Your money or your life

Kevin Lewis

August 22, 2014

Health Spending Slowdown Is Mostly Due To Economic Factors, Not Structural Change In The Health Care Sector

David Dranove, Craig Garthwaite & Christopher Ody
Health Affairs, August 2014, Pages 1399-1406

The source of the recent slowdown in health spending growth remains unclear. We used new and unique data on privately insured people to estimate the effect of the economic slowdown that began in December 2007 on the rate of growth in health spending. By exploiting regional variations in the severity of the slowdown, we determined that the economic slowdown explained approximately 70 percent of the slowdown in health spending growth for the people in our sample. This suggests that the recent decline is not primarily the result of structural changes in the health sector or of components of the Affordable Care Act, and that — absent other changes in the health care system — an economic recovery will result in increased health spending.


The Impact of Tort Reform on Intensity of Treatment: Evidence from Heart Patients

Ronen Avraham & Max Schanzenbach
Journal of Health Economics, forthcoming

This paper analyzes the effect of non-economic damage caps on the treatment intensity of heart attack victims. We focus on whether a patient receives a major intervention in the form of either a coronary artery by-pass or angioplasty. We find strong evidence that treatment intensity declines after a cap on non-economic damages. The probability of receiving a major intervention in the form of either an angioplasty or bypass declines by 1.25 to 2 percentage points after non-economic damage caps are enacted, and this effect is larger a year or two after reform. However, we also find clear evidence of substitution between major interventions. When doctors have discretion to perform a by-pass and patients have insurance coverage, caps on non-economic damages increase the probability that a by-pass is performed. The effect of non-economic damage caps on costs is not always statistically significant, but in models with state-specific trends, total costs decline by as much as four percent. We conclude that tort reform reduces treatment intensity overall, even though it changes the mix of treatments. Using the Center for Disease Control's Vital Statistics data, we find that tort reform is not associated with an increase in mortality from coronary heart disease; if anything, mortality declines.


Moral Hazard and Less Invasive Medical Treatment for Coronary Artery Disease: The Case of Cigarette Smoking

Jesse Margolis et al.
NBER Working Paper, August 2014

Over the last several decades, numerous medical studies have compared the effectiveness of two common procedures for Coronary Artery Disease: Percutaneous Coronary Intervention (PCI) and Coronary Artery Bypass Graft (CABG). Most evidence indicates that CABG – the more invasive procedure – leads to superior long term outcomes for otherwise similar patients, though there is little consensus as to why. In this article, we propose a novel explanation: patient offsetting behavior. We hypothesize that patients who undergo the more invasive procedure, CABG, are more likely to improve their behavior – eating, exercise, smoking, and drinking – in a way that increases longevity. To test our hypothesis, we use Medicare records linked to the National Health Interview Survey to study one such behavior: smoking. We find that CABG patients are 12 percentage points more likely to quit smoking in the one-year period immediately surrounding their procedure than PCI patients, a result that is robust to numerous alternative specifications.


Insurers' Negotiating Leverage and the External Effects of Medicare Part D

Darius Lakdawalla & Wesley Yin
Review of Economics and Statistics, forthcoming

By influencing the size and bargaining power of private insurers, public subsidization of private health insurance may project effects beyond the subsidized population. We test for such spillovers by analyzing how increases in insurer size resulting from the implementation of Medicare Part D affected drug prices negotiated in the non-Medicare commercial market. On average, Part D lowered prices for commercial enrollees by 3.7%. The external commercial market savings amount to $1.5 billion per year, which, if passed to consumers, approximates the internal cost-savings of newly-insured subsidized beneficiaries. If retained by insurers, it corresponds to a greater than 9.25% average increase in profitability on stand-alone drug insurance.


California Safety-Net Hospitals Likely To Be Penalized By ACA Value, Readmission, And Meaningful-Use Programs

Matlin Gilman et al.
Health Affairs, August 2014, Pages 1314-1322

The Affordable Care Act includes provisions to increase the value obtained from health care spending. A growing concern among health policy experts is that new Medicare policies designed to improve the quality and efficiency of hospital care, such as value-based purchasing (VBP), the Hospital Readmissions Reduction Program (HRRP), and electronic health record (EHR) meaningful-use criteria, will disproportionately affect safety-net hospitals, which are already facing reduced disproportionate-share hospital (DSH) payments under both Medicare and Medicaid. We examined hospitals in California to determine whether safety-net institutions were more likely than others to incur penalties under these programs. To assess quality, we also examined whether mortality outcomes were different at these hospitals. Our study found that compared to non-safety-net hospitals, safety-net institutions had lower thirty-day risk-adjusted mortality rates in the period 2009–11 for acute myocardial infarction, heart failure, and pneumonia and marginally lower adjusted Medicare costs. Nonetheless, safety-net hospitals were more likely than others to be penalized under the VBP program and the HRRP and more likely not to meet EHR meaningful-use criteria. The combined effects of Medicare value-based payment policies on the financial viability of safety-net hospitals need to be considered along with DSH payment cuts as national policy makers further incorporate performance measures into the overall payment system.


Does Seeing the Doctor More Often Keep You Out of the Hospital?

Robert Kaestner & Anthony Lo Sasso
Journal of Health Economics, forthcoming

By exploiting a unique health insurance benefit design, we provide novel evidence on the causal association between outpatient and inpatient care. Our results indicate that greater outpatient spending was associated with more hospital admissions: a $100 increase in outpatient spending was associated with a 1.9% increase in the probability of having an inpatient event and a 4.6% increase in inpatient spending among enrollees in our sample. Moreover, we present evidence that the increase in hospital admissions associated with greater outpatient spending was for conditions in which it is plausible to argue that the physician and patient could exercise discretion.


Cohort Turnover and Productivity: The July Phenomenon in Teaching Hospitals

Robert Huckman, Hummy Song & Jason Barro
Harvard Working Paper, May 2014

We consider the impact of cohort turnover — the planned simultaneous exit of a large number of experienced employees and a similarly sized entry of new workers — on productivity in the context of teaching hospitals. Specifically, we examine the impact of the annual July turnover of residents in American teaching hospitals on levels of resource utilization and quality in teaching hospitals relative to a control group of non-teaching hospitals. We find that, despite the anticipated nature of the cohort turnover and the supervisory structures that exist in teaching hospitals, this annual cohort turnover results in increased resource utilization (i.e., longer length of hospital stay) for both minor and major teaching hospitals, and decreased quality (i.e., higher mortality rates) for major teaching hospitals. Particularly in major teaching hospitals, we find evidence of a gradual trend of decreasing performance that begins several months before the actual cohort turnover and may result from a transition of responsibilities at major teaching hospitals in anticipation of the cohort turnover.


Non-Adherence In Health Care: A Positive and Normative Analysis

Mark Egan & Tomas Philipson
NBER Working Paper, July 2014

Non-adherence in health care results when a patient does not initiate or continue care that has been recommended by a provider. Previous researchers have identified non-adherence as a major source of waste in US healthcare, totaling approximately 2.3% of GDP, and have proposed a plethora of interventions to improve adherence. However, little explicit analysis exists in health economics of the dynamic demand behavior that drives non-adherence. We argue that while providers may be more informed about the population-wide effects of treatments, patients are more informed about their individual treatment effect. We interpret a patient’s adherence decision as an optimal stopping problem where patients learn the value of a treatment through experience. Our positive analysis derives an “adherence survival function” and shows how various observable factors affect adherence. Our normative analysis derives the efficiency effects of non-adherence, the conditions under which adherence is too high or too low, and why many common interventions aimed at raising adherence produce indeterminate welfare effects. We calibrate these welfare effects for one of the largest US drug categories, cholesterol reducing drugs. Contrary to frequent normative claims of under-adherence, our estimates suggest that the ex-post efficiency loss from over-adherence is over 80% larger than from under-adherence.


The Long-Term Health Effects of Early Life Medicaid Coverage

Sarah Marie Miller & Laura Wherry
University of Michigan Working Paper, July 2014

Although the link between the fetal environment and later life health and achievement is well-established, few studies have evaluated the extent to which public policies aimed at improving fetal health have effects that persist into adulthood. In this study, we evaluate how a rapid expansion of prenatal and child health insurance coverage through the Medicaid program affected the adult health and health care utilization of individuals born between 1979 and 1993 who gained coverage in utero and as children. We find that those whose mothers gained eligibility for prenatal coverage under Medicaid have lower rates of obesity and lower body mass indices as adults. Using administrative data on hospital discharges, we find that cohorts who gained in utero Medicaid eligibility have fewer preventable hospitalizations and fewer hospitalizations related to endocrine, nutritional and metabolic diseases, and immunity disorders as adults. We find effects of public eligibility in other periods of childhood on hospitalizations later in life, but these effects are small. Our results indicate that expanding Medicaid prenatal coverage had long-term benefits for the health of the next generation.


Bundled Payment Fails To Gain A Foothold In California: The Experience Of The IHA Bundled Payment Demonstration

Susan Ridgely et al.
Health Affairs, August 2014, Pages 1345-1352

To determine whether bundled payment could be an effective payment model for California, the Integrated Healthcare Association convened a group of stakeholders (health plans, hospitals, ambulatory surgery centers, physician organizations, and vendors) to develop, through a consensus process, the methods and means of implementing bundled payment. In spite of a high level of enthusiasm and effort, the pilot did not succeed in its goal to implement bundled payment for orthopedic procedures across multiple payers and hospital-physician partners. An evaluation of the pilot documented a number of barriers, such as administrative burden, state regulatory uncertainty, and disagreements about bundle definition and assumption of risk. Ultimately, few contracts were signed, which resulted in insufficient volume to test hypotheses about the impact of bundled payment on quality and costs. Although bundled payment failed to gain a foothold in California, the evaluation provides lessons for future bundled payment initiatives.


Health insurer market power and primary care consolidation

Christopher Brunt & John Bowblis
Economics Letters, forthcoming

This paper analyses how health insurance market concentration impacts the market structure of primary care physicians. In more concentrated insurance markets, physicians are found to work in larger practices and their practices are more likely to have a hospital with an ownership interest. Physicians are also less likely to report being in a competitive physician market, consistent with practice consolidation. Our results suggest consolidation in insurance markets impacts the competitive structure of physicians markets.


Socialized medicine and mortality

Sam Peltzman
International Journal of Health Care Finance and Economics, September 2014, Pages 179-205

Over the last century life expectancy has increased substantially and so has the share of health care expenditures financed by governments. In cross-country comparisons, the US, which has the lowest government health expenditure share, often has the poorest health outcomes. Is there a plausible connection between health outcomes and government financing of health care? This paper addresses this question with panel data from 20 developed countries from 1950 to 2010. I review the history of government involvement in health care financing over this period. Then I use panel regression methods to examine whether a variety of mortality based outcome measures are correlated with the extent of government involvement. The answers are robustly negative.


Medicaid Primary Care Physician Fees and the Use of Preventive Services among Medicaid Enrollees

Adam Atherly & Karoline Mortensen
Health Services Research, August 2014, Pages 1306–1328

Objective: The Patient Protection and Affordable Care Act (ACA) increases Medicaid physician fees for preventive care up to Medicare rates for 2013 and 2014. The purpose of this paper was to model the relationship between Medicaid preventive care payment rates and the use of U.S. Preventive Services Task Force (USPSTF)–recommended preventive care use among Medicaid enrollees.

Data Sources/Study Session: We used data from the 2003 and 2008 Medical Expenditure Panel Survey (MEPS), a national probability sample of the U.S. civilian, noninstitutionalized population, linked to Kaiser state Medicaid benefits data, including the state Medicaid-to-Medicare physician fee ratio in 2003 and 2008.

Study Design: Probit models were used to estimate the probability that eligible individuals received one of five USPSF-recommended preventive services. A difference-in-difference model was used to separate out the effect of changes in the Medicaid payment rate and other factors.

Principal Findings: Although Medicaid enrollees had a lower rate of use of the five preventive services in univariate analysis, neither Medicaid enrollment nor changes in Medicaid payment rates had statistically significant effects on meeting screening recommendations for the five screenings. The results were robust to a number of different sensitivity tests. Individual and state characteristics were significant.

Conclusions: Our results suggest that although temporary changes in primary care provider payments for preventive services for Medicaid enrollees may have other desirable effects, they are unlikely to substantially increase the use of these selected USPSTF-recommended preventive care services among Medicaid enrollees.


Paying Attention or Paying Too Much in Medicare Part D

Jonathan Ketcham, Claudio Lucarelli & Christopher Powers
American Economic Review, forthcoming

We study whether people became less likely to switch Medicare prescription drug plans (PDPs) due to more options and more time in Part D. Panel data for a random 20% sample of enrollees from 2006–2010 show that 50% were not in their original PDPs by 2010. Individuals switched PDPs in response to higher costs of their status quo plans, saving them money. Contrary to choice overload, larger choice sets increased switching unless the additional plans were relatively expensive. Neither switching overall nor responsiveness to costs declined over time, and above-minimum spending in 2010 remained below the 2006 and 2007 levels.


Medication Affordability Gains Following Medicare Part D Are Eroding Among Elderly With Multiple Chronic Conditions

Huseyin Naci et al.
Health Affairs, August 2014, Pages 1435-1443

Elderly Americans, especially those with multiple chronic conditions, face difficulties paying for prescriptions, which results in worse adherence to and discontinuation of therapy, called cost-related medication nonadherence. Medicare Part D, implemented in January 2006, was supposed to address issues of affordability for prescriptions. We investigated whether the gains in medication affordability attributable to Part D persisted during the six years that followed its implementation. Overall, we found continued incremental improvements in medication affordability in the period 2007–09 that eroded during the period 2009–11. Among elderly beneficiaries with four or more chronic conditions, we observed an increase in the prevalence of cost-related nonadherence from 14.4 percent in 2009 to 17.0 percent in 2011, reversing previous downward trends. Similarly, the prevalence among the sickest elderly of forgoing basic needs to purchase medicines decreased from 8.7 percent in 2007 to 6.8 percent in 2009 but rose to 10.2 percent in 2011. Our findings highlight the need for targeted policy efforts to alleviate the persistent burden of drug treatment costs on this vulnerable population.


Do Certificate-of-Need Laws Increase Indigent Care?

Thomas Stratmann & Jacob Russ
George Mason University Working Paper, July 2014

Many states have certificate-of-need regulations, which prohibit hospitals, nursing homes, and ambulatory surgical centers from entering new markets or making changes to the existing capacity of medical facilities without first gaining approval from certificate-of-need regulators. These regulations purport to limit the supply of medical services and to induce regulated institutions to use the resulting economic profits to cross-subsidize indigent care. We document that these regulations do limit supply. However, we do not find strong evidence of higher levels of indigent-care provision in states that have certificate-of-need regulations as opposed to those that do not.


Tradeoffs in the Design of Health Plan Payment Systems: Fit, Power and Balance

Michael Geruso & Thomas McGuire
NBER Working Paper, July 2014

In many markets, including the new U.S. Exchanges, health plans are paid by risk-adjusted capitation, in some markets combined with reinsurance and other payment features. This paper proposes three metrics for grading these complex payment systems: fit, power and balance, each of which addresses a distinct market failure in health insurance. We implement these metrics in a study of Exchange payment systems with data similar to that used to develop the Exchange risk adjustment scheme and describe the tradeoffs among the metrics. We find that a simple reinsurance system scores better on fit, power and balance than the risk adjustment formula in use in the Exchanges.


Price Transparency For MRIs Increased Use Of Less Costly Providers And Triggered Provider Competition

Sze-jung Wu et al.
Health Affairs, August 2014, Pages 1391-1398

To encourage patients to select high-value providers, an insurer-initiated price transparency program that focused on elective advanced imaging procedures was implemented. Patients having at least one outpatient magnetic resonance imaging (MRI) scan in 2010 or 2012 were divided according to their membership in commercial health plans participating in the program (the intervention group) or in nonparticipating commercial health plans (the reference group) in similar US geographic regions. Patients in the intervention group were informed of price differences among available MRI facilities and given the option of selecting different providers. For those patients, the program resulted in a $220 cost reduction (18.7 percent) per test and a decrease in use of hospital-based facilities from 53 percent in 2010 to 45 percent in 2012. Price variation between hospital and nonhospital facilities for the intervention group was reduced by 30 percent after implementation. Nonparticipating members residing in intervention areas also observed price reductions, which indicates increased price competition among providers. The program significantly reduced imaging costs. This suggests that patients select lower-price facilities when informed about available alternatives.


Factors Affecting Receipt of Expensive Cancer Treatments and Mortality: Evidence from Stem Cell Transplantation for Leukemia and Lymphoma

Jean Mitchell & Elizabeth Conklin
Health Services Research, forthcoming

Objective: To identify factors that affect whether patients diagnosed with either leukemia or lymphoma receive a stem cell transplant and secondly if receipt of stem cell transplantation is linked to improved survival.

Data: California inpatient discharge records (2002–2003) for patients with either leukemia or lymphoma linked with vital statistics death records (2002–2005).

Study Design: Bivariate Probit treatment effects model that accounts for both the type of treatment received and survival while controlling for nonrandom selection due to unobservable factors.

Principal Findings: Having private insurance coverage and residence in a well-educated county increased the chances a patient with either disease received HSCT. Increasing age and travel distance to the nearest transplant hospital had the opposite effect. Receipt of HSCT had a significant impact on mortality. We found the probability of death was 4.3 percentage points higher for leukemia patients who did NOT have HSCT. Receipt of HSCT reduced the chances of dying by almost 50 percent. The likelihood of death among lymphoma patients who underwent HSCT was almost 5 percentage points lower, a 70 percent reduction in the probability of death.

Conclusions: The findings raise concern about access to expensive, but highly effective cancer treatments for patients with certain hematologic malignancies.


For-Profit Medicare Home Health Agencies’ Costs Appear Higher And Quality Appears Lower Compared To Nonprofit Agencies

William Cabin et al.
Health Affairs, August 2014, Pages 1460-1465

For-profit, or proprietary, home health agencies were banned from Medicare until 1980 but now account for a majority of the agencies that provide such services. Medicare home health costs have grown rapidly since the implementation of a risk-based prospective payment system in 2000. We analyzed recent national cost and case-mix-adjusted quality outcomes to assess the performance of for-profit and nonprofit home health agencies. For-profit agencies scored slightly but significantly worse on overall quality indicators compared to nonprofits (77.18 percent and 78.71 percent, respectively). Notably, for-profit agencies scored lower than nonprofits on the clinically important outcome “avoidance of hospitalization” (71.64 percent versus 73.53 percent). Scores on quality measures were lowest in the South, where for-profits predominate. Compared to nonprofits, proprietary agencies also had higher costs per patient ($4,827 versus $4,075), were more profitable, and had higher administrative costs. Our findings raise concerns about whether for-profit agencies should continue to be eligible for Medicare payments and about the efficiency of Medicare’s market-oriented, risk-based home care payment system.


Can Caesarean section improve child and maternal health? The case of breech babies

Vibeke Myrup Jensen & Miriam Wüst
Journal of Health Economics, forthcoming

This paper examines the health effects of Caesarean section (CS) for children and their mothers. We use exogenous variation in the probability of CS in a fuzzy regression discontinuity design. Using administrative Danish data, we exploit an information shock for obstetricians that sharply altered CS rates for breech babies. We find that CS decreases the child's probability of having a low APGAR score and the number of family doctor visits in the first year of life. We find no significant effects for severe neonatal morbidity or hospitalizations. While mothers are hospitalized longer after birth, we find no effects of CS for maternal post-birth complications or infections. Although the change in mode of delivery for the marginal breech babies increases direct costs, the health benefits show that CS is the safest option for these children.


A Cross-Sectional Analysis of Variation in Charges and Prices across California for Percutaneous Coronary Intervention

Renee Hsia et al.
PLoS ONE, August 2014

Objectives: We sought to examine the variability in charges for percutaneous coronary intervention (PCI) with a drug-eluting stent and without major complications (MS-DRG-247), and determine whether hospital and market characteristics influenced these charges.

Methods: We conducted a cross-sectional analysis of adults admitted to California hospitals in 2011 for MS-DRG-247 using patient discharge data from the California Office of Statewide Health Planning and Development. We used a two-part linear regression model to first estimate hospital-specific charges adjusted for patient characteristics, and then examine whether the between-hospital variation in those estimated charges was explained by hospital and market characteristics.

Results: Adjusted charges for the average California patient admitted for uncomplicated PCI ranged from $22,047 to $165,386 (median: $88,350) depending on which hospital the patient visited. Hospitals in areas with the highest cost of living, those in rural areas, and those with more Medicare patients had higher charges, while government-owned hospitals charged less. Overall, our model explained 43% of the variation in adjusted charges. Estimated discounted prices paid by private insurers ranged from $3,421 to $80,903 (median: $28,571).

Conclusions: Charges and estimated discounted prices vary widely between hospitals for the average California patient undergoing PCI without major complications, a common and relatively homogeneous episode of care. Though observable hospital characteristics account for some of this variation, the majority remains unexplained.


The effect of in-office waiting time on physician visit frequency among working-age adults

Hyo Jung Tak et al.
Social Science & Medicine, October 2014, Pages 43–51

Disparities in unmet health care demand resulting from socioeconomic, racial, and financial factors have received a great deal of attention in the United States. However, out-of-pocket costs alone do not fully reflect the total opportunity cost that patients must consider as they seek medical attention. While there is an extensive literature on the price elasticity of demand for health care, empirical evidence regarding the effect of waiting time on utilization is sparse. Using the nationally representative 2003 Community Tracking Study Household Survey, the most recent iteration containing respondents' physician office visit frequency and estimated in-office waiting time in the United States (N = 23,484), we investigated the association between waiting time and calculated time cost with the number of physician visits among a sample of working-age adults. To avoid the bias that literature suggests would result from excluding respondents with zero physician visits, we imputed waiting time for the essential inclusion of such individuals. On average, respondents visited physician offices 3.55 times, during which time they waited 28.7 min. The estimates from a negative binomial model indicated that a doubling of waiting time was associated with a 7.7 percent decrease (p-value < 0.001) in physician visit frequency. For women and unemployed respondents, who visited physicians more frequently, the decrease was even larger, suggesting a stronger response to greater waiting times. We believe this finding reflects the discretionary nature of incremental visits in these groups, and a consequent lower perceived marginal benefit of additional visits. The results suggest that in-office waiting time may have a substantial influence on patients' propensity to seek medical attention. Although there is a belief that expansions in health insurance coverage increase health care utilization by reducing financial barriers to access, our results suggest that unintended consequences may arise if in-office waiting time increases.


Machines that Go ‘Ping’: Medical Technology and Health Expenditures in OECD Countries

Peter Willemé & Michel Dumont
Health Economics, forthcoming

Technology is believed to be a major determinant of increasing health spending. The main difficulty to quantify its effect is to find suitable proxies to measure medical technological innovation. This paper's main contribution is the use of data on approved medical devices and drugs to proxy for medical technology. The effects of these variables on total real per capita health spending are estimated using a panel model for 18 Organisation for Economic Co-operation and Development (OECD) countries covering the period 1981–2012. The results confirm the substantial cost-increasing effect of medical technology, which accounts for almost 50% of the explained historical growth of spending. Despite the overall net positive effect of technology, the effect of two subgroups of approvals on expenditure is significantly negative. These subgroups can be thought of as representing ‘incremental medical innovation’, whereas the positive effects are related to radically innovative pharmaceutical products and devices. A separate time series model was estimated for the USA because the FDA approval data in fact only apply to the USA, while they serve as proxies for the other OECD countries. Our empirical model includes an indicator of obesity, and estimations confirm the substantial contribution of this lifestyle variable to health spending growth in the countries studied.


Beyond Adoption: Does Meaningful Use of EHR Improve Quality of Care?

Yu-Kai Lin, Mingfeng Lin & Hsinchun Chen
University of Arizona Working Paper, May 2014

Electronic health record (EHR) system holds great promise in transforming healthcare. Existing empirical literature typically focused on its adoption, and found mixed evidence on whether EHR improves care. The federal initiative for meaningful use (MU) of EHR aims to maximize the potential of quality improvement, yet there is little empirical study on the impact of the initiative and, more broadly, the relation between MU and quality of care. Leveraging features of the Medicare EHR Incentive Program for exogenous variations, we examine the impact of MU on healthcare quality, and also the clinical benefit of the multi-billion-dollar EHR incentive program. We found that MU significantly and consistently improves quality of care. More importantly, this effect is greater in historically disadvantaged hospitals such as small, non-teaching, or rural hospitals. These findings contribute not only to the literature on Health IT, but also the broader literature of IT adoption and value as well.


The Impact of Tiered Physician Networks on Patient Choices

Anna Sinaiko & Meredith Rosenthal
Health Services Research, August 2014, Pages 1348–1363

Objective: To assess whether patient choice of physician or health plan was affected by physician tier-rankings.

Data Sources: Administrative claims and enrollment data on 171,581 nonelderly beneficiaries enrolled in Massachusetts Group Insurance Commission health plans that include a tiered physician network and who had an office visit with a tiered physician.

Study Design: We estimate the impact of tier-rankings on physician market share within a plan of new patients and on the percent of a physician's patients who switch to other physicians with fixed effects regression models. The effect of tiering on consumer plan choice is estimated using logistic regression and a pre–post study design.

Principal Findings: Physicians in the bottom (least-preferred) tier, particularly certain specialist physicians, had lower market share of new patient visits than physicians with higher tier-rankings. Patients whose physician was in the bottom tier were more likely to switch health plans. There was no effect of tier-ranking on patients switching away from physicians whom they have seen previously.

Conclusions: The effect of tiering appears to be among patients who choose new physicians and at the lower end of the distribution of tiered physicians, rather than moving patients to the “best” performers. These findings suggest strong loyalty of patients to physicians more likely to be considered their personal doctor.


Do the Medicaid and Medicare programs compete for access to health care services? A longitudinal analysis of physician fees, 1998–2004

Larry Howard
International Journal of Health Care Finance and Economics, September 2014, Pages 229-250

As the demand for publicly funded health care continues to rise in the U.S., there is increasing pressure on state governments to ensure patient access through adjustments in provider compensation policies. This paper longitudinally examines the fees that states paid physicians for services covered by the Medicaid program over the period 1998–2004. Controlling for an extensive set of economic and health care industry characteristics, the elasticity of states’ Medicaid fees, with respect to Medicare fees, is estimated to be in the range of 0.2–0.7 depending on the type of physician service examined. The findings indicate a significant degree of price competition between the Medicaid and Medicare programs for physician services that is more pronounced for cardiology and critical care, but not hospital care. The results also suggest several policy levers that work to either increase patient access or reduce total program costs through changes in fees.


Higher Medicare SNF Care Utilization by Dual-Eligible Beneficiaries: Can Medicaid Long-Term Care Policies Be the Answer?

Momotazur Rahman et al.
Health Services Research, forthcoming

Objective: To examine outcomes associated with dual eligibility (Medicare and Medicaid) of patients who are admitted to skilled nursing facility (SNF) care and whether differences in outcomes are related to states' Medicaid long-term care policies.

Data Sources/Collection: We used national Medicare enrollment data and claims, and the Minimum Data Set for 890,922 community-residing Medicare fee-for-service beneficiaries who were discharged to an SNF from a general hospital between July 2008 and June 2009.

Study Design: We estimated the effect of dual eligibility on the likelihood of 30-day rehospitalization, becoming a long-stay nursing home resident, and 180-day survival while controlling for clinical, demographic, socio-economic, residential neighborhood characteristics, and SNF-fixed effects. We estimated the differences in outcomes by dual eligibility status separately for each state and showed their relationship with state policies: the average Medicaid payment rate; presence of nursing home certificate-of-need (CON) laws; and Medicaid home and community-based services (HCBS) spending.

Principal Findings: Dual-eligible patients are equally likely to experience 30-day rehospitalization, 12 percentage points more likely to become long-stay residents, and 2 percentage points more likely to survive 180 days compared to Medicare-only patients. This longer survival can be attributed to longer nursing home length of stay. While higher HCBS spending reduces the length-of-stay gap without affecting the survival gap, presence of CON laws reduces both the length-of-stay and survival gaps.

Conclusions: Dual eligibles utilize more SNF care and experience higher survival rates than comparable Medicare-only patients. Higher HCBS spending may reduce the longer SNF length of stay of dual eligibles without increasing mortality and may save money for both Medicare and Medicaid.


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