THE PRICE AIN'T RIGHT? HOSPITAL PRICES AND HEALTH SPENDING ON THE PRIVATELY INSURED

Assessing the quality of public services: For-profits, chains, and concentration in the hospital market

We examine variation in US hospital quality across ownership, chain membership, and market concentration. We propose a new measure of quality derived from penalties imposed on hospitals under the flagship Hospital Readmissions Reduction Program, and use regression models to risk-adjust for hospital characteristics and county demographics. While the overall association between for-profit ownership and quality is negative, there is evidence of substantial heterogeneity. The quality of for-profit relative to non-profit hospitals declines with increasing market concentration. Moreover, the quality gap is primarily driven by for-profit chains. While the competition result mirrors earlier findings in the literature, the chain result appears to be new: it suggests that any potential quality gains afforded by chains are mostly realized by not-for-profit hospitals.

Sources of specialist physician fee variation: Evidence from Australian health insurance claims data

This study explores the variation in specialist physician fees and examines whether the variation can be attributed to patient risk factors, variation between physicians, medical specialties, or other factors. We use health insurance claims data from a large private health insurer in Australia. Although Australia has a publicly funded health system that provides universal health coverage, about 44 % of the population holds private health insurance. Specialist physician fees in the private sector are unregulated; physicians can charge any price they want, subject to market forces. We examine the variation in fees using two price measures: total fees charged and out-of- pocket payments. We follow a two-stage method of removing the influence of patient risk factors by computing risk-adjusted prices at patient-level, and aggregating the adjusted prices over all claims made by each physician to arrive at physician-level average prices. In the second stage, we use variance-component models to analyse the variation in the physician-level average prices. We find that patient risk factors account for a small portion of the variance in fees and out-of-pocket payments. Physician-specific variation accounts for the bulk of the vari- ance. The results underscore the importance of understanding physician characteristics in formulating policy efforts to reduce fee variation.

Commercial Insurer Market Power and Medicaid Managed Care Networks

Over 70% of Medicaid beneficiaries are enrolled in Medicaid managed care (MMC). MMC provider networks therefore represent a critical determinant of access to the Medicaid program. Many MMC insurers also participate in commercial insurance markets where prices are high, and some insurers exercise considerable market power. In this paper, we examined the relationship between commercial insurer market power and MMC physician network breadth using linked national enrollment data and provider directory data. Insurers with more commercial market power had broader Medicaid physician networks. Insurers with over 30% market share had 37.3% broader Medicaid networks than insurers in the same county that had no commercial market share. These differences were driven by greater breadth among primary care providers, as well as other specialists including OB/GYNs, surgeons, neurologists, and cardiologists. Commercial insurance market power may have spillovers on access to care for MMC beneficiaries.

Demand and Supply Drivers of Medicare and Non-Medicare Health Spending: An Analysis of U.S. States, 1991-2019

For the last four decades, policymakers have attempted to control the United States's high health care costs by reducing patients' demand for care (e.g., by imposing managed-care restrictions or high costs on patients at the time of use). Yet studies based mostly on data from the public Medicare program, which covers mostly elderly Americans, suggest that supply (e.g., number of physicians or hospital beds) rather than demand drives aggregate service use and, hence, costs. Using variation between U.S. states in per enrollee Medicare spending versus per capita spending of all other (non-Medicare) individuals, we find that greater supply boosts costs for the entire population. Furthermore, we find that factors that suppress demand in the non-Medicare population do reduce non-Medicare health care spending, but simultaneously increase Medicare spending. This suggests that for a given supply of medical resources, suppressing demand for one group of patients may produce a compensatory increase in provision of care to those whose demand has not been suppressed. Health planning to assure adequate medical resources where they are needed while preventing excess supply where it is duplicative and wasteful is likely a more effective cost control strategy than the imposition of managed-care restrictions or imposing higher costs onto patients seeking care.

Payer-Negotiated Price Variation and Relationship to Surgical Outcomes for the Most Common Cancers at NCI-Designated Cancer Centers

BACKGROUND

Federal rules mandate that hospitals publish payer-specific negotiated prices for all services. Little is known about variation in payer-negotiated prices for surgical oncology services or their relationship to clinical outcomes. We assessed variation in payer-negotiated prices associated with surgical care for common cancers at National Cancer Institute (NCI)-designated cancer centers and determined the effect of increasing payer-negotiated prices on the odds of morbidity and mortality.

MATERIALS AND METHODS

A cross-sectional analysis of 63 NCI-designated cancer center websites was employed to assess variation in payer-negotiated prices. A retrospective cohort study of 15,013 Medicare beneficiaries undergoing surgery for colon, pancreas, or lung cancers at an NCI-designated cancer center between 2014 and 2018 was conducted to determine the relationship between payer-negotiated prices and clinical outcomes. The primary outcome was the effect of median payer-negotiated price on odds of a composite outcome of 30 days mortality and serious postoperative complications for each cancer cohort.

RESULTS

Within-center prices differed by up to 48.8-fold, and between-center prices differed by up to 675-fold after accounting for geographic variation in costs of providing care. Among the 15,013 patients discharged from 20 different NCI-designated cancer centers, the effect of normalized median payer-negotiated price on the composite outcome was clinically negligible, but statistically significantly positive for colon [aOR 1.0094 (95% CI 1.0051-1.0138)], lung [aOR 1.0145 (1.0083-1.0206)], and pancreas [aOR 1.0080 (1.0040-1.0120)] cancer cohorts.

CONCLUSIONS

Payer-negotiated prices are statistically significantly but not clinically meaningfully related to morbidity and mortality for the surgical treatment of common cancers. Higher payer-negotiated prices are likely due to factors other than clinical quality.

Association of Hospital Market Competition with Outcomes of Complex Cancer Surgery

BACKGROUND

The association of hospital market competition, financial costs, and quality of oncologic care has not been well-defined. This study sought to evaluate variations in patient outcomes and financial expenditures after complex cancer surgery across high- and low-competition markets.

METHODS

Medicare 100% Standard Analytic Files were used to identify patients with lung, esophageal, gastric, hepatopancreaticobiliary, or colorectal cancer who underwent surgical resection between 2018 and 2021. Data were merged with the annual hospital survey database, and the hospital market Herfindahl-Hirschman index was used to categorize hospitals into low- and high-concentration markets. Multi-level, multivariable regression models adjusting for patient characteristics (i.e., age, sex, comorbidities, and social vulnerability), year of procedure, and hospital factors (i.e., case volume, nurse-bed ratio, and teaching status) were used to assess the association between hospital market competition and outcomes.

RESULTS

Among 117,641 beneficiaries who underwent complex oncologic surgery, the mean age was 73.8 ± 6.1 years, and approximately one-half of the cohort was male (n = 56,243, 47.8%). Overall, 63.8% (n = 75,041) of the patients underwent care within a high-competition market. Notably, there was marked geographic variation relative to market competition. High versus low market-competition hospitals were more likely to be in high social vulnerability areas (35.1 vs 27.5%; p < 0.001), as well as care for racial/ethnic minority individuals (13.8 vs 7.7%; p < 0.001), and patients with more comorbidities (≥ 2 Elixhauser comorbidities: 63.1 vs 61.1%; p < 0.001). In the multivariable analysis, treatment at hospitals in high- versus low-competition markets was associated with lower odds of achieving a textbook outcome (odds ratio, 0.95; 95% confidence interval, 0.91-0.99; p = 0.009). Patients at high-competition hospitals had greater mean index hospitalization costs ($19,462.2 [16211.9] vs $18,844.7 [14994.7]) and 90-day post-discharge costs ($7807.8 [15431.3] vs $7332.8 [14038.2]) (both p < 0.001) than individuals at low-competition hospitals.

CONCLUSIONS

Hospital market competition was associated with poor achievement of an optimal postoperative outcome and greater hospitalization costs.

It Is Time to Consider More Price Regulation in Health Care

This JAMA Forum discusses the promise and pitfalls of regulating prices in the US health care system.

Hospital Capital Assets, Community Health, and the Utilization and Cost of Inpatient Care: A Population-Based Study of US Counties

BACKGROUND

The provision of high-quality hospital care requires adequate space, buildings, and equipment, although redundant infrastructure could also drive service overprovision.

OBJECTIVE

To explore the distribution of physical hospital resources-that is, capital assets-in the United States; its correlation with indicators of community health and nonhealth factors; and the association between hospital capital density and regional hospital utilization and costs.

RESEARCH DESIGN

We created a dataset of n=1733 US counties by analyzing the 2019 Medicare Cost Reports; 2019 State Inpatient Database Community Inpatient Statistics; 2020-2021 Area Health Resource File; 2016-2020 American Community Survey; 2022 PLACES; and 2019 CDC WONDER. We first calculated aggregate hospital capital assets and investment at the county level. Next, we examined the correlation between community's medical need (eg, chronic disease prevalence), ability to pay (eg, insurance), and supply factors with 4 metrics of capital availability. Finally, we examined the association between capital assets and hospital utilization/costs, adjusted for confounders.

RESULTS

Counties with older and sicker populations generally had less aggregate hospital capital per capita, per hospital day, and per hospital discharge, while counties with higher income or insurance coverage had more hospital capital. In linear regressions controlling for medical need and ability to pay, capital assets were associated with greater hospital utilization and costs, for example, an additional $1000 in capital assets per capita was associated with 73 additional discharges per 100,000 population (95% CI: 45-102) and $19 in spending per bed day (95% CI: 12-26).

CONCLUSIONS

The level of investment in hospitals is linked to community wealth but not population health needs, and may drive use and costs.

Acquisitions of safety-net hospitals from 2016-2021: a case series

Safety-net hospitals have recently become targets of acquisition by health systems with the stated purpose of improving their financial solvency and preserving access to safety-net services. Whether acquisition achieves these goals is unknown. In this descriptive case series, we sought to determine the factors that contribute to safety-net hospital acquisition, and identify whether safety-net services are preserved after acquisition. We examined 22 acquisitions of safety-net hospitals from 2016 to 2021 and described characteristics of the acquired safety-net hospitals, their acquiring systems, and the operational fate of acquired hospitals. Relative to other hospitals in the same Hospital Referral Region in the year prior to acquisition, acquired safety-net hospitals tended to be smaller and have lower occupancy rates. Acquiring systems were geographically concentrated, with only 6 of 20 systems operating in more than 1 state. Safety-net hospitals frequently offered typical safety-net services prior to acquisition. However, after acquisition, 2 of the 22 acquired safety-net hospitals lost safety-net services, 3 hospitals ceased inpatient services, and 1 hospital closed entirely. These findings suggest that acquisition of safety-net hospitals may be associated with trade-offs related to the provision of safety-net services for the communities that stand to benefit from them most.

Why does the cost of employer-sponsored coverage keep rising?

Over the past 25 years, the gap between the increase in health insurance costs and workers' wages has significantly expanded. This trend has led to significant concerns about healthcare affordability, with surveys revealing conflicting opinions regarding whether hospitals or health insurance companies bear the blame for escalating costs. To better understand these dynamics, we examined consumer price indices for health insurance, hospital services, and professional services from 2006 to 2023 using Bureau of Labor Statistics data. Our analysis shows that the hospital price index rose steadily between 2006 and 2023, faster than insurance premiums or professional services. To examine whether differences in underlying costs are driving higher hospital price increases, we evaluated the profit margins of hospitals and health insurance companies using the National Academy for State Health Policy''s Hospital Cost Tool and National Association of Insurance Commissioners Industry Reports. Our findings reveal that hospitals (for-profit and nonprofit) have consistently maintained higher profit margins than insurance companies. As health insurance costs continue to weigh heavily on working Americans, our analysis suggests that high hospital prices drive insurance premiums.

Hospital behavior over the private equity life cycle

Private equity is an increasing presence in US healthcare, with unclear consequences. Leveraging unique data sources and difference-in-differences designs, we examine the largest private equity hospital takeover in history. The affected hospital chain sharply shifts its advertising strategy and pursues joint ventures with ambulatory surgery centers. Inpatient throughput is increased by allowing more patient transfers, and crucially, capturing more patients through the emergency department. The hospitals also manage shorter, less treatment-intensive stays for admitted patients. Outpatient surgical care volume declines, but remaining cases focus on higher complexity procedures. Importantly, behavior changes persist even after private equity divests.

Cost, Quality, and Utilization After Hospital-Physician and Hospital-Post Acute Care Vertical Integration: A Systematic Review

Vertical integration of health systems-the common ownership of different aspects of the health care system-continues to occur at increasing rates in the United States. This systematic review synthesizes recent evidence examining the association between two types of vertical integration-hospital-physician (n = 43 studies) and hospital-post-acute care (PAC; n = 10 studies)-and cost, quality, and health services utilization. Hospital-physician integration is associated with higher health care costs, but the effect on quality and health services utilization remains unclear. The effect of hospital-PAC integration on these three outcomes is ambiguous, particularly when focusing on hospital-SNF integration. These findings should raise some concern among policymakers about the trajectory of affordable, high-quality health care in the presence of increasing hospital-physician vertical integration but perhaps not hospital-PAC integration.

MONITORING FOR WASTE: EVIDENCE FROM MEDICARE AUDITS

This paper examines the tradeoffs of monitoring for wasteful public spending. By penalizing unnecessary spending, monitoring improves the quality of public expenditure and incentivizes firms to invest in compliance technology. I study a large Medicare program that monitored for unnecessary healthcare spending and consider its effect on government savings, provider behavior, and patient health. Every dollar Medicare spent on monitoring generated $24-29 in government savings. The majority of savings stem from the deterrence of future care, rather than reclaimed payments from prior care. I do not find evidence that the health of the marginal patient is harmed, indicating that monitoring primarily deters low-value care. Monitoring does increase provider administrative costs, but these costs are mostly incurred upfront and include investments in technology to assess the medical necessity of care.

Politics and health care spending in the United States: A case study from the passage of the 2003 Medicare Modernization Act

This paper analyzes the interplay between congressional politics, the actions of the executive branch, and hospitals' regulated Medicare payments. We focus on the 2003 Medicare Modernization Act (MMA) and analyze a provision in the law - Section 508 - that raised certain hospitals' regulated payments. We show, via our analysis of the Section 508 program, that Medicare payments are malleable and can be influenced by political dynamics. In the cross-section, hospitals represented by members of Congress who voted "yea" on the MMA were more likely to receive Section 508 payment increases. We interviewed the Secretary of Health and Human Services who oversaw the MMA, and he described how these payment increases were designed to win support for the law. The Section 508 payment increases raised hospitals' activity and spending. Members of Congress representing recipient hospitals received increased campaign contributions after the Section 508 payment increases were extended. Ultimately, our analysis highlights how Medicare payment increases can serve as an appealing tool for legislative leaders working to win votes for wider pieces of legislation.

New evidence on the impacts of cross-market hospital mergers on commercial prices and measures of quality

OBJECTIVE

To examine the impact of "cross-market" hospital mergers on prices and quality and the extent to which serial acquisitions contribute to any measured effects.

DATA SOURCES

2009-2017 commercial claims from the Health Care Cost Institute (HCCI) and quality measures from Hospital Compare.

STUDY DESIGN

Event study models in which the treated group consisted of hospitals that acquired hospitals further than 50 miles, and the control group was hospitals that were not part of any merger activity (as a target or acquirer) during the study period.

DATA EXTRACTION METHODS

We extracted data for 214 treated hospitals and 955 control hospitals.

PRINCIPAL FINDINGS

Six years after acquisition, cross-market hospital mergers had increased acquirer prices by 12.9% (CI: 0.6%-26.6%) relative to control hospitals, but had no discernible impact on mortality and readmission rates for heart failure, heart attacks and pneumonia. For serial acquirers, the price effect increased to 16.3% (CI: 4.8%-29.1%). For all acquisitions, the price effect was 21.8% (CI: 4.6%-41.7%) when the target's market share was greater than the acquirer's market share versus 9.7% (CI: -0.5% to 20.9%) when the opposite was true. The magnitude of the price effect was similar for out-of-state and in-state cross-market mergers.

CONCLUSIONS

Additional evidence on the price and quality effects of cross-market mergers is needed at a time when over half of recent hospital mergers have been cross-market. To date, no hospital mergers have been challenged by the Federal Trade Commission on cross-market grounds. Our study is the third to find a positive price effect associated with cross-market mergers and the first to show no quality effect and how serial acquisitions contribute to the price effect. More research is needed to identify the mechanism behind the price effects we observe and analyze price effect heterogeneity.

Pricing of hospital services: evidence from a thematic review

The management implications of pricing healthcare services, especially hospitals, have received insufficient scholarly attention. Additionally, disciplinary overlaps have led to scattered academic efforts in this domain. This study performs a thematic synthesis of the literature and applies retrospective analysis to hospital service pricing articles to address these issues. The study's inputs were sourced from well-known online repositories, using a structured search string and PRISMA flow chart to select the pertinent documents. Our thematic analysis of pricing literature encompasses: (a) comprehension of hospital service pricing nature; (b) pricing objectives, strategies and practices differentiation; (c) presentation of factors impacting hospital service pricing. We observe that hospital pricing is an intricate and unclear matter. The terms 'pricing strategies' and 'pricing practices' are often used interchangeably in academic literature. Hospital service pricing is influenced by costs, demand and supply factors, market structure, pricing regulation and third-party reimbursements. The study's findings provide policy implications for service pricing in hospitals, in addition to suggesting avenues for future research on hospital pricing.

Cross-country comparisons in health price growth over time

OBJECTIVE

To examine how the United States compares in terms of health price growth relative to four other countries - Australia, Canada, France, and the Netherlands.

DATA SOURCES AND STUDY SETTING

Secondary data on health expenditure were extracted from international and national agencies spanning the years 2000-2020.

STUDY DESIGN

International price indices specific to health were constructed using available international expenditure data and compared to existing health-specific national and general international price indices.

DATA COLLECTION/EXTRACTION METHODS

Health expenditure data were extracted from the Organization for Economic Cooperation and Development (OECD) database. We obtained a time series of health price indices from the national agencies in each of the study countries.

PRINCIPAL FINDINGS

We find meaningful variation across countries in the rate at which health prices grow relative to general prices. The United States had the highest cumulative health price growth compared to general price growth over the years 2000-2020 at 14%, followed by Canada and the Netherlands. Unlike the other study countries, health prices in France grew consistently in line with general prices. Price growth for health care paid for by public funds and households grew at different rates across countries, where price growth was higher for public payers. US households faced the greatest mean annual price growth.

CONCLUSIONS

The choice of price index has major implications for comparative analysis. Despite their widespread use internationally, general price indices likely underestimate the contribution of price growth to overall health expenditure growth. We find that in addition to its reputation for having high health price levels compared to other high-income countries, the United States also faces health price growth for goods and services paid for by government and households in excess of general price growth. Furthermore, US households are exposed to greater health price growth than households in comparator countries.

Catastrophic health expenditures: a disproportionate risk in uninsured ethnic minorities with diabetes

BACKGROUND

Chargemaster prices are the list prices that providers and health systems assign to each of their medical services in the US. These charges are often several factors of magnitude higher than those extended to individuals with either private or public insurance, however, these list prices are billed in full to uninsured patients, putting them at increased risk of catastrophic health expenditures (CHE). The objective of this study was to examine the risk of CHE across insurance status, diabetes diagnosis and to examine disparity gaps across race/ethnicity.

METHODS

We perform a retrospective observational study on a nationally representative cohort of adult patients from the Medical Expenditure Panel Survey for the years 2002-2017. Using logistic regression models we estimate the risk of CHE across insurance status, diabetes diagnosis and explore disparity gaps across race/ethnicity.

RESULTS

Our fully adjusted results show that the relative odds of having CHE if uninsured is 5.9 (p < 0.01) compared to if insured, and 1.1 (p < 0.01) for patients with a diabetes diagnosis (compared to those without one). We note significant interactions between insurance status and diabetes diagnosis, with uninsured patients with a diabetes diagnosis being 9.5 times (p < 0.01) more likely to experience CHE than insured patients without a diabetes diagnosis. In terms of racial/ethnic disparities, we find that among the uninsured, non-Hispanic blacks are 13% (p < 0.05), and Hispanics 14.2% (p < 0.05), more likely to experience CHE than non-Hispanic whites. Among uninsured patients with diabetes, we further find that Hispanic patients are 39.3% (p < 0.05) more likely to have CHE than non-Hispanic white patients.

CONCLUSIONS

Our findings indicate that uninsured patients with diabetes are at significantly elevated risks for CHE. These risks are further found to be disproportionately higher among uninsured racial/ethnic minorities, suggesting that CHE may present a channel through which structural economic and health disparities are perpetuated.

The relationship between community social risk factors and regional hospital-reported cash, negotiated, and chargemaster prices for 14 common services

BACKGROUND

Social risk factors are key drivers of the geographic variation in spending in the United States but little is known how community-level social risk factors are associated with hospital prices. Our objective was to describe the relationship between regional hospital-reported prices and social risk factors by price type (chargemaster, cash, commercial, Medicare, and Medicaid).

METHODS

This cross-sectional analysis used newly available hospital-reported prices from acute general hospitals in 2022. The prices were for 14 common services. Prices were winsorized at 98%, wage index-adjusted, standardized by service, and aggregated to hospital service areas (HSAs). For social risk, we used 23 measures across 5 domains of social risk (socioeconomic position; race, ethnicity, and culture; gender; social relationships; and residential and community context). Spearman's correlation was used to estimate associations between median prices and social risk by price type.

RESULTS

Prices were reported from 2,386 acute general hospitals in 45% (1,502 of 3,436) HSAs. Correlations between regional prices and other social risk factors varied by price type (range: -0.19 to 0.31). Chargemaster and cash prices were significantly correlated with the most community characteristics (10 of 23, 43%) followed by commercial prices (8, 35%). Medicare and Medicaid prices were only significantly correlated with 1 measure (all p < 0.01). All price types were significantly correlated with the percentage of uninsured (all p < 0.01). Chargemaster, cash, and commercial prices were positively correlated with percentage of Hispanic residents, residents with limited English proficiency, and non-citizens (all p < 0.05).

CONCLUSIONS

While regional correlations between prices and social risk factors were weak across all prices, chargemaster, cash, and commercial prices were more like closely aligned with community-level social risk factors than the two public payers (Medicare and Medicaid). Chargemaster, cash, and commercial hospital prices appeared to be higher in socially disadvantaged communities. Further research is needed to clarify the relationship between prices and community social risk factors.

Hospital Facility Prices Declined As A Result Of Oregon's Hospital Payment Cap

Hospital prices for commercially insured people are high and vary widely, prompting states to seek ways to control hospital price growth. In October 2019, the Oregon state employee health insurance plan instituted a cap on hospital payments. Using 2014-21 data from the Oregon All Payer All Claims Reporting Program database, we performed a difference-in-differences analysis to test the impact of the cap on hospital facility prices for Oregon's state employee plan enrollees. We found that the cap was not associated with a significant reduction in inpatient facility prices across the post period (-$901.9 per admission) but was associated with a significant reduction in the second year after implementation (-$2,774.20). The cap was associated with a significant reduction in outpatient facility prices over the course of the first twenty-seven months of the policy (-$130.50 per procedure). We estimated $107.5 million (or 4 percent of total plan spending) in savings to the state employee plan during the first two years. The hospital payment cap successfully reduced hospital prices for enrollees in that plan.

The Revival of US Hospital Care, 2004-2019

BACKGROUND

Between 2004 and 2019, the US hospital industry reversed the 21-year decline in its share of national health spending.

OBJECTIVE

To measure and explain changes in hospital utilization, cost, charges, and inpatient case mix.

DATA SOURCES

Principal sources were the American Hospital Association annual survey, the National Inpatient Sample, and the Healthcare Cost Reporting Information System. The study included all US community hospitals (n=5141 in 2019).

ANALYTIC APPROACH

We used factor decomposition to separate the impacts of population, utilization, unit cost, and charge markups on the growth in cost and charges for inpatient and outpatient care nationwide and for each state. For unit cost, we separated the impacts of input price inflation and treatment intensity. To measure the inpatient case mix, we applied an all-patient diagnosis-related groups algorithm.

RESULTS

Between 2004 and 2019, charges more than tripled to $4.11 trillion. The cost more than doubled to $911 billion. For inpatient care, discharges fell 5%, discharges per person fell 15%, cost per discharge increased 88%, and charge markups rose 43%. For outpatient care, visits rose 36%, visits per person rose 21%, cost per visit rose 119%, and charge markups rose 52%. Treatment intensity increased by 33% per discharge and 55% per visit. Nationwide, the inpatient case mix increased by 34%, reflecting sicker patients and better clinical documentation.

CONCLUSIONS

We quantified 3 important trends: rapid growth in outpatient visits, increased treatment intensity, and sustained increases in markups. Increased treatment intensity was the largest factor behind $491 billion in hospital cost growth between 2004 and 2019.

The end of an era? Activity-based funding based on diagnosis-related groups: A review of payment reforms in the inpatient sector in 10 high-income countries

CONTEXT

Across the member countries of the Organisation for Economic Co-Operation and Development, policy makers are searching for new ways to pay hospitals for inpatient care to move from volume to value. This paper offers an overview of the latest reforms and their evidence to date.

METHODS

We reviewed reforms to DRG payment systems in 10 high-income countries: Australia, Austria, Canada (Ontario), Denmark, France, Germany, Norway, Poland, the United Kingdom (England), and the United States.

FINDINGS

We identified four reform trends among the observed countries, them being (1) reductions in the overall share of inpatient payments based on DRGs, (2) add-on payments for rural hospitals or their exclusion from the DRG system, (3) episode-based payments, which use one joint price to pay providers for all services delivered along a patient pathway, and (4) financial incentives to shift the delivery of care to less costly settings. Some countries have combined some or all of these measures with financial adjustments for quality of care. These reforms demonstrate a shift away from activity and efficiency towards a diversified set of targets, and mirror efforts to slow the rise in health expenditures while improving quality of care. Where evaluations are available, the evidence indicates mixed success in improving quality of care and reducing costs and expenditures.

Healthcare costs of cancer among children, adolescents, and young adults: A scoping review

OBJECTIVE

To collate and critically review international evidence on the direct health system costs of children and adolescents and young adults (AYA) with cancer.

METHODS

We conducted searches in PubMed, MEDLINE, CINAHL, and Scopus. Articles were limited to studies involving people aged 0-39 years at cancer diagnosis and published from 2012 to 2022. Two reviewers screened the articles and evaluated the studies using the Consolidated Health Economic Evaluation Reporting Standards checklist. The reviewers synthesized the findings using a narrative approach and presented the costs in 2022 US dollars for comparability.

RESULTS

Overall, the mean healthcare costs for all cancers in the 5 years post diagnosis ranged from US$36,670 among children in Korea to US$127,946 among AYA in the USA. During the first year, the mean costs among children 0-14 years ranged from US$34,953 in Chile to over US$130,000 in Canada. These were higher than the costs for AYA, estimated at US$61,855 in Canada. At the end of life, the mean costs were estimated at over US$300,000 among children and US$235,265 among adolescents in Canada. Leukemia was the most expensive cancer type, estimated at US$50,133 in Chile, to US$152,533 among children in Canada. Overall, more than a third of the total cost is related to hospitalizations. All the included studies were of good quality.

CONCLUSIONS

Healthcare costs associated with cancer are substantial among children, and AYA. More research is needed on the cost of cancer in low- and middle-income countries and harmonization of costs across countries.

Do Insurers With Greater Market Power Negotiate Consistently Lower Prices for Hospital Care? Evidence From Hospital Price Transparency Data

This study examined if greater insurer market power was associated with consistently lower negotiated prices within each hospital for 44 shoppable and emergency procedures, using price transparency data disclosed by 1,506 hospitals in metropolitan areas. We used multi-level fixed effects models to estimate the within-hospital variation in plan-level insurer-negotiated prices (from the largest insurer, the second largest insurer, other major insurers, and nonmajor insurers) and cash-pay prices as a function of insurer market power. For shoppable services, relative to nonmajor insurers, the largest, second largest, and other major insurers negotiated 23%, 16%, and 3% lower prices, respectively, while cash prices were 17% higher. For emergency room visits, while the largest insurers paid 5% less than nonmajor insurers, the second largest and other major insurers did not pay lower prices. Stratified analyses by type of shoppable services found varying magnitudes and patterns of price discounts associated with insurer market power.

Using Case Mix Index within Diagnosis-Related Groups to Evaluate Variation in Hospitalization Costs at a Large Academic Medical Center

In analyzing direct hospitalization cost and clinical data from an academic medical center, commonly used metrics such as diagnosis-related group (DRG) weight explain approximately 37% of cost variability, but a substantial amount of variation remains unaccounted for by case mix index (CMI) alone. Using CMI as a benchmark, we isolate and target individual DRGs with higher than expected average costs for specific quality improvement efforts. While DRGs summarize hospitalization care after discharge, a predictive model using only information known before admission explained up to 60% of cost variability for two DRGs with a high excess cost burden. This level of variability likely reflects underlying patient factors that are not modifiable (e.g., age and prior comorbidities) and therefore less useful for health systems to target for intervention. However, the remaining unexplained variation can be inspected in further studies to discover operational factors that health systems can target to improve quality and value for their patients. Since DRG weights represent the expected resource consumption for a specific hospitalization type relative to the average hospitalization, the data-driven approach we demonstrate can be utilized by any health institution to quantify excess costs and potential savings among DRGs.

Price Transparency in United States' Health Care: A Narrative Policy Review of the Current State and Way Forward

Health care price transparency is gaining momentum as a tangible policy intervention that can unleash market principles to increase competition, help begin to decrease U.S. health care expenditures, and provide Americans with access to affordable, high-quality health care. Indeed, pricing reform is required to facilitate patient shopping in health care. In this narrative policy review, we offer a brief history of health care price transparency efforts and an overview of the health care price transparency literature. Further, we highlight the current rules and legislative initiatives aimed at achieving the full potential of health care price transparency. Lastly, we offer key takeaways and highlight suggestions for future policy directions, including the need to ensure hospital and insurance compliance through more appropriate penalties and incentives, importance of reducing regulation to promote financial upside that can be obtained by both patients and providers who actively promote shopping for lower cost, higher quality health care goods and services, and the need for transparent and easily found quality metrics, including outcomes most important to patients, driven by physicians "on the ground" with patient input.

Impact of Site-Neutral Payments for Commercial and Employer-Sponsored Plans

Site-neutral payment is a policy created by federal rule making and implemented by the Centers for Medicare and Medicaid Services (CMS) that aims to reduce healthcare costs by aligning payment rates for certain services provided in multiple care settings. Site-neutral payments are intended to eliminate the incentive for providers to acquire facilities, such as physician offices or ambulatory surgical centers (ASCs), that Medicare reimburses at the lower non-facility rate and convert those settings into hospital outpatient departments (HOPDs), where Medicare reimburses at the higher facility rate. Although initiated by Congress to address payment disparities in Medicare, similar payment discrepancies can be seen in the commercial market where individual and employer-sponsored health plans often pay more for certain outpatient services depending on their location. This analysis presents a simulation of the impact of applying site-neutral payments to the commercial market with respect to overall potential savings for consumers, health plans and the federal government. To conduct the analysis, we use an all-payer claims data base generalizable to the United States. The analysis focused on a select group of outpatient services identified by the Medicare Payment Advisory Commission (MedPAC). We mapped the MedPAC identified 68 Ambulatory Payment Classifications (APCs), the codes Medicare uses to reimburse facilities for outpatient services, to the relevant CPT4/HCPCS codes, which the commercial market uses for billing. The potential cost savings of applying the site-neutral payment policy to the commercial insurance market to be $58 billion for year 2022. We estimate the 10-year total (2024-2033) employer market premium reduction ranges from 5.35% to 5.0% and found that those premium reductions would result in employer-sponsored insurance (ESI) tax subsidy savings of $140 billion to the federal government over a 10-year period (2024-2033).

Certificate of Need Laws in Health Care: Past, Present, and Future

Certificate of need (CON) laws limit the supply of health care services in about two-thirds of U.S. states. The regulations require those who wish to offer new services or expand existing services to first prove to a regulator that the care is needed. While advocates for the regulation have offered several rationales for its continuance, the balance of evidence suggests that the rules protect incumbent providers from competition at the expense of patients, payors, and would-be competitors. In this article, I review the history of CON laws in health care, summarize the large literature evaluating them, and briefly sketch options for reform.JEL Classification: I11, I18, H75.

Savings associated with surgical aortic valve replacement with a RESILIA tissue valve based on seven-year COMMENCE trial results

BACKGROUND

Bioprostheses with RESILIA tissue demonstrate a reduction in calcification and improve health outcomes in pre-clinical and clinical studies. Prior economic analyses which relied on 5 years of evidence from the COMMENCE trial demonstrate financial savings for RESILIA tissue valves relative to mechanical valves after surgical aortic valve replacement (SAVR). Given the recent release of 7-year COMMENCE data, this economic evaluation updates the estimate for long-run savings of bioprosthetic valves with RESILIA.

METHODS

Simulation models estimated disease progression across two hypothetical SAVR cohorts (tissue vs. mechanical) of 10,000 patients each in the US. The primary comparison calculated the SAVR-related expenditures associated with each valve type ($US, 2023). Health outcome probabilities were based on the COMMENCE trial though year 7 and projected for an additional 8 years based on prior studies of tissue and mechanical SAVR. Costs for key outcomes (mortality, reoperation, bleeding, thromboembolism, endocarditis) and anticoagulant monitoring were sourced from the literature. Incidence rates of health outcomes associated with mechanical valves relied on relative risks of tissue valve versus mechanical valve patients.

RESULTS

Seven-year savings are $13,415 (95% CI = $10,472-$17,321) per patient when comparing RESILIA versus mechanical SAVR. Projected 15-year savings were $23,001 ($US, 2023; 95% CI = $17,802-$30,421). Most of the 15-year savings are primarily attributed to lower anti-coagulation monitoring costs ($21,073 in ACM savings over 15 years), but lower bleeding cost (savings: $2,294) and thromboembolism-related expenditures (savings: $852) also contribute. Reoperation and endocarditis expenditures were slightly larger in the RESILIA cohort. If reoperation relative risk reverts from 1.1 to 2.2 (the level in legacy tissue valves) after year 7, savings are $18,064. RESILIA SAVR also reduce costs relative to legacy tissue valves.

CONCLUSION

Patients receiving RESILIA tissue valves are projected to have lower SAVR-related health expenditures relative to mechanical and legacy tissue valves.

Hospital- and county-level characteristics explain geographic variability in prices of cancer-related procedures: Implications for policy and interventions

BACKGROUND

Healthcare costs in the U.S. are high and variable, which can hinder access and impact health outcomes across communities. This study examined hospital- and county-level characteristics to identify factors that explain geographic variation in prices for four cancer-related procedures.

METHODS

Data sources included Turquoise Health, which compiles publicly-available price data from U.S. hospitals. We examined list prices for four procedures: abdominal ultrasound, diagnostic colonoscopy, brain MRI, and pelvis CT scan, which we linked to characteristics of hospitals (e.g., number of beds) and counties (e.g., metropolitan status). We used multilevel linear regression models to assess multivariable relationships between prices and hospital- and county-level characteristics. Supplementary analyses repeated these models using procedures prices for commercial insurance plans.

RESULTS

For each procedure, list prices varied across counties (intraclass correlation: abdominal ultrasound = 23.2%; colonoscopy = 17.1%; brain MRI = 37.2%; pelvis CT = 50.9%). List prices for each procedure were associated with hospital ownership (all p < 0.001) and percent of population without health insurance (all p < 0.05). For example, list prices for abdominal ultrasound were higher for proprietary versus Government-owned hospitals (β = 539.10, 95% confidence interval [CI]: 256.12, 822.08, p < 0.001) and for hospitals in counties with more uninsured residents (β = 23.44, 95% CI: 2.55, 44.33, p = 0.03). Commercial insurance prices were negatively associated with metropolitan status.

CONCLUSIONS

Prices for cancer-related healthcare procedures varied substantially, with considerable heterogeneity associated with county location as well as county-level social determinants of health (e.g., health insurance coverage). Interventions and policy changes are needed to alleviate the financial burden of cancer care among patients, including geographic variation in prices for cancer-related procedures.

Optimizing care delivery in expanding health systems: Views from clinical leaders

INTRODUCTION

In response to intense market pressures, many hospitals have consolidated into systems. However, evidence suggests that consolidation has not led to the improvements in clinical quality promised by proponents of mergers. The challenges to delivering care within expanding health systems and the opportunities posed to surgical leaders remains largely unexplored.

METHODS

Semistructured interviews with 30 surgical leaders at teaching hospitals affiliated with health systems from August-December 2019. Interviews were transcribed verbatim and coded in an iterative process using MaxQDA software. Attitudes and strategies toward redesigning health care delivery across expanding systems were analyzed using thematic analysis.

RESULTS

Leaders reported challenges to redesigning care delivery across the system ranging from resource constraints (e.g. hospital beds and operating rooms) to evolving market demands (e.g., patient preferences to receive care close to home). However, participants also highlighted that system expansion provided multiple opportunities to increase access (e.g. decant low-complexity care to affiliated centers) and improve quality of care (e.g. standardize best practices) for diverse populations including the potential to leverage their health system to expand access and improve quality.

CONCLUSIONS

Though evidence suggests that hospital consolidation has not led to redesigned care delivery or improved clinical quality at a national level, leaders are pursuing varying sets of strategies aimed at leveraging system expansion in order to improve access and quality of care.

Role of prices in driving the variation in spending across medical groups

OBJECTIVE

To understand the relative role of prices versus utilization in the variation in total spending per patient across medical groups.

DATA SOURCES

We conducted a cross-sectional analysis of medical claims for commercially insured adults from a large national insurer in 2018.

STUDY DESIGN

After assigning patients to a medical group based on primary care visits in 2018, we calculated total medical spending for each patient in that year. Total spending included care provided by clinicians within the medical group and care provided by other providers, including hospitals. It did not include drug spending. We estimated the case mix adjusted spending per patient for each medical group. Within each market, we categorized medical groups into quartiles based on the group's spending per patient. To decompose spending variation into price versus utilization, we compared spending differences between highest and lowest quartile medical groups under two scenarios: (1) using actual prices (2) using a standardized price (same price used for a given service across the nation).

PRINCIPAL FINDINGS

In total, 3,921,736 patients were assigned to 7284 medical groups. Per-patient spending in the highest quartile of spending medical groups was $1813 higher than per-patient spending in the lowest spending quartile of medical groups (50% higher relative spending). This overall difference was primarily driven by differences in inpatient care, imaging, and specialty care. In the scenario where we used standardized prices, the difference in spending between medical groups in the top and bottom quartiles decreased to $1425, implying that 79% of the $1813 difference in spending between the top and bottom quartile groups is explained by utilization and the remaining 21% by prices. The likely explanation for the modest impact of prices is that patients cared for by a given medical group receive care across a wide range of providers.

CONCLUSIONS

Prices explained a modest fraction of the differences in spending between medical groups.

Market Competition and Anemia Management in the United States Following Dialysis Payment Reform

BACKGROUND

Whether market competition influences health care provider responses to national reimbursement reforms is unknown.

OBJECTIVES

We examined whether changes in anemia management after the expansion of Medicare's dialysis payment bundle varied with market competition.

RESEARCH DESIGN

With data from the US dialysis registry, we used a difference-in-differences (DID) design to estimate the independent associations of market competition with changes in anemia management after dialysis reimbursement reform.

SUBJECTS

A total of 326,150 patients underwent in-center hemodialysis in 2009 and 2012, representing periods before and after reimbursement reform.

MEASURES

Outcomes were erythropoiesis-stimulating agent (ESA) and intravenous iron dosage, the probability of hemoglobin <9 g/dL, hospitalizations, and mortality. We also examined serum ferritin concentration, an indicator of body iron stores. We used a dichotomous market competition index, with less competitive areas defined as effectively having <2 competing dialysis providers.

RESULTS

Compared with areas with more competition, patients in less competitive areas had slightly more pronounced declines in ESA dose (60% vs. 57%) following reimbursement reform (DID estimate: -3%; 95% CI, -5% to -1%) and less pronounced declines in intravenous iron dose (-14% vs. -19%; DID estimate: 5%; 95% CI, 1%-9%). The likelihoods of hemoglobin <9 g/dL, hospitalization, and mortality did not vary with market competition. Serum ferritin concentrations in 2012 were 4% (95% CI, 3%-6%) higher in less competitive areas.

CONCLUSIONS

After the expansion of Medicare's dialysis payment bundle, ESA use declined by more, and intravenous iron use declined by less in concentrated markets. More aggressive cost-reduction strategies may be implemented in less competitive markets.

Transparency in Coverage Data and Variation in Prices for Common Health Care Services

This cross-sectional study describes the health care prices publicly posted by Humana and the price variations by geography, service, and other factors.

Outpatient apheresis billing: A photopheresis model shows that hospital price transparency data remain difficult to interpret

OBJECTIVES

The US health care payment system is complex and difficult to interpret. Although federal regulations require that more data, in the form of charges and negotiated rates, be made available, compliance remains variable. We review chargemaster and negotiated rate values for extracorporeal photopheresis (ECP) to assess this variability. We sought to determine the availability of chargemaster and negotiated rates for health care consumers and to assess compliance and pricing among institutions using ECP as a model for apheresis billing.

METHODS

We obtained ECP chargemaster data and negotiated rates from 20 institutions. We analyzed the availability of ECP chargemaster data and compared values with a previously published historic cohort. We evaluated the availability of negotiated rates and determined relative reimbursement using charge to reimbursement ratios. We determined calculated fines for hospitals based on bed size.

RESULTS

Chargemaster availability increased from 2019 to 2022, though only 65% (13/20) of hospitals had both chargemaster and negotiated rate data. Chargemaster prices increased significantly from 2019 to 2022 (range, $3,586.83-$34,043.00). We reviewed 1,191 negotiated rates, with institutions averaging 93.6 different rates (SD, 189.5). Negotiated rates were variable, ranging from $3,586.83 to $34,043.00 per procedure. Reimbursement was higher among private insurers compared with reported Centers for Medicare & Medicaid Services negotiated rates. Of the 35% (7/20) that lacked chargemaster and negotiated rates, institutions faced an average annual fine of $1,430,800.

CONCLUSIONS

Despite recent financial penalties, ECP pricing data are often unavailable or inadequate. Current available resources are unlikely to benefit the average health care consumer who requires ECP.

Price spillovers and specialization in health care: The case of children's hospitals

Specialty hospitals tend to negotiate higher commercial insurance payments, even for relatively routine procedures with comparable clinical quality across hospital types. How specialty hospitals can maintain such a price premium remains an open question. In this paper, we examine a potential (horizontal) differentiation effect in which patients perceive specialty hospitals as sufficiently distinct from other hospitals, so that specialty hospitals effectively compete in a separate market from general acute care hospitals. We estimate this effect in the context of routine pediatric procedures offered by both specialty children's hospitals as well as general acute care hospitals, and we find strong empirical evidence of a differentiation effect in which specialty children's hospitals appear largely immune to competitive forces from non-children's hospitals.

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.

Characteristics of short-term acute care hospitals that experienced a ransomware attack from 2016 to 2021

As cybercrime increasingly targets the health care sector, hospitals face the growing threat of ransomware attacks. Ransomware is a type of malicious software that prevents users from accessing their electronic systems-demanding payment to restore access. In response, momentum is gathering to enact policy that will help hospitals strengthen their cybersecurity defenses. However, to design effective policy, it is crucial to understand the characteristics of hospitals associated with the risk of ransomware attack. In this paper, we compare the characteristics of ransomware-attacked and non-attacked short-term acute care hospitals in the United States. Using data from the American Hospital Association's Annual Survey and the Healthcare Cost Report Information System, we found that ransomware-attacked hospitals were larger, had higher net operating revenue, were more likely to be financially profitable, and more likely to provide trauma, emergency, and obstetric care than non-attacked hospitals. Measures of information technology sophistication did not vary between ransomware-attacked and non-attacked hospitals. These results can be used to tailor policy interventions in order to most effectively respond to and prevent cybercrime in health care.

Structural Factors and Racial/Ethnic Inequities in Travel Times to Acute Care Hospitals in the Rural US South, 2007-2018

Policy Points Policymakers should invest in programs to support rural health systems, with a more targeted focus on spatial accessibility and racial and ethnic equity, not only total supply or nearest facility measures. Health plan network adequacy standards should address spatial access to nearest and second nearest hospital care and incorporate equity standards for Black and Latinx rural communities. Black and Latinx rural residents contend with inequities in spatial access to hospital care, which arise from fundamental structural inequities in spatial allocation of economic opportunity in rural communities of color. Long-term policy solutions including reparations are needed to address these underlying processes.

CONTEXT

The growing rate of rural hospital closures elicits concerns about declining access to hospital-based care. Our research objectives were as follows: 1) characterize the change in rural hospital supply in the US South between 2007 and 2018, accounting for health system closures, mergers, and conversions; 2) quantify spatial accessibility (in 2018) for populations most at risk for adverse outcomes following hospital closure-Black and Latinx rural communities; and 3) use multilevel modeling to examine relationships between structural factors and disparities in spatial access to care.

METHODS

To calculate spatial access, we estimated the network travel distance and time between the census tract-level population-weighted centroids to the nearest and second nearest operating hospital in the years 2007 and 2018. Thereafter, to describe the demographic and health system characteristics of places in relation to spatial accessibility to hospital-based care in 2018, we estimated three-level (tract, county, state-level) generalized linear models.

FINDINGS

We found that 72 (10%) rural counties in the South had ≥1 hospital closure between 2007 and 2018, and nearly half of closure counties (33) lost their last remaining hospital to closure. Net of closures, mergers, and conversions meant hospital supply declined from 783 to 653. Overall, 49.1% of rural tracts experienced worsened spatial access to their nearest hospital, whereas smaller proportions experienced improved (32.4%) or unchanged (18.5%) access between 2007 and 2018. Tracts located within closure counties had longer travel times to the nearest acute care hospital compared with tracts in nonclosure counties. Moreover, rural tracts within Southern states with more concentrated commercial health insurance markets had shorter travel times to access the second nearest hospital.

CONCLUSIONS

Rural places affected by rural hospital closures have greater travel burdens for acute care. Across the rural South, racial/ethnic inequities in spatial access to acute care are most pronounced when travel times to the second nearest open acute care hospital are accounted for.

Considerations for state-imposed conditions on healthcare provider transactions

The widespread consolidation of health systems, hospitals, and physicians has contributed to the high price of healthcare across the United States. While federal antitrust enforcers continue to play an important role in overseeing large mergers, acquisitions, and other consolidating transactions of major healthcare providers, state oversight over healthcare markets is essential to slow consolidation more broadly and address market failures across the country. State laws govern the scope of authority held by state attorneys general and other state agencies to receive notice of, review, and approve, conditionally approve, or block healthcare provider transactions, which can significantly impact the breadth and content of oversight. While blocking potentially anticompetitive transactions can help states maintain any competitive forces that remain in the market, in some situations, approving a transaction with conditions may be the best path forward. Applying conditions to transactions may allow state officials to oversee and govern the behavior of providers post-transaction while states pursue other legislative fixes. Although the use of conditions is a relatively common practice at the state level, little research has been done to explore their use among states. Following a search in all 50 states, this paper examines decisions from state officials imposing conditions intended to address the impacts of transactions on healthcare price, access, and quality and provides recommendations for the effective use of conditions moving forward.

Price Increases Versus Upcoding As Drivers Of Emergency Department Spending Increases, 2012-19

Recent studies document a substantial increase in emergency department (ED) spending in the past decade, even though the number of ED visits per capita has remained relatively stable. Price increases and upcoding are sometimes cited as possible explanations, but their relative impacts are not known. We analyzed Blue Cross Blue Shield claims for patients of all ages who received care in EDs in five states in 2012 and 2019. We used estimates from spending regressions and regressions explaining coding intensity to decompose changes in spending between 2012 and 2019 into components attributable to price increases, changes in patient characteristics or treatment intensity, and upcoding. Prices accounted for at least half of the increase in ED spending per visit for four of the five states we examined. Increases in spending attributable to upcoding were notable but generally not as large. Future research should explore the associations between local market conditions, such as consolidation and ownership type, and both price increases and upcoding.

Hospital Prices For Commercial Plans Are Twice Those For Medicare Advantage Plans When Negotiated By The Same Insurer

Most major insurers operate in both the commercial health insurance and Medicare Advantage (MA) markets. We investigated the ratio of commercial-to-MA prices negotiated by the same insurer, in the same hospital and for the same services, using 2022 price information disclosed by hospitals in compliance with the hospital price transparency rule. Insurers negotiated median hospital prices for commercial plans that were two to three times higher than their MA prices in the same hospital for the same service. The median commercial-to-MA price ratio in the same hospital varied, from 1.8 for surgery and medicine services to 2.2 for laboratory tests and emergency department visits and 2.4 for imaging services. In multivariable Poisson regression analysis, higher ratios were associated with system-affiliated, nonprofit, and teaching hospitals, as well as with large national insurers. These findings reflect the differences in financial incentives and regulatory policies in the commercial and MA markets. Because insurers respond to differing incentives by obtaining different negotiated prices across markets, policy and practice efforts that alter incentives for insurers may have the potential to lower commercial prices.

Spatial price differences of medical services: evidence from the Yangtze River Delta in China

BACKGROUND

Price differences of medical services across regions may affect equity in health financing. This study aimed to estimate the spatial price index of medical services to measure price levels across regions in the Yangtze River Delta, China.

METHODS

Gini-Éltetö-Köves-Szulc method and minimum spanning tree method based on the purchasing power parities were used in this study.

RESULTS

According to the Gini-Éltetö-Köves-Szulc method, Shanghai and Anhui province had price levels that are 127.55% and 103.45% respectively of the price level in Zhejiang province, whereas in Jiangsu medical services were priced at 92.71% of that in Zhejiang province. The spatial price index of medical services in the Yangtze River Delta based on the minimum spanning tree method provided similar results.

CONCLUSIONS

Regions in the Yangtze River Delta had significant gaps in medical services price levels. And the price levels tended to not correlate with socioeconomic levels. It is necessary to promote the regional coordination of medical services price and better achieve equity in health.

Association between Medicare eligibility at age 65 years and in-hospital treatment patterns and health outcomes for patients with trauma: regression discontinuity approach

OBJECTIVE

To determine whether health systems in the United States modify treatment or discharge decisions for otherwise similar patients based on health insurance coverage.

DESIGN

Regression discontinuity approach.

SETTING

American College of Surgeons' National Trauma Data Bank, 2007-17.

PARTICIPANTS

Adults aged between 50 and 79 years with a total of 1 586 577 trauma encounters at level I and level II trauma centers in the US.

INTERVENTIONS

Eligibility for Medicare at age 65 years.

MAIN OUTCOME MEASURES

The main outcome measure was change in health insurance coverage, complications, in-hospital mortality, processes of care in the trauma bay, treatment patterns during hospital admission, and discharge locations at age 65 years.

RESULTS

1 586 577 trauma encounters were included. At age 65, a discontinuous increase of 9.6 percentage points (95% confidence interval 9.1 to 10.1) was observed in the share of patients with health insurance coverage through Medicare at age 65 years. Entry to Medicare at age 65 was also associated with a decrease in length of hospital stay for each encounter, of 0.33 days (95% confidence interval -0.42 to -0.24 days), or nearly 5%), which coincided with an increase in discharges to nursing homes (1.56 percentage points, 95% confidence interval 0.94 to 2.16 percentage points) and transfers to other inpatient facilities (0.57 percentage points, 0.33 to 0.80 percentage points), and a large decrease in discharges to home (1.99 percentage points, -2.73 to -1.27 percentage points). Relatively small (or no) changes were observed in treatment patterns during the patients' hospital admission, including no changes in potentially life saving treatments (eg, blood transfusions) or mortality.

CONCLUSIONS

The findings suggest that differences in treatment for otherwise similar patients with trauma with different forms of insurance coverage arose during the discharge planning process, with little evidence that health systems modified treatment decisions based on patients' coverage.

Practice Competition and Treatment of Newly Diagnosed Prostate Cancer

OBJECTIVE

To examine the effect of urology practice market competition on use of treatment in men with newly diagnosed prostate cancer.

METHODS

We performed a retrospective national cohort study of 48,067 Medicare beneficiaries with newly diagnosed prostate cancer between 2014 and 2018. The primary exposure was urology practice-level market competition. Markets were established by the flow of patients to a practice using a variable radius approach. Practice level competition was measured annually using the Herfindahl-Hirschman Index. The primary outcome was use of treatment for prostate cancer (ie, surgery, radiation, or cryotherapy) stratified by 10-year risk of noncancer mortality.

RESULTS

Between 2014 and 2018, there was a decrease in the total percent of urologists practicing in small single-specialty groups (49%-41%) with an increase in multispecialty practices (38%-47%). After adjusting for demographic and clinical characteristics, a lower percentage of men underwent treatment in practices with low competition relative to those managed in practices with high competition (70% vs 67.0%, P < .001). Among men with the highest risk of noncancer mortality, those managed in practices in the least competitive markets were less likely to receive treatment relative to men managed by practices in the most competitive markets (48% vs 60%, P-value<.001).

CONCLUSION

Reduction in competition between urology practices is not associated with greater use of treatment in men with newly diagnosed prostate cancer, particularly in those with a high risk of noncancer mortality.

What Difference Does a Health Plan Make? Evidence from Random Plan Assignment in Medicaid

Exploiting the random assignment of Medicaid beneficiaries to managed care plans, we find substantial plan-specific spending effects despite plans having identical cost sharing. Enrollment in the lowest-spending plan reduces spending by at least 25%-primarily through quantity reductions-relative to enrollment in the highest-spending plan. Rather than reducing "wasteful" spending, lower-spending plans broadly reduce medical service provision-including the provision of low-cost, high-value care-and worsen beneficiary satisfaction and health. Consumer demand follows spending: a 10 percent increase in plan-specific spending is associated with a 40 percent increase in market share. These facts have implications for the government's contracting problem and program cost growth.

Variation in Cost of Echocardiography Within and Across United States Hospitals

BACKGROUND

While transthoracic echocardiography (TTE) is responsible for more Medicare spending than any other cardiovascular imaging procedure, little is known about its commercial cost footprint. The 2021 Hospital Price Transparency Final Rule mandated that U.S. hospitals publish their insurer-negotiated and self-pay prices for services. This study sought to characterize and assess factors contributing to variation in TTE prices.

METHODS

We used a commercial database containing hospital-disclosed prices to characterize variation in TTE prices within and across hospitals. We linked these price data to hospital and regional characteristics using Medicare Facility IDs.

RESULTS

A total of 1,949 hospitals reported commercial prices. Among reporting hospitals, median commercial and self-pay prices were 2.93 and 3.06 times greater than the median Medicare price ($1,313 and $1,422, respectively, vs $464). Within hospitals, the 90th percentile payer-negotiated rate was 2.78 (interquartile range, 1.80-5.09) times the 10th percentile rate (within-center ratio). Across hospitals within the same hospital referral region, the median price at the 90th percentile hospital was 2.47 (interquartile range, 1.69-3.75) times that at the 10th percentile hospital (across-center ratio). On univariate analysis, for-profit (P = .04), teaching (P < .01), investor-owned (P < .01), and higher-rated hospitals (P < .01) charged higher prices, whereas rural referral centers (P = .01) and disproportionate share hospitals (P < .01) charged less. On multivariate analysis, the association between these characteristics and TTE prices persisted, except for investor ownership and rural referral centers.

CONCLUSIONS

Self-pay and commercial TTE prices were higher than Medicare prices and varied significantly within and across hospitals. For-profit, teaching, and higher-rated hospitals had higher prices, in contrast to DSH hospitals. A better understanding of the relationship between this cost variation and quality of care is critical given the impact of cost on health care access and affordability.

California Hospitals' Rapidly Declining Traditional Medicare Operating Margins

In recent years, Medicare margins of U.S. short-term acute care hospitals participating in the inpatient prospective payment system (IPPS) have declined nationally by over 10 percentage points, from 2.2% in 2002 to -8.7% in 2019. This trend conceals critical regional variations, with recent studies documenting particularly low and negative margins in metropolitan areas with higher labor costs despite geographic adjustments by the Centers for Medicare & Medicaid Services (CMS). In this article, we describe recent trends in California hospitals' traditional fee-for-service Medicare operating margins compared to hospital operating margins across payers and changes in the CMS hospital wage index (HWI) used to adjust Medicare payments. We conduct an observational study of audited financial reports of IPPS-participating California hospitals using California Department of Health Care Access and Information and CMS data for years 2005-2020 (n = 4429 reports included in the analysis). We describe trends in financial measures by payer and investigate associations between HWI and traditional Medicare margins, focusing on the pre-COVID period of 2005 through 2019. During that period, California hospitals' statewide traditional Medicare operating margin declined from -27 to -40%, and financial shortfalls in caring for fee-for-service Medicare patients more than doubled ($4.1 billion in 2005 to $8.5 billion in 2019, both values in 2019 dollars). Meanwhile, operating margins from commercial managed care patients increased from 21% in 2005 to 38% in 2019. There was a stable negative association between HWI and traditional Medicare operating margins throughout the period (p = 0.000 in 2005; p < 0.0001 in 2006-2020), indicating that areas of California with higher health care wages had persistently worse traditional Medicare operating margins than areas with lower wages.

Barriers to optimizing inflammatory bowel disease care in the United States

Significant progress in the management and modification of inflammatory bowel disease (IBD) has been made; however, significant barriers to the optimization of IBD care in the United States still exist. The majority of these barriers are constructed by insurance carriers and the integration of market pressures into healthcare decision-making. In this review, we highlight the barriers to IBD care optimization within the context of the US insurance system and review current and proposed solutions.

Hospital concentration and low-income populations: Evidence from New York State Medicaid

While a large body of evidence has examined hospital concentration, its effects on health care for low-income populations are less explored. We use comprehensive discharge data from New York State to measure the effects of changes in market concentration on hospital-level inpatient Medicaid volumes. Holding fixed hospital factors constant, a one percent increase in HHI leads to a 0.6% (s.e. = 0.28%) decrease in the number of Medicaid admissions for the average hospital. The strongest effects are on admissions for birth (-1.3%, s.e. = 0.58%). These average hospital-level decreases largely reflect redistribution of Medicaid patients across hospitals, rather than overall reductions in hospitalizations for Medicaid patients. In particular, hospital concentration leads to a redistribution of admissions from non-profit hospitals to public hospitals. We find evidence that for births, physicians serving high shares of Medicaid beneficiaries in particular experience reduced admissions as concentration increased. These reductions may reflect preferences among these physicians or reduced admitting privileges by hospitals as a means to screen out Medicaid patients.