Surprise medical bill

Kevin Lewis

March 17, 2017

A Kinked Health Insurance Market: Employer-Sponsored Insurance under the Cadillac Tax

Coleman Drake et al.

American Journal of Health Economics, forthcoming

The Affordable Care Act imposes a 40 percent excise tax on high-cost “Cadillac” health insurance plans in excess of defined thresholds beginning in 2020. Using economic theory and a microsimulation model, we predict how employers will respond to the Cadillac tax by adjusting wages and health insurance benefits. In its first year, 13.34 percent of individual and 16.73 percent of family employer-sponsored health insurance plan holders will be affected by the Cadillac tax; these percentages will increase to 35.33 and 42.01 percent, respectively, by 2025. Over 99 percent of those affected will reduce their health insurance benefits to the thresholds. Effectively, the Cadillac Tax will impose a hard cap on health insurance benefits, causing a clustering of benefits at the thresholds and a sharp reduction in the variance of benefits. Revenue from the Cadillac tax through 2025 will total $204 billion, all but $42 million of which will stem from “indirect” revenues – health insurance benefits shifted into taxable wages. This shift will increase wage growth and decrease benefit growth for those affected by the Cadillac tax. We simulate a cap on the tax exclusion of employer-sponsored insurance premiums and conduct sensitivity analyses with linear regression metamodeling.


Sticking Points: Common-Agency Problems and Contracting in the U.S. Healthcare System

Brigham Frandsen, Michael Powell & James Rebitzer

NBER Working Paper, February 2017

We propose a "common-agency" model for explaining inefficient contracting in the U.S. healthcare system. In our setting, common-agency problems arise when multiple payers seek to motivate a shared provider to invest in improved care coordination. Our approach differs from other common-agency models in that we analyze "sticking points," that is, equilibria in which payers coordinate around Pareto-dominated contracts that do not offer providers incentives to implement efficient investments. These sticking points offer a straightforward explanation for three long observed but hard to explain features of the U.S. healthcare system: the ubiquity of fee-for-service contracting arrangements outside of Medicare; problematic care coordination; and the historic reliance on small, single specialty practices rather than larger multi-specialty group practices to deliver care. The common-agency model also provides insights on the effects of policies, such as Accountable Care Organizations, that aim to promote more efficient forms of contracting between payers and providers.


Oregon’s Medicaid Reform And Transition To Global Budgets Were Associated With Reductions In Expenditures

John McConnell et al.

Health Affairs, March 2017, Pages 451-459

In 2012 Oregon initiated an ambitious delivery system reform, moving the majority of its Medicaid enrollees into sixteen coordinated care organizations, a type of Medicaid accountable care organization. Using claims data, we assessed measures of access, appropriateness of care, utilization, and expenditures for five service areas (evaluation and management, imaging, procedures, tests, and inpatient facility care), comparing Oregon to the neighboring state of Washington. Overall, the transformation into coordinated care organizations was associated with a 7 percent relative reduction in expenditures across the sum of these services, attributable primarily to reductions in inpatient utilization. The change to coordinated care organizations also demonstrated reductions in avoidable emergency department visits and improvements in some measures of appropriateness of care, but also exhibited reductions in primary care visits, a potential area of concern. Oregon’s coordinated care organizations could provide lessons for controlling health care spending for other state Medicaid programs.


State Health Insurance Mandates and Labor Market Outcomes: New Evidence on Old Questions

Yaa Akosa Antwi & Johanna Catherine Maclean

NBER Working Paper, February 2017

In this study we re-visit the relationship between private health insurance mandates, access to employer-sponsored health insurance, and labor market outcomes. Specifically, we model employer-sponsored health insurance access and labor market outcomes across the lifecycle as a function of the number of high cost mandates in place at labor market entrance. Our analysis draws on a long panel of workers from the National Longitudinal Survey of Youth 1979 and exploits variation in five high cost state mandates between 1972 and 1989. Four principal findings emerge from our analysis. First, we find no strong evidence that high cost state health insurance mandates discourage employers from offering insurance to employees. Second, employers adjust both wages and labor demand to offset mandate costs, suggesting that employees place some value on the mandated benefits. Third, the effects are persistent, but not permanent. Fourth, the effects are heterogeneous across worker types. These findings have implications for thinking through the full labor market effects of health insurance expansions.


Medicaid, Family Spending, and the Financial Implications of Crowd-Out

Marcus Dillender

Journal of Health Economics, May 2017, Pages 1–16

A primary purpose of health insurance is to protect families from medical expenditure risk. Despite this goal and despite the fact that research has found that Medicaid can crowd out private coverage, little is known about the effect of Medicaid on families’ spending patterns. This paper implements a simulated instrumental variables strategy with data from the Consumer Expenditure Survey to estimate the effect of an additional family member becoming eligible for Medicaid on family-level health insurance coverage and spending. The results indicate that an additional family member becoming eligible for Medicaid increases the number of people in the family with Medicaid coverage by about 0.135 to 0.142 and decreases the likelihood that a family has any medical spending in a quarter by 2.7 percentage points. As previous research often finds with different data sets, I find evidence that Medicaid expansions crowd out some private coverage. Unlike most other data sets, the Consumer Expenditure Survey allows for considering the financial implications of crowd-out. The results indicate that families that transition from private coverage to Medicaid are able to spend significantly less on health insurance expenses, meaning Medicaid expansions can be welfare improving for families even when crowd-out occurs.


The Effect of Health Insurance on Home Payment Delinquency: Evidence from ACA Marketplace Subsidies

Emily Gallagher, Radhakrishnan Gopalan & Michal Grinstein-Weiss

Washington University in St. Louis Working Paper, February 2017

We use administrative income tax data coupled with survey responses from roughly five thousand households living near the federal poverty line (FPL) to estimate the effect of health insurance coverage on rent and mortgage delinquency. Our identification strategy centers on states that did not expand Medicaid as part of the Affordable Care Act (ACA). We employ a fuzzy Regression Discontinuity (RD) design, exploiting the income eligibility threshold to receive Marketplace subsidies in those states (100% FPL) as our source of exogenous variation in insurance coverage. Marketplace subsidies result in an 11–12 percentage point increase in the prevalence of private health insurance. Households with private insurance are 40–63 percentage points less likely to be delinquent on home payments as compared to similar uninsured households. Consistent with health insurance protecting household liquidity against health shocks, medical spending is a smaller part of liquid assets for insured households that experience a health shock.


Do People with Health Insurance Coverage Who Live in Areas with High Uninsurance Rates Pay More for Emergency Department Visits?

James Kirby & Joel Cohen

Health Services Research, forthcoming

Data Sources: The Medical Expenditure Panel Survey linked to county-level data from the American Community Survey, the Healthcare Cost and Utilization Project, and the Area Health Resources Files.

Study Design: We use a nationally representative sample of emergency department visits that took place between 2009 and 2013 to estimate the association between the percent uninsured in counties and the amount paid for a typical visit. Final estimates come from a diagnosis-level fixed-effects model, with additional controls for a wide variety of visit, individual, and county characteristics.

Principal Findings: Among those with private insurance, we find that an increase of 1 percentage point in the county uninsurance rate is associated with a $20 increase in the mean emergency department payment. No such association is observed among visits covered by other insurance types.


Constraints on Formulary Design Under the Affordable Care Act

Martin Andersen

Health Economics, forthcoming

I study the effect of prescription drug essential health benefits (EHB) requirements from the Affordable Care Act on prescription drug formularies of health insurance marketplace plans. The EHB regulates the number of drugs covered but leaves other dimensions (cost sharing and utilization management) of the formulary unregulated. Using data on almost all formularies in the country, I demonstrate that requiring insurers to cover one additional drug adds 0.22 drugs (3.3%) to the average formulary, mostly owing to firms increasing the number of drugs covered to comply with the EHB requirement. The EHB requirement also increases the probability that a drug is subject to utilization management and is assigned to a higher (more costly) formulary tier. My results suggest that newly covered drugs are 22.3 percentage points more likely to be subject to utilization management, compared to 36.7% for the average covered drug. Using formularies for Medicare Advantage plans, which are subject to uniform, nationwide benefit design standards, and the formulary status of newly approved drugs that do not satisfy the EHB requirement, I reject the hypotheses that consumer demand or effects on plan entry can explain my results.


Recent Evidence on the ACA and Employment: Has the ACA Been a Job Killer? 2016 Update

Bowen Garrett, Robert Kaestner & Anuj Gangopadhyaya

Urban Institute Working Paper, February 2017

This brief examines effects of the Affordable Care Act (ACA) on labor market outcomes using data from the Current Population Survey from 2000 to 2016. Results indicate that through 2016, the ACA had little to no adverse effect on employment and usual hours worked per week. Levels of part-time work (29 or fewer hours per week) have fallen since 2014, but remain at somewhat higher levels than would be expected at this stage of the economic recovery. The higher-than-expected rate of part-time work is driven by increases in voluntary part-time employment. Involuntary part-time employment was lower than expected. These findings suggest that the ACA did not lead to widespread cutbacks in workers’ hours by employers attempting to avoid employer mandate penalties, but may have led some workers to reduce the number of hours they chose to work.


Pediatric and Adult Physician Networks in Affordable Care Act Marketplace Plans

Charlene Wong et al.

Pediatrics, forthcoming

Methods: Data on physician networks, including physician specialty and address, in all 2014 individual marketplace silver plans were aggregated. Networks were quantified as the fraction of providers in the underlying rating area within a state that participated in the network. Narrow networks included none available networks (ie, no providers available in the underlying area) and limited networks (ie, included <10% of the available providers in the underlying area). Proportions of narrow networks between pediatric and adult specialty providers were compared.

Results: Among the 1836 unique silver plan networks, the proportions of narrow networks were greater for pediatric (65.9%) than adult specialty (34.9%) networks (P < .001 for all specialties). Specialties with the highest proportion of narrow networks for children were infectious disease (77.4%) and nephrology (74.0%), and they were highest for adults in psychiatry (49.8%) and endocrinology (40.8%). A larger proportion of pediatric networks (43.8%) had no available specialists in the underlying area when compared with adult networks (10.4%) (P < .001 for all specialties). Among networks with available specialists in the underlying area, a higher proportion of pediatric (39.3%) than adult (27.3%) specialist networks were limited (P < .001 except psychiatry).

Conclusions: Narrow networks were more prevalent among pediatric than adult specialists, because of both the sparseness of pediatric specialists and their exclusion from networks. Understanding narrow networks and marketplace network adequacy standards is a necessary beginning to monitor access to care for children and families.


Does Regulation of Physicians Reduce Health Care Spending?

Scott Barkowski

Southern Economic Journal, forthcoming

The medical community argues that physician fear of legal liability increases health care spending. Theoretically, though, the effect could be positive or negative, and empirical evidence has supported both cases. Previous studies, however, have ignored the fact that physicians face risk from industry oversight groups like state-level medical licensing boards in addition to civil litigation risk. This article addresses this omission by incorporating previously unused data on punishments by oversight groups against physicians, known as adverse actions, along with malpractice payments data to study state-level health care spending. My analysis suggests that, contrary to conventional wisdom, spending does not rise in response to increased risk. An increase in adverse actions of 16 (the year-to-year average) is associated with statistically significant, annual decreases in state spending on hospital care of approximately $22 million, and on prescription drugs of nearly $10 million. Malpractice payments are estimated to have smaller, statistically insignificant effects.


Patient Outcomes at Urban and Suburban Level I Versus Level II Trauma Centers

Amy Kaji et al.

Annals of Emergency Medicine, forthcoming

Study objective: Regionalized systems of trauma care and level verification are promulgated by the American College of Surgeons. Whether patient outcomes differ between the 2 highest verifications, Levels I and II, is unknown. In contrast to Level II centers, Level I centers are required to care for a minimum number of severely injured patients, have immediate availability of subspecialty services and equipment, and demonstrate research, substance abuse screening, and injury prevention. We compare risk-adjusted mortality outcomes at Levels I and II centers.

Methods: This was an analysis of data from the 2012 to 2014 Los Angeles County Trauma and Emergency Medical Information System. The system includes 14 trauma centers: 5 Level I and 9 Level II centers. Patients meeting criteria for transport to a trauma center are routed to the closest center, regardless of verification level. All adult patients (≥15 years) treated at any of the trauma centers were included. Outcomes of patients treated at Level I versus Level II centers were compared with 2 validated risk-adjusted models: Trauma Score–Injury Severity Score (TRISS) and the Haider model.

Results: Adult subjects (33,890) were treated at a Level I center; 29,724, at a Level II center. We found lower overall mortality at Level II centers compared with Level I, using TRISS (odds ratio 0.68; 95% confidence interval 0.59 to 0.78) and Haider (odds ratio 0.84; 95% confidence interval 0.73 to 0.97).

Conclusion: In this cohort of patients treated at urban and suburban trauma centers, treatment at a Level II trauma center was associated with overall risk-adjusted reduced mortality relative to that at a Level I center. In the subset of penetrating trauma, no differences in mortality were found. Further study is warranted to determine optimal trauma system configuration and allocation of resources.


Los Angeles Safety-Net Program eConsult System Was Rapidly Adopted And Decreased Wait Times To See Specialists

Michael Barnett et al.

Health Affairs, March 2017, Pages 492-499

Lack of timely access to specialty care is a significant problem among disadvantaged populations, such as those served by the Los Angeles County Department of Health Services. In 2012 the department implemented an electronic system for the provision of specialty care called the eConsult system, in which all requests from primary care providers for specialty assistance were reviewed by specialists. In many cases, the specialist can address the primary care provider’s question via an electronic dialogue, thereby eliminating the need for the patient to see a specialist in person. We observed rapid growth in the use of eConsult: By 2015 the system was in use by over 3,000 primary care providers, and 12,082 consultations were taking place per month, compared to 86 in the third quarter of 2012. The median time to an electronic response from a specialist was one day, and 25 percent of eConsults were resolved without a specialist visit. Three to four years after implementation, the median time to a specialist appointment decreased significantly, while the volume of visits remained stable. eConsult systems are a promising and sustainable intervention that could improve access to specialist care for underserved patients.


Convenient Access to Professional Interpreters in the Hospital Decreases Readmission Rates and Estimated Hospital Expenditures for Patients With Limited English Proficiency

Leah Karliner, Eliseo Pérez-Stable & Steven Gregorich

Medical Care, March 2017, Pages 199–206

Design: Natural experiment on a medicine floor of an academic hospital.

Participants: Patients age 50 years or above discharged between January 15, 2007 and January 15, 2010.

Exposure: Dual-handset interpreter telephone at every bedside July 15, 2008 to Mar 14, 2009.

Results: Of 8077 discharges, 1963 were for LEP, and 6114 for English proficient patients. There was a significant decrease in observed 30-day readmission rates for the LEP group during the 8-month intervention period compared with 18 months preintervention (17.8% vs. 13.4%); at the same time English proficient readmission rates increased (16.7% vs. 19.7%); results remained significant in adjusted analyses. This improved readmission outcome for the LEP group was not maintained during the subsequent postintervention period when the telephones became less accessible. There was no significant intervention impact on length of stay in either unadjusted or adjusted analyses. After accounting for interpreter services costs, the estimated 119 readmissions averted during the intervention period were associated with estimated monthly hospital expenditure savings of $161,404.

Conclusions: Comprehensive language access represents an important, high value service that all medical centers should provide to achieve equitable, quality healthcare for vulnerable LEP populations.


The Reduction in ED and Hospital Admissions in Medical Home Practices Is Specific to Primary Care–Sensitive Chronic Conditions

Lee Green et al.

Health Services Research, forthcoming

Objective: To determine whether the Patient-Centered Medical Home (PCMH) transformation reduces hospital and ED utilization, and whether the effect is specific to chronic conditions targeted for management by the PCMH in our setting.

Data Sources and Study Setting: All patients aged 18 years and older in 2,218 primary care practices participating in a statewide PCMH incentive program sponsored by Blue Cross Blue Shield of Michigan (BCBSM) in 2009–2012.

Study Design: Quantitative observational study, jointly modeling PCMH-targeted versus other hospital admissions and ED visits on PCMH score, patient, and practice characteristics in a hierarchical multivariate model using the generalized gamma distribution.

Principal Findings: Both hospital and ED utilization were reduced proportionately to PCMH score. Hospital utilization was reduced by 13.9 percent for PCMH-targeted conditions versus only 3.8 percent for other conditions (p = .003), and ED utilization by 11.2 percent versus 3.7 percent (p = .010). Hospital PMPM cost was reduced by 17.2 percent for PCMH-targeted conditions versus only 3.1 percent for other conditions (p < .001), and ED PMPM cost by 9.4 percent versus 3.6 percent (p < .001).

Conclusions: PCMH transformation reduces hospital and ED use, and the majority of the effect is specific to PCMH-targeted conditions.


Direct-To-Consumer Telehealth May Increase Access To Care But Does Not Decrease Spending

Scott Ashwood et al.

Health Affairs, March 2017, Pages 485-491

The use of direct-to-consumer telehealth, in which a patient has access to a physician via telephone or videoconferencing, is growing rapidly. A key attraction of this type of telehealth for health plans and employers is the potential savings involved in replacing physician office and emergency department visits with less expensive virtual visits. However, increased convenience may tap into unmet demand for health care, and new utilization may increase overall health care spending. We used commercial claims data on over 300,000 patients from three years (2011–13) to explore patterns of utilization and spending for acute respiratory illnesses. We estimated that 12 percent of direct-to-consumer telehealth visits replaced visits to other providers, and 88 percent represented new utilization. Net annual spending on acute respiratory illness increased $45 per telehealth user. Direct-to-consumer telehealth may increase access by making care more convenient for certain patients, but it may also increase utilization and health care spending.


The Returns to Nursing: Evidence from a Parental Leave Program

Benjamin Friedrich & Martin Hackmann

NBER Working Paper, February 2017

Nurses comprise the largest health profession. In this paper, we measure the effect of nurses on health care delivery and patient health outcomes across sectors. Our empirical strategy takes advantage of a parental leave program, which led to a sudden, unintended, and persistent 12% reduction in nurse employment. Our findings indicate detrimental effects on hospital care delivery as indicated by an increase in 30-day readmission rates and a distortion of technology utilization. The effects for nursing home care are more drastic. We estimate a persistent 13% increase in nursing home mortality among the elderly aged 85 and older. Our results also highlight an unintended negative consequence of parental leave programs borne by providers and patients.


Home Health Care: Nurse–Physician Communication, Patient Severity, and Hospital Readmission

Michael Pesko et al.

Health Services Research, forthcoming

Data Source/Study Setting: We linked Visiting Nurse Services of New York electronic medical records for patients with congestive heart failure in 2008 and 2009 to hospitalization claims data for Medicare fee-for-service beneficiaries.

Study Design: Linear regression models and a propensity score matching approach were used to assess the relationship between communication failure and 30-day readmission, separately for patients with high-risk and low-risk readmission probabilities.

Data Collection/Extraction Methods: Natural language processing was applied to free-text data in electronic medical records to identify failures in communication between home health nurses and physicians.

Principal Findings: Communication failure was associated with a statistically significant 9.7 percentage point increase in the probability of a patient readmission (32.6 percent of the mean) among high-risk patients.

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