The moral hazard effects of consumer responses to targeted cost-sharing

More cost-sharing, less cost? Evidence on reference price drugs

This paper evaluates the causal effects of changes in reference prices (RP) on prices, copayments, and overall expenditures for off-patent pharmaceuticals. With reference pricing, firms set prices freely and the health plan covers the expenses only up to a certain threshold. We use quarterly data of the German market for anti-epileptics at the package level and at the active substance level and exploit that the RP has been adjusted in some of the active substances but not in others in a difference-in-differences framework. At the product level, we find that a lower RP reduces prices for both brand-name drugs and generics, but leads to higher copayments, especially for brand-name drugs. At the aggregate level, we find that a lower RP leads to savings for the public health insurer since revenues decrease substantially for brand-name firms and, to a lesser extent, also for generic firms. Overall expenditures (payments by the health insurer and the patients) for brand-name drugs decrease in proportion to the decrease in the RP, while the adjustment does not significantly influence overall expenditures for generics.

If Patients Don't Use Available Health Service Pricing Information, Is Transparency Still Important?

The US health system is replete with health service pricing idiosyncrasies and opacity unrelated to quality. Online tools intended to make health care purchasing resemble consumerism by making prices transparent have had little if any effect on improving health care market functioning and changing patient behavior. Although price transparency is still in its infancy, it holds promise to be as useful to patient-consumers as it has been to large purchasers (eg, employers) of health services and policymakers. But even if price information is not routinely used by patients, transparency of such information still has ethical importance in a market in which patients pay increasingly high out-of-pocket costs.

Tiered cost sharing and health care demand

In this paper, I study tiered cost sharing, an innovative incentive structure designed to steer patients toward low-cost providers using large out-of-pocket price differentials. Using administrative data from New Hampshire, where two large insurers utilize tiered pricing programs, I estimate the effects of tiering on choices and spending for common gastrointestinal endoscopic procedures. I first conduct a difference-in-differences analysis using the rollout of one insurer's tiered option. I then develop and estimate a demand model to explicitly compare the tiered design with other common plans. Both the reduced form and structural models imply that the tiered plans are associated with 4.5%-6.3% less in mean per-episode spending than high-deductible and coinsurance-based plans, and do not affect the likelihood of seeking care. I find evidence that the savings is in part due to a salience or "simple pricing" effect whereby patients respond to tiered out-of-pocket prices but not to traditional deductibles or coinsurance rates.

Demand-side Interventions to Control Moral Hazard in Health Systems, Beneficial or Detrimental: A Systematic Review Study

Background: Moral hazard is one of the main reasons for health market failure where supply-side and demand-side interventions are used for its control and prevention. This study aimed to identify the effects of demand-side interventions on moral hazards in health systems. Methods: For this systematic review, electronic databases, including Scopus, PubMed, Web of Science, Embase, ProQuest, Google Scholar's search engine, and Iranian databases such as SID and Magiran, were investigated. No time limitation was considered in the search process. The narrative synthesis approach was used for data analysis. Results: Out of 7484 retrieved papers, 61 papers were included in the study. The Identified effects were divided into 2 categories: health services consumption effects and financial effects, which were summarized in the form of advantages and disadvantages. The most important advantages included a decrease in the utilization of different services and a reduction in health expenditures. Also, the most important disadvantages included lower quality of care, shifting financing burden to the consumers, and limited access to necessary care. Conclusion: The results showed that the most benefits of interventions, especially in cost-sharing and waiting list interventions, are for insurance organizations, where the disadvantages also affect consumers more. Therefore, it is necessary to pay more attention to these effects and their management because a lack of attention in this regard may impair the performance of insurance financial protection and health provision as one of the major goals of the health system.

Is physician location sensitive to changes in patients' financial responsibility?

This study examines how changes to patients' financial responsibility affect physicians' behavior. This is achieved by examining a health insurance reform that changes patients' relative financial responsibilities for a medical service that can be received at one of two locations. In particular, this study examines how physicians' treatment location decisions change after the reform. This study finds that physicians who previously work across the two locations are increasingly observed working at the location that becomes cheaper for patients. Thus, physicians' responsiveness to new policies may be an important lever by which certain demand-side health insurance reforms successfully operate.

Paying patients to use lower-priced providers

OBJECTIVE

Many employers have introduced rewards programs as a new benefit design in which employees are paid $25-$500 if they receive care from lower-priced providers. Our goal was to assess the impact of the rewards program on procedure prices and choice of provider and how these outcomes vary by length of exposure to the program and patient population.

STUDY SETTING

A total of 87 employers from across the nation with 563,000 employees and dependents who have introduced the rewards program in 2017 and 2018.

STUDY DESIGN

Difference-in-difference analysis comparing changes in average prices and market share of lower-priced providers among employers who introduced the reward program to those that did not.

DATA COLLECTION METHODS

We used claims data for 3.9 million enrollees of a large health plan.

PRINCIPAL FINDINGS

Introduction of the program was associated with a 1.3% reduction in prices during the first year and a 3.7% reduction in the second year of access. Use of the program and price reductions are concentrated among magnetic resonance imaging (MRI) services, for which 30% of patients engaged with the program, 5.6% of patients received an incentive payment in the first year, and 7.8% received an incentive payment in the second year. MRI prices were 3.7% and 6.5% lower in the first and second years, respectively. We did not observe differential impacts related to enrollment in a consumer-directed health plan or the degree of market-level price variation. We also did not observe a change in utilization.

CONCLUSIONS

The introduction of financial incentives to reward patients from receiving care from lower-priced providers is associated with modest price reductions, and savings are concentrated among MRI services.

Understanding the distributional impacts of health insurance reform: Evidence from a consumer cost-sharing program

We examine the heterogeneous effects of reference pricing, a health insurance reform introduced by the California Public Employees' Retirement System (CalPERS), on the distribution of spending by patients and insurers. Using medical claims data for CalPERS and a comparison group not subject to reference pricing, we use the changes-in-changes approach to estimate the quantile treatment effects of the program across different medical procedures. We find that the quantile treatment effects vary across the patient spending distributions, with a range of positive and negative estimates of the QTE, depending on the medical procedure considered. However, across all procedures, the insurer's spending distributions tend to shift left, with the largest reductions occurring in the right-tail of the spending distributions. These effects are not captured by mean estimates but have important policy implications.

Higher Medicare Spending On Imaging And Lab Services After Primary Care Physician Group Vertical Integration

In recent years direct ownership of physician practices by hospitals and health systems (that is, vertical integration) has become a prominent feature of the US health care system. One unexplored impact of vertical integration is the impact on referral patterns for common diagnostic tests and procedures and the associated spending. Using a 100 percent sample of 2013-16 Medicare fee-for-service claims data, we examined whether hospital and health system ownership of physician practices was associated with changes in site of care and Medicare reimbursement rates for ten common diagnostic imaging and laboratory services. After vertical integration, the monthly number of diagnostic imaging tests per 1,000 attributed beneficiaries performed in a hospital setting increased by 26.3 per 1,000, and the number performed in a nonhospital setting decreased by 24.8 per 1,000. Hospital-based laboratory tests increased by 44.5 per 1,000 attributed beneficiaries, and non-hospital-based laboratory tests decreased by 36.0 per 1,000. Average Medicare reimbursement rose by $6.38 for imaging tests and $0.57 for laboratory tests, which translates to $40.2 million and $32.9 million increases in Medicare spending, respectively, for the entire study period. This study highlights how the growing trend of vertical integration, combined with differences in Medicare payment between hospitals and nonhospital providers, leads to higher Medicare spending.

An Employer-Provider Direct Payment Program Is Associated With Lower Episode Costs

Bundled payment has shown promise in reducing medical spending while maintaining quality. However, its impact among commercially insured populations has not been well studied. We examined the impacts on episode cost and patient cost sharing of a program that applies bundled payments for orthopedic and surgical procedures in a commercially insured population. The program we studied negotiates preferred prices for selected providers that cover the procedure and all related care within a thirty-day period after the procedure and waives cost sharing for patients who receive care from these providers. After implementation, episode prices for three selected surgical procedures declined by $4,229, a 10.7 percent relative reduction. Employers captured approximately 85 percent of the savings, or $3,582 per episode (a 9.5 percent relative decrease), and patient cost-sharing payments decreased by $498 per episode (a 27.7 percent relative decrease).

Does the Implementation of Reference Pricing Result in Reduced Utilization? Evidence From Inpatient and Outpatient Procedures

Reference pricing (RP) is an insurance design that can be used to incentivize patients to use low-price settings. While RP is not intended to affect overall utilization, it could unintentionally reduce utilization. We examined whether utilization was reduced when a large employer adopted RP for selected elective surgeries, including inpatient joint replacement surgery and outpatient cataract surgery, colonoscopy, and arthroscopic surgery. Data included a treatment group subject to RP implementation and a comparison group that was not. We applied autoregressive integrated moving average analysis as comparison-population interrupted time-series analysis to determine whether there were procedure reductions following RP implementation. We find no evidence of short-term decreases (within 3 months of RP implementation). However, we find very modest declines of approximately 14 (20%) fewer arthroscopic knee surgeries 6 months after RP implementation and 129 (17.2%) fewer colonoscopies 8 months after RP implementation. There were no declines in the other procedures examined.

Paying Patients To Switch: Impact Of A Rewards Program On Choice Of Providers, Prices, And Utilization

Employers and insurers are experimenting with benefit strategies that encourage patients to switch to lower-price providers. One increasingly popular strategy is to financially reward patients who receive care from such providers. We evaluated the impact of a rewards program implemented in 2017 by twenty-nine employers with 269,875 eligible employees and dependents. For 131 elective services, patients who received care from a designated lower-price provider received a check ranging from $25 to $500, depending on the provider's price and service. In the first twelve months of the program we found a 2.1 percent reduction in prices paid for services targeted by the rewards program. The reductions in price resulted in savings of $2.3 million, or roughly $8 per person, per year. These effects were primarily seen in magnetic resonance imaging and ultrasounds, with no observed price reduction among surgical procedures.

Exploring the Factors Triggering Occupational Ethics Risk of Technology Transaction in Chinese Construction Industry

: The importance of occupational ethics risk considerations during technology transaction in the construction industry is acknowledged. This is particularly in that the industry plays a significant part in a nation's development. The technology transaction has seen an increase in activity due to massive infrastructure development programmers adopted by governments and increase in external investment. The technology transaction, like any other, is not immune to unethical occupational behavior. This study aims to investigate the source of occupational ethics risk during technology transaction in the Chinese construction industry. A review of literature demonstrated that a number of contextual factors can influence unethical occupational risk practices. In total, 130 engineering practitioners took part in a questionnaire survey to explore the source of occupational ethics risk during the technology transaction in the Chinese construction industry. Firstly, there were 25 factors identified through literature review overall, which were sorted and analyzed. Among the twenty-five factors, three were identified as the most significant factors: Unreasonable incentives for technology trading; poor regulation; and asymmetry of information. Then, through exploratory factor analysis (EPA) method, the twenty-five factors were divided into seven groups: legal environment, industry environment, incompleteness of information, asymmetry of information, difficulty of observation of information, differences between the two sides of cooperation, and incorrect conceptual awareness. This study provided an added dimension to the understanding of occupational ethics risk issues during the technology transaction in the Chinese construction industry. This paper therefore contributes to the list of countries where similar studies have been undertaken.

Reference pricing: The case of screening colonoscopies

We study the introduction of reference pricing to the California Public Employees' Retirement System. Reference pricing changes the relative price of using a hospital versus an ambulatory surgery center (ASC) for patients receiving a colonoscopy, leading to as good as random variation in patients' use of ASCs. We find a 10 percentage point increase in the share of patients using an ASC, leading to a $2300 to $1700 reduction in prices paid for patients who switch to ASCs. Our results suggest that the use of ASCs has a causal effect on prices paid and has no negative effect on patient health outcomes.

How robust are reference pricing studies on outpatient medical procedures? Three different preprocessing techniques applied to difference-in differences

The evaluation of policies that are not randomly assigned on outcomes generated by nonlinear data generating processes often requires modeling assumptions for which there is little theoretical guidance. This paper revisits previously published difference-in-differences results of an important example, the introduction of reference pricing to common outpatient procedures, to assess the robustness of the estimated impacts by using different matching, and reweighting techniques to preprocess the data. These techniques improve covariate balance and reduce model dependence. Specifically, we examine the robustness of the effect of reference pricing on patient site-of-care choice, total expenditures, and complication rates. We apply three preprocessing methods: propensity score reweighting, exact matching, and genetic matching. Propensity score reweighting is a technique for achieving covariate balance but does not balance higher-order moments and may lead to bias and inefficiency in estimating treatment effects in the context of nonlinear data generating processes. In contrast, exact matching and genetic matching are designed to balance higher-order moments. We find that although the use of the preprocessing techniques is a valuable robustness check showing that some results are sensitive to the method used, the three approaches generally yield results that do not statistically differ from the published results.

Firm responses to targeted consumer incentives: Evidence from reference pricing for surgical services

This paper examines how health care providers respond to a reference pricing insurance program that increases consumer cost sharing when consumers choose high-priced surgical providers. We use geographic variation in the population covered by the program to estimate supply-side responses. We find limited evidence of market segmentation and price reductions for providers with baseline prices above the reference price. Finally, approximately 75% of the reduction in provider prices is in the form of a positive externality that benefits a population not subject to the program.