage points) more likely to perform a C-section when delivering patients with whom they have a pre-existing clinical relationship (their “own patients”) than when delivering patients with whom they had no prior relationship. OBs’ decisions are consistent with receiving greater disutility from their own patients’ difficult labors. After a string of difficult labors, OBs are more likely to perform C-sections on their own patients, and this can explain the entire own patient effect.
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Hospital Advertising, Competition, and HCAHPS: Does It Pay to Advertise?
John Huppertz et al.
Health Services Research, forthcoming
Data Sources/Study Setting: We examined media advertising expenditures by 2,142 acute care hospitals in 209 markets in the United States. Data on hospital characteristics, location, and revenue came from CMS reports; system ownership was obtained from the American Hospital Association. Advertising data came from Kantar Media. HCAHPS data were obtained from HospitalCompare.
Principal Findings: In competitive markets (HHI below 1,000), hospital advertising predicted HCAHPS global measures. A 1-percent increase in advertising was associated with a 1.173-percent increase in patients rating the hospital a “9” or “10” on the HCAHPS survey and a 1.540-percent increase in patients who “definitely” would recommend the hospital. In concentrated markets, this association was not significant.
Conclusions: In competitive markets, hospitals that spend more on advertising earn higher HCAHPS ratings on global measures.
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Strategic Patient Discharge: The Case of Long-Term Care Hospitals
Paul Eliason et al.
NBER Working Paper, September 2016
Abstract:
Medicare's prospective payment system for long-term acute-care hospitals (LTCHs) gives providers modest reimbursements for short patient stays before jumping discontinuously to a large lump-sum payment after a pre-specified number of days. Using Medicare claims data, we show that LTCHs strategically discharge patients after they exceed the large-payment threshold. We find this behavior is more common among for-profit facilities, facilities acquired by leading LTCH chains, and facilities located within standard acute-care hospitals. Using a dynamic structural model, we evaluate counterfactual payment policies recently considered as alternatives for the existing scheme and find that they would provide substantial savings for CMS.
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Eric Lammers & Catherine McLaughlin
Health Services Research, forthcoming
Data Sources: American Hospital Association (AHA) General Survey and Information Technology Supplement, Health Information Management Systems Society (HIMSS) Analytics survey, SK&A Information Services, and the Centers for Medicare & Medicaid Services (CMS) Chronic Conditions Data Warehouse Geographic Variation Database for 2010 through 2013.
Study Design: Fixed effects model comparing associations between hospital referral region (HRR) level measures of hospital and physician EHR penetration and annual Medicare expenditures for beneficiaries with one of four chronic conditions. Calculated hospital penetration rates as the percentage of Medicare discharges from hospitals that satisfied criteria analogous to Meaningful Use (MU) Stage 1 requirements and physician rates as the percentage of physicians using ambulatory care EHRs.
Principal Findings: An increase in the hospital penetration rate was associated with a small but statistically significant decrease in total Medicare and Medicare Part A acute care expenditures per beneficiary. An increase in physician EHR penetration was also associated with a significant decrease in total Medicare and Medicare Part A acute care expenditures per beneficiary as well as a decrease in Medicare Part B expenditures per beneficiary. For the study population, we estimate approximately $3.8 billion in savings related to hospital and physician EHR adoption during 2010–2013. We also found that an increase in physician EHR penetration was associated with an increase in lab test expenses.
Conclusions: Health care markets that had steeper increases in EHR penetration during 2010–2013 also had steeper decreases in total Medicare and acute care expenditures per beneficiary. Markets with greater increases in physician EHR had greater declines in Medicare Part B expenditures per beneficiary.
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Health plan type variations in spells of health care treatment
Randall Ellis & Wenjia Zhu
American Journal of Health Economics, forthcoming
Abstract:
This paper analyzes 30-day “treatment spells” - fixed length periods that commence with a service after a gap in provider contact - to examine how health care utilization and spending of insured employees at large firms are influenced by health plan types. We focus on differences between preferred provider organizations (PPOs) and two recent innovations: plans that feature a narrow panel of providers, and plans that allow free choice of providers but increase demand-side cost sharing: consumer-driven/high-deductible health plans. Health plan effect estimates change dramatically after controlling for endogenous plan type choice, and individual fixed effects. With these controls, narrow panel plans reduce the probability of new treatment spells relative to PPOs by 34 percent with little effect on chronic, repeat visit spells. Visit reductions are more concentrated in less severe conditions in narrow network plans, hence diagnostic coding on the remaining patients increases. We find no evidence that either narrow panel or higher cost sharing plans pay lower prices per procedure or have less intensive treatment given initiation of treatment. With controls, consumer-driven/high-deductible health plans are associated with higher total spending on procedures than PPO plans.
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Daeyong Lee
Economics Letters, October 2016, Pages 32–37
Abstract:
This article examines the effects of the health insurance coverage mandate for young adults on household precautionary savings by focusing on the Affordable Care Act (ACA) of 2010. The ACA dependent coverage mandate allows young adults to remain on their parents’ health insurance plans until their 26th birthday. Using the Survey of Income and Program Participation data, I find that the ACA mandate reduced precautionary savings for households with both parental employer-sponsored health insurance and dependent children aged 19–25 years. These households significantly reduced liquid assets by $897 after ACA, but they did not reduce savings in tax-deferred accounts or real estate assets.
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Mark Shepard
NBER Working Paper, September 2016
Abstract:
Health insurers increasingly compete on their covered networks of medical providers. Using data from Massachusetts’ pioneer insurance exchange, I find substantial adverse selection against plans covering the most prestigious and expensive “star” hospitals. I highlight a theoretically distinct selection channel: these plans attract consumers loyal to the star hospitals and who tend to use their high-price care when sick. Using a structural model, I show that selection creates a strong incentive to exclude star hospitals but that standard policy solutions do not improve net welfare. A key reason is the connection between selection and moral hazard in star hospital use.
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Medication Costs and Adherence of Treatment Before and After the Affordable Care Act: 1999–2015
Jae Kennedy & Elizabeth Geneva Wood
American Journal of Public Health, October 2016, Pages 1804-1807
Abstract:
To examine national changes in rates of cost-related prescription nonadherence (CRN) by age group, we used data from the 1999–2015 Sample Adult and Sample Child National Health Interview Surveys (n = 768 781). In a logistic regression analysis of 2015 data, we identified subgroups at risk for cost-related nonadherence. The proportion of all Americans who did not fill a prescription in the previous 12 months because they could not afford it grew from 1999 to 2009, peaking at 8.3% at the height of the Great Recession and dropping to 5.2% by 2015. CRN among seniors, however, peaked in 2004 at 5.4% and dropped to 3.6% after implementation of Medicare Part D in 2006. CRN is responsive to improved access related to implementation of Medicare Part D and the Affordable Care Act.
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Trends in Hospital Inpatient Admissions Following Early Medicaid Expansion in California
Peter Cunningham, Lindsay Sabik & Ali Bonakdar Tehrani
Medical Care Research and Review, forthcoming
Abstract:
The Affordable Care Act is expected to profoundly affect inpatient hospital utilization, both as a result of expansions in insurance coverage as well as payment and delivery system reforms. The objective of this study is to examine changes in inpatient utilization between 2010 and 2013 in California, following a Medicaid expansion and implementation of the Delivery System Reform Incentive Payment program. Findings show that between 2010 and 2013: (a) the overall number of inpatient admissions increased, mainly because an increase in Medicaid admissions exceeded the decrease in uninsured admissions; (b) the number of preventable admissions did not change; (c) preventable admissions decreased at safety net hospitals that received Delivery System Reform Incentive Payment funds relative to other safety net hospitals. The results suggest that delivery system reforms may help offset the upward pressures on utilization and costs due to coverage expansions.
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Quality rating and private-prices: Evidence from the nursing home industry
Sean Shenghsiu Huang & Richard Hirth
Journal of Health Economics, December 2016, Pages 59–70
Abstract:
We use the rollout of the five-star rating of nursing homes to study how private-pay prices respond to quality rating. We find that star rating increases the price differential between top- and bottom-ranked facilities. On average, prices of top-ranked facilities increased by 4.8 to 6.0 percent more than the prices of bottom-ranked facilities. We find stronger price effects in markets that are less concentrated where consumers may have more choices of alternative nursing homes. Our results suggest that with simplified design and when markets are less concentrated, consumers are more responsive to quality reporting.
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Michael McCue
Medical Care Research and Review, forthcoming
Abstract:
To allow for greater coverage of the uninsured, the Affordable Care Act expanded Medicaid coverage in 2014. Accessing financial data of state health insurers from the National Association of Insurance Commissioners, this data trend study compares the financial performance and solvency of Medicaid-focused health insurers prior to and after the first year expansion of Medicaid coverage. After the first year of Medicaid expansion, there was a significant increase in operating profit margin ratio for Medicaid-focused health insurers within expansion states. Lower medical loss ratio as well as no change in administrative costs contributed to this profitable position. The risk-based capital ratio for solvency increased significantly for health insurers in nonexpansion states while there was no change in this ratio for health insurers in expansion states. Conversely, the other important solvency ratio of cash flow margin increased significantly for health insurers in expansion states but not for insurers in nonexpansion states.
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Does medical malpractice law improve health care quality?
Michael Frakes & Anupam Jena
Journal of Public Economics, forthcoming
Abstract:
We assess the potential for medical liability forces to deter medical errors and improve health care treatment quality, identifying liability's influence by drawing on variations in the manner by which states formulate the negligence standard facing physicians. Using hospital discharge records from the National Hospital Discharge Survey and clinically-validated quality metrics inspired by the Agency for Health Care Research and Quality, we find evidence suggesting that treatment quality may improve upon reforms that expect physicians to adhere to higher quality clinical standards. We do not find evidence, however, suggesting that treatment quality may deteriorate following reforms to liability standards that arguably condone the delivery of lower quality care. Similarly, we do not find evidence of deterioration in health care quality following remedy-focused liability reforms such as caps on non-economic damages awards.
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The relationship between the markets for health insurance and medical malpractice insurance
Bradley Karl, Patricia Born & Kip Viscusi
Applied Economics, Fall 2016, Pages 5348-5363
Abstract:
This article evaluates the interdependence of medical malpractice insurance markets and health insurance markets. Prior research has addressed the performance of these markets, individually, without specifically quantifying the extent to which they are linked. Increasing levels of health insurance losses could increase the scale of potential malpractice claims, boosting medical malpractice losses, or could embody an improvement in medical care quality, which will reduce malpractice losses. Our results for a state panel data set from 2002 to 2009 demonstrate that health insurance losses are negatively related to medical malpractice insurance losses. An additional dollar of health insurance losses is associated with a $0.01–$0.05 reduction in medical malpractice losses. These findings have potentially important implications for assessments of the net cost of health insurance policies.
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Tyler Winkelman et al.
Journal of General Internal Medicine, forthcoming
Design: Repeated and pooled cross-sectional analyses of data from the National Survey on Drug Use and Health (NSDUH).
Participants: Nationally representative sample of 15,899 adults age 19–64 years between 2008 and 2014 with a history of justice involvement during the prior 12 months.
Key results: The dependent coverage mandate was associated with a 13.0 percentage point decline in uninsurance among justice-involved individuals age 19–25 years (p < 0.001). Following Medicaid expansion, uninsurance declined among justice involved individuals of all ages by 9.7 percentage points (p < 0.001), but remained 16.3 percentage points higher than uninsurance rates for individuals without justice involvement (p < 0.001). In pooled analyses, Medicaid, relative to uninsurance and private insurance, was associated with significantly higher treatment rates for illicit drug abuse/dependence and depression.
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Laura Dummit et al.
Journal of the American Medical Association, 27 September 2016, Pages 1267-1278
Importance: Bundled Payments for Care Improvement (BPCI) is a voluntary initiative of the Centers for Medicare & Medicaid Services to test the effect of holding an entity accountable for all services provided during an episode of care on episode payments and quality of care.
Objective: To evaluate whether BPCI was associated with a greater reduction in Medicare payments without loss of quality of care for lower extremity joint (primarily hip and knee) replacement episodes initiated in BPCI-participating hospitals that are accountable for total episode payments (for the hospitalization and Medicare-covered services during the 90 days after discharge).
Design, Setting, and Participants: A difference-in-differences approach estimated the differential change in outcomes for Medicare fee-for-service beneficiaries who had a lower extremity joint replacement at a BPCI-participating hospital between the baseline (October 2011 through September 2012) and intervention (October 2013 through June 2015) periods and beneficiaries with the same surgical procedure at matched comparison hospitals.
Results: There were 29 441 lower extremity joint replacement episodes in the baseline period and 31 700 in the intervention period (mean [SD] age, 74.1 [8.89] years; 65.2% women) at 176 BPCI-participating hospitals, compared with 29 440 episodes in the baseline period (768 hospitals) and 31 696 episodes in the intervention period (841 hospitals) (mean [SD] age, 74.1 [8.92] years; 64.9% women) at matched comparison hospitals. The BPCI mean Medicare episode payments were $30 551 (95% CI, $30 201 to $30 901) in the baseline period and declined by $3286 to $27 265 (95% CI, $26 838 to $27 692) in the intervention period. The comparison mean Medicare episode payments were $30 057 (95% CI, $29 765 to $30 350) in the baseline period and declined by $2119 to $27 938 (95% CI, $27 639 to $28 237). The mean Medicare episode payments declined by an estimated $1166 more (95% CI, −$1634 to −$699; P < .001) for BPCI episodes than for comparison episodes, primarily due to reduced use of institutional postacute care. There were no statistical differences in the claims-based quality measures, which included 30-day unplanned readmissions (−0.1%; 95% CI, −0.6% to 0.4%), 90-day unplanned readmissions (−0.4%; 95% CI, −1.1% to 0.3%), 30-day emergency department visits (−0.1%; 95% CI, −0.7% to 0.5%), 90-day emergency department visits (0.2%; 95% CI, −0.6% to 1.0%), 30-day postdischarge mortality (−0.1%; 95% CI, −0.3% to 0.2%), and 90-day postdischarge mortality (−0.0%; 95% CI, −0.3% to 0.3%).
Conclusions and Relevance: In the first 21 months of the BPCI initiative, Medicare payments declined more for lower extremity joint replacement episodes provided in BPCI-participating hospitals than for those provided in comparison hospitals, without a significant change in quality outcomes. Further studies are needed to assess longer-term follow-up as well as patterns for other types of clinical care.
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Medicare Reform: Estimation of the Impacts of Premium Support Systems
Awi Federgruen & Lijian Lu
Columbia University Working Paper, September 2016
Abstract:
Medicare reform plans advocate reducing the capitation levels or determining these endogenously as a function of the premium bids, for example, the lowest, the second-lowest or a weighted average of the bids. Based on a price competition model tailored toward this market, and actual 2010 county-by county data, we estimate the impact such reforms would have on the plans’ market shares, equilibrium premia, the government’s and the beneficiaries’ costs. We employ two methodologies to derive the model parameters. The predicted impacts are remarkably consistent and reveal, for example, that government costs could be reduced by 16.5%-21%.
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Financial Loss for Inpatient Care of Medicaid-Insured Children
Jeffrey Colvin et al.
JAMA Pediatrics, forthcoming
Importance: Medicaid payments tend to be less than the cost of care. Federal Disproportionate Share Hospital (DSH) payments help hospitals recover such uncompensated costs of Medicaid-insured and uninsured patients. The Patient Protection and Affordable Care Act reduces DSH payments in anticipation of fewer uninsured patients and therefore decreased uncompensated care. However, unlike adults, few hospitalized children are uninsured, while many have Medicaid coverage. Therefore, DSH payment reductions may expose extensive Medicaid financial losses for hospitals serving large absolute numbers of children.
Design, Setting, and Participants: This retrospective cross-sectional analysis evaluated Medicaid-insured hospital discharges of patients 20 years and younger from 23 states in the 2009 Kids’ Inpatient Database. The dates of the analysis were March to September 2015. Hospitals were categorized as freestanding children’s hospitals (FSCHs), children’s hospitals within general hospitals, non–children’s hospital teaching hospitals, and non–children’s hospital nonteaching hospitals. Financial records of FSCHs in the data set were used to estimate the proportion of Medicaid losses recovered through DSH payments.
Results: The 2009 Kids’ Inpatient Database study population included 1485 hospitals and 843 725 Medicaid-insured discharges. Freestanding children’s hospitals had a higher median number of Medicaid-insured discharges (4082; interquartile range [IQR], 3524-5213) vs non–children’s hospital teaching hospitals (674; IQR, 258-1414) and non–children’s hospital nonteaching hospitals (161; IQR, 41-420). Freestanding children’s hospitals had the largest median Medicaid losses from pediatric inpatient care (−$9 722 367; IQR, −$16 248 369 to −$2 137 902). Smaller losses were experienced by non–children’s hospital teaching hospitals (−$204 100; IQR, −$1 014 100 to $14 700]) and non–children’s hospital nonteaching hospitals (−$28 310; IQR, −$152 370 to $9040]). Disproportionate Share Hospital payments to FSCHs reduced their Medicaid losses by almost half.
Conclusions and Relevance: Estimated financial losses from pediatric inpatients covered by Medicaid were much larger for FSCHs than for other hospital types. For children’s hospitals, small anticipated increases in insured children are unlikely to offset the reductions in DSH payments.
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Average surgeon-level volume and hospital performance
Gregory Stock, Christopher McDermott & Gopesh Anandc
International Journal of Production Economics, December 2016, Pages 253–262
Abstract:
This study evaluates the relationships among the average number of procedures per surgeon, calculated across the entire hospital, and multiple dimensions of overall hospital operational performance. Hospital administrative data from 154 public and private hospitals in the state of New York were augmented by data from the Centers for Medicare and Medicaid Services. The data included administrative surgical records across all clinical areas for the year 2009. The study used maximum likelihood estimation path analysis to simultaneously test the relationships among average surgical volume and risk-adjusted length of stay, cost, and mortality, across all surgical procedures and clinical areas. The results showed that higher average volume per surgeon, computed across all surgical procedures in a hospital, was directly related to lower risk-adjusted length of stay, and indirectly related to lower risk-adjusted cost and mortality. A higher average number of procedures per surgeon may provide greater hospital-specific experience, including interactions among surgical teams and with other areas of the hospital, leading to better overall outcomes. This study advances the literature in health care operations management by examining the relationships among surgical volume, across all clinical areas and all types of surgeries, and three different dimensions of hospital performance.
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Do hospital-owned skilled nursing facilities provide better post-acute care quality?
Momotazur Rahman, Edward Norton & David Grabowski
Journal of Health Economics, December 2016, Pages 36–46
Abstract:
As hospitals are increasingly held accountable for patients' post-discharge outcomes under new payment models, hospitals may choose to acquire skilled nursing facilities (SNFs) to better manage these outcomes. This raises the question of whether patients discharged to hospital-based SNFs have better outcomes. In unadjusted comparisons, hospital-based SNF patients have much lower Medicare utilization in the 180 days following discharge relative to freestanding SNF patients. We solved the problem of differential selection into hospital-based and freestanding SNFs by using differential distance from home to the nearest hospital with a SNF relative to the distance from home to the nearest hospital without a SNF as an instrument. We found that hospital-based SNF patients spent roughly 5 more days in the community and 6 fewer days in the SNF in the 180 days following their original hospital discharge with no significant effect on mortality or hospital readmission.
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Bruce Lambert et al.
Health Services Research, forthcoming
Objective: To determine whether a communication and resolution approach to patient harm is associated with changes in medical liability processes and outcomes.
Data Sources/Study Setting: Administrative, safety, and risk management data from the University of Illinois Hospital and Health Sciences System, from 2002 to 2014.
Study Design: Single health system, interrupted time series design. Using Mann–Whitney U tests and segmented regression models, we compared means and trends in incident reports, claims, event analyses, patient communication consults, legal fees, costs per claim, settlements, and self-insurance expenses before and after the implementation of the “Seven Pillars” communication and resolution intervention.
Principal Findings: The intervention nearly doubled the number of incident reports, halved the number of claims, and reduced legal fees and costs as well as total costs per claim, settlement amounts, and self-insurance costs.
Conclusions: A communication and optimal resolution (CANDOR) approach to adverse events was associated with long-lasting, clinically and financially significant changes in a large set of core medical liability process and outcome measures.
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Estimating the Value of Public Insurance Using Complementary Private Insurance
Marika Cabral & Mark Cullen
NBER Working Paper, August 2016
Abstract:
The welfare associated with public insurance is often difficult to quantify. Relative to private insurance, a fundamental difficulty is that public insurance is typically compulsory, so the demand for coverage is unobserved and thus cannot be used to analyze welfare. However, in many public insurance settings, individuals can purchase private insurance to supplement their public coverage. In this paper, we outline an approach to use data and variation from private complementary insurance to quantify welfare associated with several counterfactuals related to compulsory public insurance. Using administrative data from one large firm on employee long-term disability insurance, we then apply this approach empirically to quantify the value of disability insurance among this population. We use premium variation among the employer-provided disability policies to quantify the surplus that would be generated by increasing the replacement rate of disability insurance for our sample population -- a counterfactual that is within the set of insurance contracts observed in this setting. In addition, we estimate a lower bound on the surplus generated by public disability insurance in this context. Our findings suggest that public disability insurance generates substantial surplus for this population, and there may be gains to increasing the generosity of coverage in this context.
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Decreasing Malpractice Claims by Reducing Preventable Perinatal Harm
William Riley et al.
Health Services Research, forthcoming
Objective: To evaluate the association of improved patient safety practices with medical malpractice claims and costs in the perinatal units of acute care hospitals.
Data Sources: Malpractice and harm data from participating hospitals; litigation records and medical malpractice claims data from American Excess Insurance Exchange, RRG, whose data are managed by Premier Insurance Management Services, Inc. (owned by Premier Inc., a health care improvement company).
Principal Findings: There is a significant reduction in the number of perinatal malpractice claims paid, losses paid, and indemnity payments (43.9 percent, 77.6 percent, and 84.6 percent, respectively) following interventions to improve perinatal patient safety and reduce perinatal harm. This compares with no significant reductions in the nonperinatal claims in the same hospitals during the same time period.
Conclusions: The number of perinatal malpractice claims and dollar amount of claims payments decreased significantly in the participating hospitals, while there was no significant decrease in nonperinatal malpractice claims activity in the same hospitals.