Healthy Money
Medicare Drug Price Negotiations May Not Reduce Patient Cost Sharing for Most Users of Targeted Drugs
Debra Lederman, Alexander Olssen & Mark Pauly
NBER Working Paper, June 2025
Abstract:
This paper studies two major changes in the financing of Part D drugs for Medicare due to the Inflation Reduction Act (IRA). Effective 2025 it capped out of pocket (OOP) payments at $2000 per year, and effective 2026 it will pay lower prices (negotiated by Medicare) for 10 targeted costly and effective drugs. This paper uses a large representative claims sample to explore the combined effect of these two provisions on the marginal cost sharing that affects beneficiaries’ access to these drugs. While many beneficiaries will be expected to see lower marginal OOP prices, we find that a majority of those using the targeted drugs will face either no change in their marginal OOP or, in a large fraction of cases, an increase in their dollar cost sharing per additional unit of use. This happens even when beneficiaries see reductions in their annual OOP cost because of the nonlinear nature of cost sharing in the Medicare Part D drug.
Private Equity Among US Psychiatric Hospitals
Morgan Shields, Yuanyuan Yang & Susan Busch
JAMA Psychiatry, forthcoming
Design, Setting, and Participants: In this cross-sectional study, a novel dataset of PE ownership of psychiatric hospitals in the US was constructed using industry sources and web searches. Characteristics of 87 PE-owned psychiatric hospitals in 2021 were compared with 530 non–PE-owned psychiatric hospitals. Regression models were used to estimate adjusted differences in hospital staffing and quality. Participants included all Medicare-participating freestanding psychiatric hospitals in the US (N = 617). These data were analyzed from September 2023 to October 2024.
Results: By 2021, of the 617 freestanding psychiatric hospitals in the US, 87 (14.10%), representing 4660 beds (6.30%), were PE owned, with two-thirds of PE-owned facilities in the southern US (63.22%). In adjusted models, PE ownership was associated with significantly lower staff per patient day among registered nurses (0.12 vs 0.15; P = .048 and medical social workers (0.02 vs 0.04; P = .005). Yet, PE-owned facilities performed better on quality measures, including lower reported hours of restraint use (0.03 vs 0.24 hours per 1000 patient hours; P < .001), 30-day readmissions (19.40% vs 20.16%; P = .047), and higher 7-day (29.34% vs 26.28%; P = .03) and 30-day (52.92% vs 49.08%; P = .01) follow-up visits.
Medicaid Coverage of Psychological Treatment Prevents Crime
Thomas Hegland
Health Economics, forthcoming
Abstract:
Does expanding access to mental healthcare reduce crime rates? Prior research indicates that targeted psychological treatment programs prevent criminal behavior, but whether expanding access to treatment prevents crime depends on who seeks treatment and whether the treatments people seek for themselves are effective. To shed light on this question, I study five states that expanded their Medicaid programs to cover adult psychological treatment between 2004 and 2010. I show that the coverage expansions reduced the index crime rate by 7.8% of the pre-coverage expansion mean crime rate. The social cost of just the property crimes averted conservatively total to 10% of the total cost of non-disabled, non-elderly adult Medicaid spending during this period, and appear to be of similar magnitude to the cost of psychological treatment coverage itself. Beyond effects on crime, the coverage expansions increased employment in industries related to psychological treatment without generating offsetting reductions in employment among mental health specialist physicians or at physician's offices more broadly. Overall, my results indicate that broad expansions in access to mental healthcare can reduce crime rates, even in the absence of targeted efforts to encourage take-up among persons at a high risk of criminal behavior or efforts to tailor the services covered toward a goal of crime-prevention.
The impacts of shortage area designations on mortality
Jessica Sauve-Syed
Contemporary Economic Policy, forthcoming
Abstract:
Spatial mismatch between patients and physicians constrains access to medical care and contributes to differential health outcomes. Health Professional Shortage Area (HPSA) designations identify areas where there are too few primary care physicians to treat the local population. State and federal programs are used to incentivize an increase in primary care services for designated communities. Propensity score matching methods estimate the effect of county-level primary care HPSA designation on mortality. Designated counties experience an average three percent decline in overall mortality, a six percent decline in the cancer mortality rate and a 13% decline in the stroke mortality rate.
Information Disclosure and Peer Innovation: Evidence from Mandatory Reporting of Clinical Trials
Po-Hsuan Hsu et al.
Journal of Financial and Quantitative Analysis, forthcoming
Abstract:
We document significant increases in the suspension of ongoing drug projects following the passage of the Food and Drug Administration Amendments Act of 2007 (FDAAA), which mandates that pharmaceutical companies publicly disclose detailed clinical study results. Our results suggest a causal interpretation through difference-in-differences analyses that exploit variations in pre-FDAAA information environments. We also show evidence that fewer new projects are initiated after the FDAAA. Drug developers’ learning from peer failures is the primary mechanism, further amplified by financial constraints. We also examine the consequences of enhanced information disclosure, including changes in firm investment efficiency, drug quality, and disease morbidity.
Towards conversational diagnostic artificial intelligence
Tao Tu et al.
Nature, 12 June 2025, Pages 442-450
Abstract:
At the heart of medicine lies physician–patient dialogue, where skillful history-taking enables effective diagnosis, management and enduring trust. Artificial intelligence (AI) systems capable of diagnostic dialogue could increase accessibility and quality of care. However, approximating clinicians’ expertise is an outstanding challenge. Here we introduce AMIE (Articulate Medical Intelligence Explorer), a large language model (LLM)-based AI system optimized for diagnostic dialogue. AMIE uses a self-play-based simulated environment with automated feedback for scaling learning across disease conditions, specialties and contexts. We designed a framework for evaluating clinically meaningful axes of performance, including history-taking, diagnostic accuracy, management, communication skills and empathy. We compared AMIE’s performance to that of primary care physicians in a randomized, double-blind crossover study of text-based consultations with validated patient-actors similar to objective structured clinical examination. The study included 159 case scenarios from providers in Canada, the United Kingdom and India, 20 primary care physicians compared to AMIE, and evaluations by specialist physicians and patient-actors. AMIE demonstrated greater diagnostic accuracy and superior performance on 30 out of 32 axes according to the specialist physicians and 25 out of 26 axes according to the patient-actors. Our research has several limitations and should be interpreted with caution. Clinicians used synchronous text chat, which permits large-scale LLM–patient interactions, but this is unfamiliar in clinical practice. While further research is required before AMIE could be translated to real-world settings, the results represent a milestone towards conversational diagnostic AI.
Stipends From Hospitals To Emergency Medicine And Anesthesiology Clinicians Increased In California, 2002–21
Erin Duffy, Sarah Green & Erin Trish
Health Affairs, June 2025, Pages 754-760
Abstract:
In lieu of hiring physicians, hospitals often contract with medical groups and pay stipends to clinicians to supplement professional services reimbursements from insurers and patients. We measured the prevalence and magnitude of stipends from California hospitals to emergency medicine and anesthesiology clinicians in Hospital Annual Financial Disclosure Reports from the period 2002–21. The prevalence and average magnitudes of stipends, even standardizing for service volume, have risen in both specialties. In 2021, stipends to emergency medicine and anesthesiology clinicians were paid by 81 percent and 57 percent of hospitals in California, respectively. The mean amount hospitals spent on stipends were $4.1 million for emergency medicine and $2.9 million for anesthesiology annually in 2021, among hospitals with any stipend. Standardizing for service volume, the mean amount across all hospitals was $91.42 per emergency visit and $40.11 per fifteen minutes of anesthesiology services in 2021. These findings inform policy discussions on hospital labor costs and professional reimbursement.
Administrative Fragmentation in Health Care
Riley League & Maggie Shi
NBER Working Paper, May 2025
Abstract:
This paper examines the impact of reducing the administrative fragmentation of billing and payment, one commonly cited cause of inefficiency in US health care. We study a Medicare reform that consolidated billing processes across service types, using its staggered rollout and hospitals’ prior levels of administrative fragmentation for identification. The reform dramatically reduced fragmentation and modestly lowered claim denial rates but had no effect on spending, post-discharge care, or rehospitalizations. It also did not affect administrative costs or technology adoption. These findings suggest that addressing administrative fragmentation alone is unlikely to significantly improve health care efficiency.
CMS’s Hospice Star Rating System Limited By Missing Data
Amanda Chen & David Grabowski
Health Affairs, June 2025, Pages 716-721
Abstract:
Two-thirds of US hospices were not given a star rating when the Centers for Medicare and Medicaid Services (CMS) introduced its hospice star rating system in 2022. Since then, the share of hospices without a star rating has steadily increased, including through the most recent reporting period of 2024. This suggests that the CMS hospice star rating is having limited impact. We provide recommendations for CMS and other policy makers to improve the value for hospice patients of publicly reported star ratings.