Reference pricing: The case of screening colonoscopies

Price transparency in Iranian healthcare market

Insufficient price transparency has emerged as a pivotal contributor to patient dissatisfaction, escalating costs, and diminished productivity within Iran's health system. This study aims to delineate and elucidate a definition of price transparency, identify suitable strategies, and present the outcomes associated with establishing a health system that embraces transparent pricing while also addressing the challenges ahead. Employing a quantitative-qualitative research design, data were extracted from a semi-structured interviews with stakeholders. A purposive sampling method, encompassing sequential and snowball techniques, was employed to capture the perspectives of all stakeholders involved in the issue of price transparency in Iran. The interview data were analyzed using the grounded theory approach was classified into three categories: price transparency before, during, and after the receipt of healthcare services. Our findings reveal the causes of low price transparency, strategies to address the issue, and the consequences associated with increased levels of transparency. Ultimately, we contend that health systems can significantly enhance efficiency, patient satisfaction, and the performance of health insurance by adopting transparent pricing for health services, thus obviating the need for resource-intensive restructuring efforts.

Physician responses to insurance benefit restrictions: The case of ophthalmology

This study examines the impact of social insurance benefit restrictions on physician behaviour, using ophthalmologists as a case study. We examine whether ophthalmologists use their market power to alter their fees and rebates across services to compensate for potential policy-induced income losses. The results show that ophthalmologists substantially reduced their fees and rebates for services directly targeted by the benefit restriction compared to other medical specialists' fees and rebates. There is also some evidence that they increased their fees for services that were not targeted. High-fee charging ophthalmologists exhibited larger fee and rebate responses while the low-fee charging group raise their rebates to match the reference price provided by the policy environment.

Private equity and healthcare firm behavior: Evidence from ambulatory surgery centers

Healthcare firms regularly seek outside capital; yet, we have an incomplete understanding of external investor influence on provider behavior. We investigate the effects of private equity investment, divestment, and an initial public offering (IPO) on ambulatory surgery centers (ASCs). Throughput is unchanged while charges grow by up to 50% for the same service mix. Affected ASCs witness declines in privately insured cases and rely more on Medicare business. Private equity increases physician ASC ownership stakes, and both simultaneously divest when the ASC is sold. Our findings appear more consistent with private equity influencing the financing of ASCs, rather than treatment approaches.

Do Chargemaster Prices Matter?: An Examination of Acute Care Hospital Profitability

BACKGROUND

It remains widely debated whether chargemaster price markups are tied to hospital profitability.

OBJECTIVE

To evaluate the effect of chargemaster markups on hospital profitability in the presence of unobserved hospital-specific (time-invariant) confounders, and cross-sectional dependence due to latent (common) policy shocks.

DESIGN

We use interactive fixed effects methods to address concerns of unobserved hospital-specific (time-invariant) confounders, and cross-sectional dependence.

SETTING

US acute care hospitals, 1996 through 2017 (ie, 22 y).

PARTICIPANTS

Using primarily Medicare cost report data, we construct an unbalanced panel of 3499 acute care hospitals per year, or a total of 76,972 hospital-year observations.

MEASUREMENTS

Chargemaster markups (above cost), profits per hospital inpatient discharge.

RESULTS

Between 1996 and 2017, chargemaster markups increased (on average) by 155%, and the SD of the chargemaster markup distribution increased by 324%-indicating growing variability in the average markup strategies pursued by hospitals. Our preferred model specification implies that a unit increase of the hospital chargemaster markup is associated with a $261 ( P <0.01; 95% confidence interval: $232-$291) increase in profits per hospital inpatient discharge. These results are robust to a wide set of model specifications, the use of alternative profitability measurements, and the use of an alternative instrumental variable identification strategy. Additional subsample analysis that controls for a rich set of hospital quality measures and system affiliation information also yields similar results.

CONCLUSION

We show that higher chargemaster markups are associated with higher hospital profitability. Additional research is needed to understand how chargemaster pricing impact health outcomes and health care disparities.

Coinsurance vs. co-payments: Reimbursement rules for a monopolistic medical product with competitive health insurers

This paper studies a market for a medical product in which there is perfect competition among health insurers, while the good is sold by a monopolist. Individuals differ in their severity of illness and there is ex postmoral hazard. We consider two regimes: one in which insurers use coinsurance rates (ad valorem reimbursements) and one in which insurers use co-payments (specific reimbursements). We show that the induced equilibrium with co-payments involves a lower producer price and a higher level of welfare for consumers even though it may imply a larger consumer price. This result provides strong support for a reference price based reimbursement policy.

Trading spaces: Medicare's regulatory spillovers on treatment setting for non-Medicare patients

Medicare pricing is known to indirectly influence provider prices and care provision for non-Medicare patients; however, Medicare's regulatory externalities beyond fee-setting are less well understood. We study how physicians' outpatient surgery choices for non-Medicare patients responded to Medicare removing a ban on ambulatory surgery center (ASC) use for a specific procedure. Following the rule change, surgeons began reallocating both Medicare and commercially insured patients to ASCs. Specifically, physicians became 70% more likely to use ASCs for the policy-targeted procedure among their non-Medicare patients. These novel findings demonstrate that Medicare rulemaking affects physician behavior beyond the program's statutory scope.

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.

Long-run growth of ambulatory surgery centers 1990-2015 and Medicare payment policy

OBJECTIVE

To examine long-run growth in the ambulatory surgery center (ASC) industry and potential factors influencing its trajectory.

DATA SOURCES

National data for all Medicare-certified ASCs (1990-2015) and outpatient discharge records from the state of Florida in 2007.

STUDY DESIGN

We documented the number of ASCs in the United States over time and decomposed the trend into underlying ASC market entry and exit behavior. We then examined the plausibility of 2008 Medicare payment reforms to influence the trend changes.

DATA EXTRACTION METHODS

Data on ASC openings and closures are obtained from the Centers for Medicare and Medicaid Services Provider of Service files. Secondary data on ASC volume in Florida are obtained from the Florida Agency for Health Care Administration.

PRINCIPAL FINDINGS

The number of ASCs in the United States grew 5%-10% annually between 1990 and 2007 but by 1% or less beginning in 2008. This change coincided with substantive reductions in Medicare payments for key ASC services. The annual number of new ASCs was as much as 50% lower following the payment change.

CONCLUSIONS

ASCs are an important competitor for outpatient services, but growth has slowed dramatically. Sharp changes in new ASC entry align with less generous Medicare fees.

Treatment consolidation after vertical integration: Evidence from outpatient procedure markets

Hospital ownership of physician practices has grown across the US, and these strategic decisions seem to drive higher prices and spending. Using detailed physician ownership information and a universe of Florida discharge records, we show novel evidence of hospital-physician integration foreclosure effects within outpatient procedure markets. Following hospital acquisition, physicians shift nearly 10% of their Medicare and commercially insured cases away from ambulatory surgery centers (ASCs) to hospitals and are up to 18% less likely to use an ASC at all. Altering physician choices over treatment setting can be in conflict with patient and payer cost, convenience, and quality preferences.

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.

Price Differences To Insurers For Infused Cancer Drugs In Hospital Outpatient Departments And Physician Offices

The prices paid in 2019 by Blue Cross Blue Shield health plans in hospital outpatient departments were double those paid in physician offices for biologics, chemotherapies, and other infused cancer drugs (99-104 percent higher) and for infused hormonal therapies (68 percent higher). Had these plans excluded hospital clinics from their networks, channeling all of the infusions to physician offices, they would have saved $1.28 billion per year, or 26 percent of what they actually paid. Had they relied on cost-sharing incentives to channel infusions to physician offices-with either uniform 20 percent coinsurance or reference pricing-they would have realized savings but increased the financial burden on patients who received care at the higher-price hospital clinics. Under 20 percent coinsurance, patients' payment obligations for care at hospital clinics would have exceeded those for care in physician offices by a median of 67 percent for biologics, 72 percent for chemotherapies, 87 percent for hormonal therapies, and 75 percent for other cancer drugs. Large savings are potentially available to commercial insurers from shifting cancer infusion care to nonhospital settings, but cost-sharing burdens could become very high for patients.