How much do hospitals cost shift? A review of the evidence

Lower Commercial Rates for Breast Surgical Procedures are Associated with Socioeconomic Disadvantage: A Transparency in Coverage Analysis

BACKGROUND

The Centers for Medicare & Medicaid Services (CMS) implemented the Transparency in Coverage Rule in 2022, which requires payers to disclose commercial rates for the first time in the history of the US healthcare system. The purpose of this study was to characterize payer-disclosed commercial facility rates and examine the relationship with county-level social disadvantage for common breast surgical procedures.

MATERIALS AND METHODS

We performed a cross-sectional study of 2023 pricing data for 14 ablative and reconstructive breast procedures from Turquoise Health. Socioeconomic disadvantage was quantified using the Social Vulnerability Index (SVI). Within- and across-payer ratios quantified rate variation. Linear regression assessed the relationship between relative value unit (RVU)-adjusted median commercial rates and facility-level variables including SVI quartile.

RESULTS

There were 4,748,074 unique commercial rates disclosed by four payers from negotiations with 10,023 hospitals. Rates varied by a factor of 9.8-15.6 within and 10.0-18.1 across payers. RVU-adjusted commercial rate decreased in a stepwise fashion as SVI quartile increased and varied by payer (p < 0.001). Higher RVU-adjusted rates were associated with hospitals compared with ambulatory facilities (β = 138, 95% CI 138-139, p < 0.001). Lower rates were associated with areas of less healthcare infrastructure (β = - 37, 95% CI - 38 to - 37, p < 0.001).

CONCLUSIONS

Facility rates for breast surgical procedures varied significantly within and between payers and were higher for hospitals compared with ambulatory surgery centers. Facilities in areas of higher social vulnerability were associated with lower negotiated rates. The health equity implications of lower payment in areas of higher disadvantage, particularly in terms of access to care, deserve further investigation.

How significant is cost-shifting behavior under the diagnosis intervention packet payment reform? Evidence from the coronary heart disease market

Background

Controlling the growth of inpatient costs presents a major challenge in China's healthcare system. China introduced a new case-based payment method, the "Diagnosis Intervention Packet" (DIP), to address the surge in hospitalization expenses. However, the influence of DIP payment reform on cost shifting among coronary heart disease (CHD) inpatients remains unclear.

Methods

This study focused on Zunyi, a national pilot city for DIP, utilizing inpatient claim data to assess the effects of DIP payment reform. We analyzed the influence on total health expenditures (THE), individual payments excluding reimbursement (IPER), proportion of IPER, copayments for category-B, proportion of copayments for category-B, copayments for category C, and proportion of copayments for category C per case for CHD inpatient.

Results

Results indicate a significant reduction in THE per case for CHD inpatients after the DIP reform (β = -0.1272, p < 0.01). Increases in cost shifting were observed in IPER (β = 0.1080, p < 0.05), the proportion of IPER (β = 0.0551, p < 0.01), copayments for category B (β = 0.2392, p < 0.01), and the proportion of copayments for category B (β = 0.0295, p < 0.01), along with the proportion of copayments for category C (β = 0.0255, p < 0.01). However, the copayments for category C did not significantly change. Notable variations in the effects of cost control and shifting were observed across different hospital categories, teaching statuses, hospital grades, and ownership types.

Conclusion

The DIP reform significantly reduced the THE per case for CHD inpatients, while shifting in-policy expenditures to IPER, particularly with a greater shift intensity in the proportion of Class B compared with the proportion of Class C.

Financial toxicity part II: A practical guide to measuring and tracking long-term financial outcomes among acute care surgery patients

ABSTRACT

Acute care surgery (ACS) patients are frequently faced with significant long-term recovery and financial implications that extend far beyond their hospitalization. While major injury and emergency general surgery (EGS) emergencies are often viewed solely as acute moments of crisis, the impact on patients can be lifelong. Financial outcomes after major injury or emergency surgery have only begun to be understood. The Healthcare Economics Committee from the American Association for the Surgery of Trauma previously published a conceptual overview of financial toxicity in ACS, highlighting the association between financial outcomes and long-term physical recovery. The aims of second-phase financial toxicity review by the Healthcare Economics Committee of the American Association for the Surgery of Trauma are to (1) understand the unique impact of financial toxicity on ACS patients; (2) delineate the current limitations surrounding measurement domains of financial toxicity in ACS; (3) explore the "when, what and how" of optimally capturing financial outcomes in ACS; and (4) delineate next steps for integration of these financial metrics in our long-term patient outcomes. As acute care surgeons, our patients' recovery is often contingent on equal parts physical, emotional, and financial recovery. The ACS community has an opportunity to impact long-term patient outcomes and well-being far beyond clinical recovery.

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.

The Cost Shifting Economics of United States Emergency Department Professional Services (2016-2019)

STUDY OBJECTIVE

We estimate the economics of US emergency department (ED) professional services, which is increasingly under strain given the longstanding effect of unreimbursed care, and falling Medicare and commercial payments.

METHODS

We used data from the Nationwide Emergency Department Sample (NEDS), Medicare, Medicaid, Health Care Cost Institute, and surveys to estimate national ED clinician revenue and costs from 2016 to 2019. We compare annual revenue and cost for each payor and calculate foregone revenue, the amount clinicians may have collected had uninsured patients had either Medicaid or commercial insurance.

RESULTS

In 576.5 million ED visits (2016 to 2019), 12% were uninsured, 24% were Medicare-insured, 32% Medicaid-insured, 28% were commercially insured, and 4% had another insurance source. Annual ED clinician revenue averaged $23.5 billion versus costs of $22.5 billion. In 2019, ED visits covered by commercial insurance generated $14.3 billion in revenues and cost $6.5 billion. Medicare visits generated $5.3 billion and cost $5.7 billion; Medicaid visits generated $3.3 billion and cost $7 billion. Uninsured ED visits generated $0.5 billion and cost $2.9 billion. The average annual foregone revenue for ED clinicians to treat the uninsured was $2.7 billion.

CONCLUSION

Large cost-shifting from commercial insurance cross-subsidizes ED professional services for other patients. This includes the Medicaid-insured, Medicare-insured, and uninsured, all of whom incur ED professional service costs that substantially exceed their revenue. Foregone revenue for treating the uninsured relative to what may have been collected if patients had health insurance is substantial.

Examining multiple funding flows to public healthcare providers in low- and middle-income countries - results from case studies in Burkina Faso, Kenya, Morocco, Nigeria, Tunisia and Vietnam

Provider payment methods are traditionally examined by appraising the incentive signals inherent in individual payment mechanisms. However, mixed payment arrangements, which result in multiple funding flows from purchasers to providers, could be better understood by applying a systems approach that assesses the combined effects of multiple payment streams on healthcare providers. Guided by the framework developed by Barasa et al. (2021) (Barasa E, Mathauer I, Kabia E et al. 2021. How do healthcare providers respond to multiple funding flows? A conceptual framework and options to align them. Health Policy and Planning  36: 861-8.), this paper synthesizes the findings from six country case studies that examined multiple funding flows and describes the potential effect of multiple payment streams on healthcare provider behaviour in low- and middle-income countries. The qualitative findings from this study reveal the extent of undesirable provider behaviour occurring due to the receipt of multiple funding flows and explain how certain characteristics of funding flows can drive the occurrence of undesirable behaviours. Service and resource shifting occurred in most of the study countries; however, the occurrence of cost shifting was less evident. The perceived adequacy of payment rates was found to be the strongest driver of provider behaviour in the countries examined. The study results indicate that undesirable provider behaviours can have negative impacts on efficiency, equity and quality in healthcare service provision. Further empirical studies are required to add to the evidence on this link. In addition, future research could explore how governance arrangements can be used to coordinate multiple funding flows, mitigate unfavourable consequences and identify issues associated with the implementation of relevant governance measures.

Billing and Utilization Trends for Hand Surgery Indicate Worsening Barriers to Accessing Care

BACKGROUND

Hospitals and providers may increase hand surgery charges to compensate for decreasing reimbursement. Higher charges, combined with increasing utilization of ambulatory surgical centers (ASCs), may threaten the accessibility of affordable hand surgery care for uninsured and underinsured patients.

METHODS

We queried the Physician/Supplier Procedure Summary to collect the number of procedures, charges, and reimbursements of hand procedures from 2010 to 2019. We adjusted procedural volume by Medicare enrollment and monetary values to the 2019 US dollar. We calculated weighted means of charges and reimbursement that were then used to calculate reimbursement-to-charge ratios (RCRs). We calculated overall change and r2 from 2010 to 2019 for all procedures and stratified by procedural type, service setting, and state where service was rendered.

RESULTS

Weighted mean charges, reimbursement, and RCRs changed by + 21.0% (from $1,227 to $1,485; r2 = 0.93), +10.8% (from $321 to $356; r2 = 0.69), and -8.4% (from 0.26 to 0.24; r2 = 0.76), respectively. The Medicare enrollment-adjusted number of procedures performed in ASCs increased by 63.8% (r2 = 0.95). Trends in utilization and billing varied widely across different procedural types, service settings, and states.

CONCLUSIONS

Charges for hand surgery procedures steadily increased, possibly reflecting an attempt to make up for reimbursements perceived to be inadequate. This trend places uninsured and underinsured patients at greater risk for financial catastrophe, as they are often responsible for full or partial charges. In addition, procedures shifted from inpatient to ASC setting. This may further limit access to affordable hand care for uninsured and underinsured patients.

Measuring Active Purchasing in Healthcare: Analysing Reallocations of Funds Between Providers to Evaluate Purchasing Systems Performance in the Netherlands

BACKGROUND

Purchasing systems aim to improve resource allocation in healthcare markets. The Netherlands is characterized by four different purchasing systems: managed competition in the hospital market, a non-competitive single payer system for long-term care (LTC), municipal procurement for home care and social services, and self-procurement via personal budgets. We hypothesize that managed competition and competitive payer reforms boost reallocations of provider market share by means of active purchasing, ie, redistributing funds from high-quality providers to low-quality providers.

METHODS

We define a Market Activity Index (MAI) as the sum of funds reallocated between providers annually. Provider expenditures are extracted from provider financial statements between 2006 and 2019. We compare MAI in six healthcare sectors under four different purchasing systems, adjusting for reforms, and market entry/exit. Next, we perform in-depth analyses on the hospital market. Using multivariate linear regressions, we relate reallocations to selective contracting, provider quality, and market characteristics.

RESULTS

No difference was found between reallocations in the hospital care market under managed competition and the non-competitive single payer LTC (MAI between 2% and 3%), while MAI was markedly higher under procurement by municipalities and personal budget holders (between 5% and 15%). While competitive reforms temporarily increased MAI, no structural effects were found. Relatively low hospital MAI could not be explained by market characteristics. Furthermore, the extent of selective contracting or hospital quality differences had no significant effects on reallocations of funds.

CONCLUSION

Dutch managed competition and competitive purchaser reforms had no discernible effect on reallocations of funds between providers. This casts doubt on the mechanisms advocated by managed competition and active purchasing to improve allocative efficiency.

The Reality of Commercial Payer-Negotiated Rates in Cleft Lip and Palate Repair

BACKGROUND

Commercial payer-negotiated rates for cleft lip and palate surgery have not been evaluated on a national scale. The aim of this study was to characterize commercial rates for cleft care, both in terms of nationwide variation and in relation to Medicaid rates.

METHODS

A cross-sectional analysis was performed of 2021 hospital pricing data from Turquoise Health, a data service platform that aggregates hospital price disclosures. The data were queried by CPT code to identify 20 cleft surgical services. Within- and across-hospital ratios were calculated per CPT code to quantify commercial rate variation. Generalized linear models were used to assess the relationship between median commercial rate and facility-level variables and between commercial and Medicaid rates.

RESULTS

There were 80,710 unique commercial rates from 792 hospitals. Within-hospital ratios for commercial rates ranged from 2.0 to 2.9 and across-hospital ratios ranged from 5.4 to 13.7. Median commercial rates per facility were higher than Medicaid rates for primary cleft lip and palate repair ($5492.20 versus $1739.00), secondary cleft lip and palate repair ($5429.10 versus $1917.00), and cleft rhinoplasty ($6001.00 versus $1917.00; P < 0.001). Lower commercial rates were associated with hospitals that were smaller ( P < 0.001), safety-net ( P < 0.001), and nonprofit ( P < 0.001). Medicaid rate was positively associated with commercial rate ( P < 0.001).

CONCLUSIONS

Commercial rates for cleft surgical care demonstrated marked variation within and across hospitals, and were lower for small, safety-net, or nonprofit hospitals. Lower Medicaid rates were not associated with higher commercial rates, suggesting that hospitals did not use cost-shifting to compensate for budget shortfalls resulting from poor Medicaid reimbursement.

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.

Determinants of Commercial Prices for Common Radiation Therapy Procedures

PURPOSE

Using hospital-reported price data, we analyzed whether various market factors including radiation oncology practice consolidation were associated with higher commercial prices for radiation therapy (RT).

METHODS AND MATERIALS

We evaluated commercial prices paid by private insurers for 4 common RT procedures-intensity modulated RT (IMRT) planning, IMRT delivery, 3-dimensional RT (3D-RT) planning, and 3D-RT delivery-reported among the 2096 hospitals in the United States that deliver RT according to the Medicare Provider of Service file. To assess price variation within hospitals, we evaluated the ratio of the 90th percentile price to the 10th percentile price among different private insurers. To assess regional variation, we similarly compared median commercial prices at the 90th and 10th percentile hospitals in each Hospital Referral Region. We generated multivariable models to test the association of various hospital, health system, regional, and market factors on median hospital commercial prices.

RESULTS

A total of 1004 hospitals (47.9%) reported at least 1 commercial price for any of the 4 RT procedures considered in this study. National median commercial prices for IMRT planning and IMRT delivery were $4073 (interquartile ratio [IQR], $2242-$6305) and $1666 (IQR, $1014-$2619), respectively. Prices for 3D-RT planning and 3D-RT delivery were $2824 (IQR, $1339-$4738) and $616 (IQR, $419-877), respectively. Within hospitals, the 90th percentile price paid by a private insurer was 2.3 to 2.5 times higher on average than the 10th percentile price, depending on the procedure. Within each Hospital Referral Region, the median price at the 90th percentile hospital was between 2.4 and 3.2 times higher than at the 10th percentile hospital. On multivariable analysis, higher prices were generally observed at hospitals with for-profit ownership, teaching status, and affiliation with large health systems. Levels of radiation oncology practice consolidation were not significantly associated with any prices.

CONCLUSIONS

Commercial prices for common RT procedures vary by more than a factor of 2 depending on a patient's private insurer and hospital of choice. Higher prices were more likely to be found at for-profit hospitals, teaching hospitals, and hospitals affiliated with large health systems.

Hospital resource allocation decisions when market prices exceed Medicare prices

OBJECTIVE

To examine nonprofit hospitals' financial and spending allocations when the private sector payment rate is higher than the Medicare's payment rate.

DATA SOURCES

Hospital financial data for 2014-2018 from Center for Medicare and Medicaid Services Hospital Cost Reports, hospital characteristics from the American Hospital Association (AHA) Annual Survey.

STUDY DESIGN

Hospital and year level fixed effects regressions modeling each hospital's (1) operating net income per discharge equivalent (DE); (2) administrative cost per DE; (3) patient care cost per DE; (4) registered nurse per bed; charity care cost per DE; and (5) provision of unprofitable services as a function of the private sector to Medicare payment ratio (PMR).

DATA COLLECTION/EXTRACTION METHODS

Hospital/year-level data from hospital cost reports merged with AHA data. Samples included general short-term hospitals with nonprofit ownership, excluding critical access hospitals.

PRINCIPAL FINDINGS

The final sample included a total of 8862 hospital-year observations, with a mean PMR of 1.62. Nonprofit hospitals having a 0.1 higher PMR were associated with $257 (95% CI: $181-$334) increase in operating net income per DE; $66 (95% CI: $32-$99) increase in administrative cost per DE; $170 (95% CI: $120-$220) increase in patient care cost per DE; and $18 (95% CI: $10-$25) increase in charity care cost per DE. We found hospitals hired 0.86 (95% CI: -0.08 to 1.81) more registered nurses per 100 beds, but no evidence on providing more beds for unprofitable services, such as obstetric care, burn care, alcohol/drug abuse treatment, or psychiatric care.

CONCLUSIONS

Higher private sector prices led primarily to greater surplus and administrative cost for nonprofit hospitals and smaller increases in spending on services that will directly benefit patients.

Supporting strategic health purchasing: a case study of annual health budgets from general tax revenue and social health insurance in Abia state, Nigeria

BACKGROUND

Tracking general trends in strategic purchasing of health financing mechanisms will highlight where country demands may exist for technical support and where progress in being made that offer opportunities for regional learning. Health services in Abia State, Nigeria are funded from general tax-revenues (GTR), and a new state social health insurance scheme (SSHIS) is proposed to overcome the failings of the GTR and expand coverage of services. This study examined purchasing functions within the GTR and the proposed SSHIS to determine if the failings in GTR have been overcome, identify factors that shape health purchasing at sub-national levels, and provide lessons for other states in Nigeria pursuing a similar intervention.

METHODS

Data was collected through document review and key informant interviews. Government documents were retrieved electronically from the websites of different organizations. Hard copies of paper-only files were retrieved from relevant government agencies and departments. Interviews were conducted with seven key personnel of the State Ministry of Health and State Health Insurance Agency. Thematic analysis of data was based on a strategic health purchasing progress tracking framework which delves into the governance arrangements and information architecture needed for purchasing to work well; and the core purchasing decisions of what to buy; who to buy from; and how to buy.

RESULTS

There are differences in the purchasing arrangements of the two schemes. Purchaser-provider split does not exist for the GTR, unlike in the proposed SSHIS. There are no data systems for monitoring provider performance in the GTR-funded system, unlike in the SSHIS. Whereas GTR is based on a historical budgeting system, the SSHIS proposes to use a defined benefit package, which ensures value-for-money, as the basis for resource allocation. The GTR lacks private sector engagement, provider accreditation and contracting arrangements while the SSHIS will accredit and engage private providers through selective contracting. Likewise, provider payment is not linked to performance or adherence to established standards in the GTR, whereas provider payment will be linked to performance in the SSHIS.

CONCLUSIONS

The State Social Health Insurance has been designed to overcome many of the limitations of the budgetary allocation to health. This study provides insights into the enabling and constraining factors that can be used to develop interventions intended to strengthen the strategic health purchasing in the study area, and lessons for the other Nigeria states with similar characteristics and approaches.

Public Payment Rates For Hospitals And The Potential For Consolidation-Induced Cost Shifting

The theory of hospital cost shifting posits that reductions in public prices lead to higher commercial prices. The cost-shifting narrative and the empirical strategies used to evaluate it typically assume no connection between public prices and the number of hospitals operating in the market (market structure). We raise the possibility of "consolidation-induced cost shifting," which recognizes that changes in public prices for hospital care can affect market structure and, through that mechanism, affect commercial prices. We investigated the first leg of that argument: that public payment may affect hospital market structure. After controlling for many confounders, we found that hospitals with a higher share of Medicare patients had lower and more rapidly declining profits and an increased likelihood of closure or acquisition compared with hospitals that were less reliant on Medicare. This is consistent with the existence of consolidation-induced cost shifting and implies that reductions in public prices must be undertaken cautiously. Mechanisms to limit closure- or acquisition-induced increases in commercial hospital prices may be important.

How do healthcare providers respond to multiple funding flows? A conceptual framework and options to align them

Provider payment methods are a key health policy lever because they influence healthcare provider behaviour and affect health system objectives, such as efficiency, equity, financial protection and quality. Previous research focused on analysing individual provider payment methods in isolation, or on the actions of individual purchasers. However, purchasers typically use a mix of provider payment methods to pay healthcare providers and most health systems are fragmented with multiple purchasers. From a health provider perspective, these different payments are experienced as multiple funding flows which together send a complex set of signals about where they should focus their effort. In this article, we argue that there is a need to expand the analysis of provider payment methods to include an analysis of the interactions of multiple funding flows and the combined effect of their incentives on the provision of healthcare services. The purpose of the article is to highlight the importance of multiple funding flows to health facilities and present a conceptual framework to guide their analysis. The framework hypothesizes that when healthcare providers receive multiple funding flows, they may find certain funding flows more favourable than others based on how these funding flows compare to each other on a range of attributes. This creates a set of incentives, and consequently, healthcare providers may alter their behaviour in three ways: resource shifting, service shifting and cost shifting. We describe these behaviours and how they may affect health system objectives. Our analysis underlines the need to align the incentives generated by multiple funding flows. To achieve this, we propose three policy strategies that relate to the governance of healthcare purchasing: reducing the fragmentation of health financing arrangements to decrease the number of multiple purchaser arrangements and funding flows; harmonizing signals from multiple funding flows; and constraining providers from responding to undesirable incentives.

Trends in Pediatric Private Insurance and Medicaid Spending: A Repeated Cross-Sectional Analysis of Data from 2002 to 2014

Given increased focus on health spending, this investigation aims to compare trends in pediatric Medicaid and private insurance spending on type of service from 2002 to 2014 in order to inform policy and research. A repeated cross-sectional analysis of 2002 to 2014 National Health Expenditure Accounts data was conducted. Total spending, per capita spending, and compounded annual growth rates for type of service were determined for children ages 0 to 18 at the national level. Per capita spending growth was higher for private insurance than for Medicaid, and the areas of high per capita spending growth differed for private insurance and Medicaid. While Medicaid spent more per capita on hospital care than private insurance, private insurance demonstrated greater per capita spending growth on hospital care than Medicaid (8.49% vs 1.99%, respectively). Conversely, per capita spending on home health care grew more for Medicaid (6.79%) than for private insurance (3.18%). Trends in private insurance and Medicaid overall and per capita spending differ. Medicaid experienced higher annual growth in total spending than per capita spending, while private insurance had greater annual growth in per capita spending than total spending. Growth in private insurance per capita spending was higher than growth in Medicaid per capita spending, but growth in Medicaid total spending was higher than growth in private insurance total spending. These data suggest that Medicaid and private insurance may have different drivers of spending growth, highlighting the need for policy makers to examine spending patterns by payer. Further research to determine why such differences in spending growth exist will better inform efforts to increase health care value.

Effectiveness of hospital payment reforms in low- and middle-income countries: a systematic review

Payment mechanisms have attracted substantial research interest because of their consequent effect on care outcomes, including treatment costs, admission and readmission rates and patient satisfaction. Those mechanisms create the incentive environment within which health workers operate and can influence provider behaviour in ways that can facilitate achievement of national health policy goals. This systematic review aims to understand the effects of changes in hospital payment mechanisms introduced in low- and middle-income countries (LMICs) on hospital- and patient-level outcomes. A standardised search of seven databases and a manual search of the grey literature and reference lists of existing reviews were performed to identify relevant articles published between January 2000 and July 2019. We included original studies focused on hospital payment reforms and their effect on hospital and patient outcomes in LMICs. Narrative descriptions or studies focusing only on provider payments or primary care settings were excluded. The authors used the Risk of Bias in Non-Randomized Studies of Interventions tool to assess the risk of bias and quality. Results were synthesized in a narrative description due to methodological heterogeneity. A total of 24 articles from seven middle-income countries were included, the majority of which are from Asia. In most cases, hospital payment reforms included shifts from passive (fee-for-service) to active payment models-the most common being diagnosis-related group payments, capitation and global budget. In general, hospital payment reforms were associated with decreases in hospital expenditures, out-of-pocket payments, length of hospital stay and readmission rates. The majority of the articles scored low on quality due to weak study design. A shift from passive to active hospital payment methods in LMICs has been associated with lower hospital and patient costs as well as increased efficiency without any apparent compromise on quality. However, there is an important need for high-quality studies in this area.

Private choices, public costs: Evaluating cost-shifting between private and public health sectors in New Zealand

New Zealand's dual public-private health system allows individuals to purchase health services from the private sector rather than relying solely upon publicly-funded services. However, financial boundaries between the public and private sectors are not well defined and patients receiving privately-funded care may subsequently seek follow-up care within the public health system, in effect shifting costs to the public sector. This study evaluates this phenomenon, examining whether cost-shifting between the private and public hospital systems is a significant issue in New Zealand. We used inpatient discharge data from 2013/14 to identify private events with a subsequent admission to a public hospital within seven days of discharge. We examined the frequency of subsequent public admissions, the demographic and clinical characteristics of the patients and estimated the direct costs of inpatient care incurred by the public health system. Approximately 2% of private inpatient events had a subsequent admission to a public hospital. Overall, the costs to the public system amounted to NZ$11.5 million, with a median cost of NZ$2800. At least a third of subsequent admissions were related to complications of a medical procedure. Although only a small proportion of private events had a subsequent public admission, the public health system incurred significant costs, highlighting the need for greater understanding and discussion around the interface between the public and private health systems.

Impact of insurance type on national variation in cost of endovascular treatment for unruptured cerebral aneurysms

BACKGROUND

Identifying drivers of nationwide variation in healthcare costs could help reduce overall cost. Endovascular treatment for unruptured cerebral aneurysms (ETUCR) is an elective neurointerventional procedure that allows for detailed analysis of cost variation. This study aimed to investigate the role of insurance type in cost variation of ETUCR.

METHODS

A retrospective analysis of patients undergoing ETUCR was done. Demographic and hospital data were obtained from the National Inpatient Sample 2012-2015. Multivariate analysis was done using a generalized linear model. Oaxaca-Blinder decomposition was performed to identify factors driving cost variation.

RESULTS

There was a significant difference in median cost ($25 331.82 vs $25 825.25, respectively, P<0.001) as well as length of stay (P<0.001) and complications (P<0.001) between patients with private insurance and Medicare. In multivariate analysis, insurance type was not predictive of increased cost. Among patients aged 65-75 years there was a higher median cost with private insurance compared to Medicare ($28 373.85 vs $25 558.25, respectively, P<0.001) but no difference in complications or length of stay. Oaxaca-Blinder decomposition showed higher marginal costs associated with private insurance patients at hospitals with greater endovascular operative volume (P=0.015).

CONCLUSIONS

In patients aged 65-75 years, private insurance is associated with higher costs compared to Medicare; however, insurance type is not predictive of increased cost in multivariate analysis. Differential treatment of private insurance and Medicare patients at hospitals with greater operative volume seems to influence this difference, likely due to differential reimbursement schemes that lead to weaker cost controls.

Palliative space-time: Expanding and contracting geographies of US health care

Two important changes are happening in health care in the US. As hospitals close in high numbers, the geographies of health care services are changing. Also, the ageing of the population brings about new and complex care needs. These are not discrete trends, as ageing impacts the who, what, and where of care needs, and hospital closures remakes the geographies of where people overall access care. Developed out of research on the impacts of hospital restructuring on workers, patients, and communities, this paper aims to understand how health care financing, care needs for the ageing, and new geographies of health services are intertwined. To do so, I look back to 1980s policy changes to Medicare, the federal health insurance program for the elderly and disabled. In 1982, Congress made two important changes to Medicare. The program began covering hospice services, constituting an expansion of care, and the government drastically changed the way it reimburses providers, effectively a contraction of the program. I trace the impacts of these changes over the next decades through analysis of media coverage and secondary research on hospital budgets. Drawing on the concept of palliative space-time, I identify a contradictory logic of death at the center of this expansion and contraction of the health care system. This death logic works to destabilize an already uneven geography of health service. Yet, this crisis has the potential for more just geographies of health and care.

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US population ageing poses new challenges for caring for people as they age.

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Hospital closures across the US alter how and where people receive care.

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Palliative Space-time shows systems that struggle to exist but have radical potential.

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Palliative Space-time helps analyse health systems, death, and care.

Vascular Complications Increase Hospital Charges and Mortality in Adult Patients on Extracorporeal Membrane Oxygenation in the United States

Patients on extracorporeal membrane oxygenation (ECMO) who suffer vascular complications frequently accrue additional procedures and costs. We sought to evaluate the effect of ECMO-related vascular complications on hospital charges and in-hospital mortality. Adult discharges involving ECMO from 2004 to 2013 in the National Inpatient Sample were examined. There were 12,636 patients in the cohort. Vascular complications, focusing on arterial complications were identified using ICD-9-CM diagnosis and procedure codes. A multivariable survey linear regression model using median hospital charges was used to model the effect of vascular complications on charges. We used multivariable survey logistic regression to evaluate the effect of vascular complications on in-hospital mortality. Of the 12,636 patients examined, 6467 (51.2%) had ECMO-related vascular complications. Median charges in patients with vascular complications were $ 477,363 (interquartile range: 258,660-875,823) and were $ 282,298 (interquartile range: 130,030-578,027) without vascular complications. On multivariable analysis, patients with vascular complications had 24% higher median charges than patients without vascular complications (Ratio: 1.24; 95% confidence interval [CI]: 1.16-1.33; P < 0.0001) and 34% higher odds of experiencing in-hospital mortality than patients without vascular complications (adjusted odds ratio: 1.34; 95% CI:1.08-1.66; P = 0.009). Vascular complications occur in over half of ECMO patients and are associated with an increased risk of high hospital charges and in-hospital mortality. These findings support the need for identification and modification of risk factors for ECMO-related vascular complications. Furthermore, the standardization of protocols using evidence-based measures to mitigate vascular complications may improve overall ECMO outcomes.

Public insurance expansions and mental health care availability

OBJECTIVE

To provide new evidence on the effects of large-scale public health insurance expansions, associated with the Affordable Care Act (ACA), on the availability of specialty mental health care treatment in the United States. We measure availability with the probability that a provider accepts Medicaid.

DATA SOURCE/STUDY SETTING

The National Mental Health Services Survey (N-MHSS) 2010-2018.

STUDY DESIGN

A quasi-experimental differences-in-differences design using observational data.

DATA COLLECTION

The N-MHSS provides administrative data on the universe of specialty mental health care providers in the United States. Response rates are above 90 percent in all years. Data cover 85 019 provider/year observations.

PRINCIPAL FINDINGS

ACA-Medicaid expansion increases the probability that a provider accepts Medicaid by 1.69 percentage points, 95 percent confidence interval: [0.0017,0.0321], which corresponds to an increase from 87.27 percent pre-expansion to 90.27 percent postexpansion in expansion states or a 1.94 percent increase. We observe spillovers to Medicare, although this finding is sensitive to specification.

CONCLUSIONS

This study provides evidence on the impact of ACA-Medicaid expansion on accepted forms of payment for specialty mental health care treatment. Findings suggest that expansion increases availability of providers who deliver valuable care for enrollees with severe mental illness. These findings may help policy makers reflecting on the future directions of the US health care delivery system.

Obesity negatively affects cost efficiency and outcomes following adult spinal deformity surgery

BACKGROUND CONTEXT

Obesity has risen to epidemic proportions within the United States. As the rates of obesity have increased, so has its prevalence among patients undergoing adult spinal deformity (ASD) surgery. The effect of obesity on the cost efficiency of corrective procedures for ASD has not been effectively evaluated.

PURPOSE

To investigate differences in cost efficiency of ASD surgery for patients stratified by body mass index (BMI).

STUDY DESIGN/SETTING

Retrospective review of a single-center ASD database.

PATIENT SAMPLE

Five hundred five ASD patients.

OUTCOME MEASURES

Complications, revisions, costs, EuroQol-5D (EQ5D), quality-adjusted life years (QALYs), cost per QALY.

METHODS

ASD patients (scoliosis≥20°, SVA≥5 cm, PT≥25°, or TK ≥60°) ≥18, undergoing ≥4 level fusions were included. Patients were stratified into NIH-defined obesity groups based on their preoperative BMI: underweight 18.5< (U), normal 18.5 to 24.9 (N), overweight 25.0 to 29.9 (O), obese I 30.0 to 34.9 (OI), obese II 35.0 to 39.9 (OII), and obesity class III 40.0+ (OIII). Total surgery costs for each ASD obesity group were calculated. Costs were calculated using the PearlDiver database, which reflects both private insurance and Medicare reimbursement claims. Overall complications and major complications were assessed according to CMS definitions. QALYs and cost per QALY for obesity groups were calculated using an annual 3% discount up to life expectancy (78.7 years).

RESULTS

In all, 505 patients met inclusion criteria. Baseline demographics and surgical details were: age 60.8±14.8, 67.6% female, BMI 28.8±7.30, 81.0% posterior approach, 18% combined approach, 10.1±4.2 levels fused, op time 441.2±146.1 minutes, EBL 1903.8±1594.7 cc, and LOS 8.7±10.7 days. There were 17 U, 154 N patients, 151 O patients, 100 OI, 51 OII, and 32 OIII patients. Revision rates by obesity group were: 0% U, 3% N patients, 3% O patients, 5% OI, 4% OII, and 6% for OIII patients. The total surgery costs by obesity group were: $48,757.86 U, $49,688.52 N, $47,219.93 O, $50,467.66 OI, $51,189.47 OII, and $53,855.79 OIII. In an analysis of patients with baseline and 1 Y EQ5D follow-up, the cost per QALY by obesity group was: $153,737.78 U, $229,222.37 N, $290,361.68 O, $493,588.47 OI, $327,876.21 OII, and $171,680.00 OIII. If that benefit was sustained to life expectancy, the cost per QALY was $8,588.70 U, $12,805.72 N, $16,221.32 O, $27,574.77 OI, $18,317.11 OII, and $9,591.06 for OIII.

CONCLUSIONS

Among adult spinal deformity patients, those with BMIs in the obesity I, obesity II, or obesity class III range had more expensive total surgery costs. When assessing 1 year cost per QALY, obese patients had costs 32% higher than nonobese patients ($224,440.61 vs. $331,048.23). Further research is warranted on the utility of optimizing modifiable preoperative health factors for patients undergoing corrective adult spinal deformity surgery.

Characteristics and Effects of Multiple and Mixed Funding Flows to Public Healthcare Facilities on Financing Outcomes: A Case Study From Nigeria

Introduction: Most public hospitals in Nigeria are usually financed by funding flows from different health financing mechanisms, which could potentially trigger different provider behaviors that can affect the health system goals of efficiency, equity, and quality of care. The study examined how healthcare providers respond to multiple funding flows and the implications of such flows for achieving equity, efficiency, and quality.

Methods: A cross-sectional qualitative study of selected healthcare providers and purchasers in Enugu state was used. Four public hospitals were selected—two tertiary and two secondary; because they received funding from more than one healthcare financing mechanism. Key informants were individual healthcare providers and decision-makers in the hospitals, State Ministry of Health, National Health Insurance Scheme and Health Maintenance Organizations. Service users from each hospital were purposively selected for focus group discussions (FGDs). A total of 66 key informant interviews and 8 FGDs were conducted.

Findings: The multiple flows that were received by public hospitals varied by type of health facility (Secondary vs. Tertiary), ownership of health facility (Federal government vs. State government) and population served. Out-of-pocket payment (OOP) and government budget were the only recurring forms of funding to all the public hospitals. It was found that multiple funding flows, generate different signals to service providers, resulting in positive and negative consequences. The results also showed that multiple flows lead to predictability and stability of funding to public hospitals. Hospital Managers and administrators reported that multiple flows increased their financial pool and capacity to undertake capital projects and enabled the provision of a wider range of services to clients. Multiple sources of funding also give a sense of security to health facilities, because there would always be a back-up source of funding if one flow delays or defaults in payment. Nevertheless, health providers were seen to shift resources from less attractive to more attractive flows in response to the relative size perceived adequacy, predictability, and flexibility of funding flow. Patients were also shifted from less predictable to more predictable funding flows and providers charged different rates to different funding flows to make up for the inadequacies in some sources of funding. The negative consequences of multiple funding flows on provider behavior that was reported in the study were wastage/under-utilization of resources, differential quality of care provided to clients, and inequities in resource distribution and access to health services. In some instances, providers' responses resulted in better quality of care for clients and improved access to services that were not ordinarily available or clients could not have been afforded.

Conclusion: Multiple funding flows to public hospitals are beneficial as well as constraining to health providers. They can be beneficial in ensuring that hospitals have a ready and predictable pool of funds to render services with. However, they could be detrimental to some patients that could be charged more for some services that other patients pay less and may also lead of provision of differential quality of services to different payments depending on the funding flows that are used to purchase services for them. Ultimately, some of the consequences of multiple funding flows if not properly managed, will affect health systems goals of equity, efficiency and quality of care, either positively or negatively.

Trends and Disparities in Inpatient Costs for Eye Trauma in the United States (2001-2014)

PURPOSE

To determine the trends and disparities in inpatient costs for eye trauma in the United States from 2001 through 2014.

DESIGN

Retrospective population-based cross-sectional study.

METHODS

National Inpatient Sample, a representative sample of U.S. hospital discharges, was used to determine costs of eye trauma hospitalizations. Linear regression was used to estimate changes in mean inflation-adjusted cost per admission. Multivariable logistic regression was used to evaluate factors associated with a cost in the highest quartile (>$13 000) including age, sex, race, income quartile, primary payer, hospital location, size, and type. The model was adjusted for year of admission, length of stay, type of trauma, comorbidities, and the type and number of procedures performed.

RESULTS

The inpatient costs for eye trauma from 2001 through 2014 totaled $1.72 billion. The mean cost (95% confidence interval [CI]) per stay remained relatively constant: $12 000 ($11 000-13 000) in 2001 to $11 000 ($10 000-12 000) in 2014 (P = .643). A cost in the highest quartile was more likely in African Americans compared to whites (adjusted odds ratio, 1.3; 95% CI, 1.2-1.5), patients in the highest income quartile compared to those in the lowest (1.3; 1.2-1.5), uninsured patients compared to publicly insured patients (1.2; 1.1-1.4), teaching hospitals compared to non-teaching ones (1.5; 1.2-1.8), and the West compared to the South (2.4; 2.0-2.8).

CONCLUSIONS

Inpatient costs of eye trauma have remained steady and can be potentially reduced by addressing associated disparities. Further research including outpatient costs and eye trauma in vulnerable populations will be key to optimizing care and advancing healthcare equity.

Hospital Charges for Urologic Surgery Episodes of Care Are Rising Despite Declining Costs

OBJECTIVE

To investigate the temporal relationship of hospital charges relative to recorded costs for surgical episodes of care.

PATIENTS AND METHODS

This retrospective cohort study selected individuals who underwent any of 8 index urologic surgical procedures at 392 unique institutions from January 1, 2005, through December 31, 2015. For each surgical encounter, cost and charge data reported by hospitals were extracted and adjusted to 2016 US dollars. Trend analysis and multivariable logistic regression modeling were used to assess outcomes. The primary outcome was trend in median charge and cost. Secondary outcomes consisted of hospital characteristics associated with membership in the highest quartile of institutional charge-to-cost ratio.

RESULTS

Cohort-level median cost per encounter trended down from $6824 in 2005 to $5586 in 2015 (P for trend<.001), and charges increased from $20,210 to $25,773 during the same period (P for trend<.001). Hospitals in the highest quartile of institutional charge-to-cost ratio were more likely to be safety net, nonteaching, urban, lower surgical volume, smaller, and located outside the Midwest (P<.001 for each characteristic).

CONCLUSION

The pricing trends shown herein could indicate some success in cost-containment for surgical episodes of care, although higher hospital charges may be increasingly used to bolster reimbursement from third-party payers and to compensate for escalating costs in other areas.

Incentivizing Better Quality of Care: The Role of Medicaid and Competition in the Nursing Home Industry

This paper develops a model of the nursing home industry to investigate the quality effects of policies that either raise regulated reimbursement rates or increase local competition. Using data from Pennsylvania, I estimate the parameters of the model. The findings indicate that nursing homes increase the quality of care, measured by the number of skilled nurses per resident, by 8.7% following a universal 10% increase in Medicaid reimbursement rates. In contrast, I find that pro-competitive policies lead to only small increases in skilled nurse staffing ratios, suggesting that Medicaid increases are more cost effective in raising the quality of care.

How Have Hospital Pricing Practices for Surgical Episodes of Care Responded to Affordable CareAct-Related Medicaid Expansion?

OBJECTIVE

To determine how Medicaid expansion under the Affordable Care Act of 2010 (ACA) has affected hospital pricing practices for surgical episodes of care.

METHODS

Given that safety net hospitals would be more vulnerable to decreasing reimbursement due to an increase in proportion of Medicaid patients, we utilized the Premier Healthcare Database to compare institutional charge-to-cost ratio (CCR) in safety net hospitals vs nonsafety net hospitals for 8 index urologic surgery procedures during the period from 2012 to 2015. The effect of Medicaid expansion on CCR was assessed through difference-in-differences analysis.

RESULTS

CCR among safety net hospitals increased from 4.06 to 4.30 following ACA-related Medicaid expansion. This did not significantly differ from the change among nonsafety net hospitals, which was from 4.00 to 4.38 (P = .086). The census division with the highest degree of Medicaid expansion experienced a smaller increase in CCR among safety net hospitals relative to nonsafety net (P < .0001). CCR increased by a greater degree in safety net hospitals compared to nonsafety net in the census division where Medicaid expansion was the least prevalent (P < .0001).

CONCLUSION

Safety net hospitals have not preferentially increased CCR in response to ACA-related Medicaid expansion. Census divisions where safety net hospitals did increase CCR more than their nonsafety net counterparts do not correspond to those where Medicaid expansion was most prevalent. This could indicate that, despite being more vulnerable to an increased proportion of more poorly reimbursing Medicaid patients, safety net hospitals have not reacted by increasing charges to private payers.

Inappropriate admissions of the cardiology and orthopedics departments of a tertiary hospital in Shanghai, China

OBJECTIVES

Admission rates have increased in China, despite the fact that accessibility to primary care is improving. Hospital care could be cost-inefficient, and little is currently known about the appropriateness of admissions to tertiary hospitals in China. This study aims to measure the extent of inappropriate admissions in the cardiology and orthopedics departments of a tertiary hospital in Shanghai, to explore the factors associated with inappropriateness for each department, and to identify the causes of inappropriate admissions.

METHODS

The records of inpatients discharged on randomly sampled two days each week during March 2013 to February 2014 from the two departments were extracted. Two reviewers were recruited to assess the records according to the Chinese version of the Appropriateness Evaluation Protocol (C-AEP). Demographic, socio-economic, and other admissions-related variables were collected. Logistic regression analysis was adopted to determine the associated factors of inappropriateness.

RESULTS

35.0% (N = 120) of the 343 admissions and 38.7% (N = 179) of the 463 admissions of the cardiology and orthopedics departments were not justified by the C-AEP, respectively. Age (OR = 0.717), self-pay (OR = 3.752), admission via outpatient sector (OR = 5.332), and readmission (OR = 2.501) were identified as factors affecting the appropriateness of admissions in the cardiology department. Age (OR = 0.930), self-pay (OR = 2.597), admission during 12:00-17:59 (OR = 3.211), and admission via outpatient sector (OR = 7.060) were determined to be associated with appropriateness of admission in the orthopedics department. The main reason for inappropriateness was premature admission for both departments.

CONCLUSIONS

The magnitude of inappropriate admissions was considerable in the departments. To improve appropriateness, the results suggest that further interventions should be focused on both external and internal factors.

Geographic Disparities in Access to Nursing Home Services: Assessing Fiscal Stress and Quality of Care

OBJECTIVE

We test whether nursing homes serving predominately low-income and racial minority residents (compositional explanation) or located in neighborhoods with higher concentrations of low-income and racial minority residents (contextual explanation) have worse financial outcomes and care quality.

DATA SOURCES

Healthcare Cost Report Information System, Nursing Home Compare, Online Survey Certification and Reporting Certification, and American Community Survey.

STUDY DESIGN

A cross-sectional study design of nursing homes within U.S. metropolitan areas.

DATA COLLECTION/EXTRACTION METHODS

Data were obtained from Centers for Medicare & Medicaid Services and U.S. Census Bureau.

PRINCIPAL FINDINGS

Medicaid-dependent nursing homes have a 3.5 percentage point lower operating ratio. Those serving primarily racial minorities have a 2.64-point lower quality rating. A 1 percent increase in the neighborhood population living in poverty is associated with a 1.20-point lower quality rating, on a scale from 10 to 50, and a 1 percent increase in the portion of neighborhood black residents is associated with a 0.8 percentage point lower operating ratio and a 0.37 lower quality rating.

CONCLUSIONS

Medicaid dependency (compositional effect) and concentration of racial minority residents in neighborhoods (contextual effect) are associated with higher fiscal stress and lower quality of care, indicating that nursing homes' geographic location may exacerbate long-term care inequalities.

Inappropriate hospital days of a tertiary hospital in Shanghai, China

Objective

This study aims to evaluate the prevalence of inappropriate hospital stays in a tertiary hospital in Shanghai, identify the causes for the inappropriateness and analyze the predictors.

Design

A retrospective review of medical records.

Setting

The cardiology and the orthopedics departments of a tertiary hospital in Shanghai, China.

Participants

About 806 patients discharged from the cardiology or the orthopedics department of a tertiary hospital from March 2013 to February 2014.

Interventions

Two reviewers audited 8396 hospital days of the cardiology department (n = 3606) and the orthopedics department (n = 4790) by adopting the Chinese Version of the Appropriateness Evaluation Protocol. Univariate and multivariate analysis were adopted to identify the predictors of higher levels of inappropriateness produced by internal causes.

Main outcome measure

The prevalence of inappropriate hospital days.

Results

It was found that 910 (25.2%) and 1940 (40.5%) hospital days were judged to be inappropriate in the cardiology and the orthopedics departments, respectively; and 753 (20.9%) and 1585 (33.1%) of these inappropriate hospital days were due to internal reasons, respectively. Awaiting tests, surgery or discharge were determined to constitute the main causes of inappropriateness for both departments. The predictors of higher levels of inappropriateness in the cardiology department were younger age, self-pay, outpatient admission and inappropriate admission. Self-pay, surgical and/or first-time admission patients exhibited the highest levels of inappropriateness in the orthopedics department.

Conclusions

The rates of inappropriateness in the involved departments were relatively high. Further interventions should be designed and implemented, accordingly.

Ninety-Day Reimbursements for Primary Single-Level Posterior Lumbar Interbody Fusion From Commercial and Medicare Data

STUDY DESIGN

Retrospective, economic analysis.

OBJECTIVE

To analyze the distribution of 90-day payments for a primary single-level posterior lumbar interbody fusion from Commercial payers and Medicare.

SUMMARY OF BACKGROUND DATA

Episode-based bundled payments aim to align incentives of all health care providers toward the common goal of high quality and economic health care. Understanding the evolving reimbursement models for spine surgery will require knowledge on existing payments, distribution, and variation. Also, it will help identify areas for cost reduction. This is currently not known for a primary single-level posterior lumbar interbody fusion.

METHODS

Administrative claims data were used to study reimbursements from Commercial payers (2007-Q3 2015), Medicare Advantage (2007-Q3 2015), and Medicare (2005-2012) for a primary single-level posterior lumbar interbody fusion. Distribution of payments among various service providers was studied. In addition to descriptive analysis, variation between regions and payers was studied by a one-way analysis of variance and post hoc Tukey test.

RESULTS

Average hospital costs comprise 74.2% to 77% of the total payments, followed by surgeon's fees which accounted for 12.8% to 13.7%. Overall burden of readmissions/revisions was 2.1% to 2.7%, but for the readmitted patient it constitutes 25% to 54% of the 90-day payment. Inpatient surgery had significantly higher facility costs than outpatient surgery (P = 0.02). The average 90-day payment amount was $51,465, $26,234, and $25,501 for Commercial payers, Medicare Advantage, and Medicare, respectively. There was some regional variation, however not consistent among different payers.

CONCLUSION

Hospital costs constitute the majority share of 90-day payments, which can be reduced by performing surgery in the outpatient setting. Reducing hospital costs and readmissions can lower the financial burden associated with this common spine procedure.

LEVEL OF EVIDENCE

3.

How should hospital reimbursement be refined to support concentration of complex care services?

The English National Health Service is promoting concentration of the treatment of patients with relatively rare and complex conditions into a limited number of specialist centres. If these patients are more costly to treat, the prospective payment system based on Healthcare Resource Groups (HRGs) may need refinement because these centres will be financially disadvantaged. To assess the funding implications of this concentration policy, we estimate the cost differentials associated with caring for patients that receive complex care and examine the extent to which complex care services are concentrated across hospitals and HRGs. We estimate random effects models using patient-level activity and cost data for all patients admitted to English hospitals during the 2013/14 financial year and construct measures of the concentration of complex services. Payments for complex care services need to be adjusted if they have large cost differentials and if provision is concentrated within a few hospitals. Payments can be adjusted either by refining HRGs or making top-up payments to HRG prices. HRG refinement is preferred to top-payments the greater the concentration of services among HRGs.

Economic modelling of telehealth substitution of face-to-face specialist outpatient consultations for Queensland correctional facilities

Objective The provision of healthcare services to inmates in correctional facilities is costly and resource-intensive. This study aimed to estimate the costs of transporting prisoners from 11 Queensland correctional facilities to the Princess Alexandra Hospital Secure Unit (PAHSU) in Brisbane for non-urgent specialist outpatient consultations and identify the cost consequences that would result from the substitution of face-to-face visits with telehealth consultations. Methods A 12-month retrospective review of patient activity at the PAHSU was conducted to obtain the number of transfers per correctional facility. The total cost of transfers was calculated with estimates for transport vehicle costs and correctional staff escort wages, per diem and accommodation costs. A cost model was developed to estimate the potential cost savings from substituting face-to-face consultations with telehealth consultations. A sensitivity analysis on the cost variables was conducted. Costs are reported from a government funding perspective and presented in 2016 Australian dollars (A$). Results There were 3539 inmate appointments from July 2015 to June 2016 at the PAHSU, primarily for imaging, general practice, and orthopaedics. Telehealth may result in cost savings from negligible to A$969 731, depending on the proportion, and travel distance, of face-to-face consultations substituted by telehealth. Wages of correctional staff were found to be the most sensitive variable. Conclusions Under the modelled conditions, telehealth may reduce the cost of providing specialist outpatient consultations to prisoners in Queensland correctional facilities. Telehealth may improve the timeliness of services to a traditionally underserved population. What is known about the topic? Specialist medical services are located in only a few metropolitan centres across Australia, which requires some populations to travel long distances to attend appointments. Some face-to-face specialist outpatient consultations can be substituted by telehealth. What does this paper add? Prisoners from correctional facilities represent one specific population that requires complex travel arrangements for specialist medical appointments. Transportation of prisoners for specialist health appointments represents a substantial cost to the government. This paper quantifies the annual cost in Queensland for transporting prisoners, taking into account fuel and vehicle costs, staff wages, per diem rates, and accommodation. In addition, it quantifies the costs of substituting face-to-face consultations with telehealth consultations. What are the implications for practitioners? This research encourages practitioners to consider using telehealth services for prisoners, as well providing an argument for tertiary centres to include telehealth as a model of care for this population. Telehealth can result in major cost savings and state and federal governments should consider implementation especially in Australia where correctional facilities and specialist services are separated by great geographic distances.

How did market competition affect outpatient utilization under the diagnosis-related group-based payment system?

Objective

Although competition is known to affect quality of care, less is known about the effects of competition on outpatient health service utilization under the diagnosis-related group payment system. This study aimed to evaluate these effects and assess differences before and after hospitalization in South Korea.

Design

Population-based retrospective observational study.

Setting

We used two data set including outpatient data and hospitalization data from National Health Claim data from 2011 to 2014.

Participants

Participants who were admitted to the hospital for hemorrhoidectomy were included. A total of 804 884 hospitalizations were included in our analysis.

Main outcome measure(s)

The outcome variables included the costs associated with outpatient examinations and the number of outpatient visits within 30 days before and after hospitalization.

Results

High-competition areas were associated with lower pre-surgery examination costs (rate ratio [RR]: 0.88, 95% confidence interval [CI]: 0.88-0.89) and fewer outpatient visits before hospitalization (RR: 0.98, 95% CI: 0.98-0.99) as well as after hospitalization compared with moderate-competition areas.

Conclusion

Our study reveals that outpatient health service utilization is affected by the degree of market competition. Future evaluations of hospital performance should consider external factors such as market structure and hospital location.

Does Insurance Status Influence a Patient's Hospital Charge?

BACKGROUND

There is obscurity regarding how US hospitals determine patients' charges. Whether insurance status influences a patient's hospital charge has not been explored.

OBJECTIVE

The objective of this study was to determine whether hospitals charge patients differently based on their insurance status.

METHODS

This was an analysis of the Florida Hospital Inpatient Data File for fiscal years 2011-2012 (N = 4.7 million). Multivariable regression analysis was used to adjust for patients' age, sex, length of stay, priority of admission, principal ICD-9-CM diagnosis, and All Payer Refined Diagnosis-Related Group subdivided by Severity of Illness subclass. Hospital fixed effects were included to account for differences in hospitals' markups.

RESULTS

Compared with those with no insurance, patients with private insurance received hospital bills that were an average of 10.7% higher and patients with Medicare received bills that were an average of 8.9% higher. The impact of Medicaid coverage was imprecisely estimated, but the magnitude of the point-estimate was consistent with 3.5% higher charges to Medicaid patients, relative to the uninsured.

CONCLUSION

Conditional on patient characteristics, length of stay, and expected intensity of resource utilization, patients with private insurance and patients with Medicare were charged more (before discounting) than their uninsured counterparts within the same hospital.

Variation in Payment Rates under Medicare's Inpatient Prospective Payment System

OBJECTIVE

To measure variation in payment rates under Medicare's Inpatient Prospective Payment System (IPPS) and identify the main payment adjustments that drive variation.

DATA SOURCES/STUDY SETTING

Medicare cost reports for all Medicare-certified hospitals, 1987-2013, and Dartmouth Atlas geographic files.

STUDY DESIGN

We measure the Medicare payment rate as a hospital's total acute inpatient Medicare Part A payment, divided by the standard IPPS payment for its geographic area. We assess variation using several measures, both within local markets and nationally. We perform a factor decomposition to identify the share of variation attributable to specific adjustments. We also describe the characteristics of hospitals receiving different payment rates and evaluate changes in the magnitude of the main adjustments over time.

DATA COLLECTION/EXTRACTION METHODS

Data downloaded from the Centers for Medicare and Medicaid Services, the National Bureau of Economic Research, and the Dartmouth Atlas.

PRINCIPAL FINDINGS

In 2013, Medicare paid for acute inpatient discharges at a rate 31 percent above the IPPS base. For the top 10 percent of discharges, the mean rate was double the IPPS base. Variations were driven by adjustments for medical education and care to low-income populations. The magnitude of variation has increased over time.

CONCLUSIONS

Adjustments are a large and growing share of Medicare hospital payments, and they create significant variation in payment rates.

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

OBJECTIVE

To investigate the relationship between the percent uninsured in a county and expenditures associated with the typical emergency department visit.

DATA SOURCES

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

STUDY DESIGN

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

PRINCIPAL FINDINGS

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

CONCLUSIONS

Results provide tentative evidence that the costs associated with high uninsurance rates spill over to those with insurance, but future research needs to replicate these findings with longitudinal data and methods before drawing causal conclusions. Recent data on changes in area uninsurance rates following the ACA's insurance expansions and subsequent changes in emergency department expenditures afford a valuable opportunity to do this.

In the Shadow of a Giant: Medicare's Influence on Private Physician Payments

We analyze Medicare's influence on private insurers' payments for physicians' services. Using a large administrative change in reimbursements for surgical versus medical care, we find that private prices follow Medicare's lead. A $1.00 increase in Medicare's fees increases corresponding private prices by $1.16. A second set of Medicare fee changes, which generates area-specific payment shocks, has a similar effect on private reimbursements. Medicare's influence is strongest in areas with concentrated insurers and competitive physician markets, consistent with insurer-doctor bargaining. By echoing Medicare's pricing changes, these payment spillovers amplify Medicare's impact on specialty choice and other welfare-relevant aspects of physician practices.

Early Medicaid Expansion In Connecticut Stemmed The Growth In Hospital Uncompensated Care

As states continue to debate whether or not to expand Medicaid under the Affordable Care Act (ACA), a key consideration is the impact of expansion on the financial position of hospitals, including their burden of uncompensated care. Conclusive evidence from coverage expansions that occurred in 2014 is several years away. In the meantime, we analyzed the experience of hospitals in Connecticut, which expanded Medicaid coverage to a large number of childless adults in April 2010 under the ACA. Using hospital-level panel data from Medicare cost reports, we performed difference-in-differences analyses to compare the change in Medicaid volume and uncompensated care in the period 2007-13 in Connecticut to changes in other Northeastern states. We found that early Medicaid expansion in Connecticut was associated with an increase in Medicaid discharges of 7-9 percentage points, relative to a baseline rate of 11 percent, and an increase of 7-8 percentage points in Medicaid revenue as a share of total revenue, relative to a baseline share of 10 percent. Also, in contrast to the national and regional trends of increasing uncompensated care during this period, hospitals in Connecticut experienced no increase in uncompensated care. We conclude that uncompensated care in Connecticut was roughly one-third lower than what it would have been without early Medicaid expansion. The results suggest that ACA Medicaid expansions could reduce hospitals' uncompensated care burden.

Readmissions To New York Hospitals Fell For Three Target Conditions From 2008 To 2012, Consistent With Medicare Goals

The Medicare Hospital Readmissions Reduction Program (HRRP), an initiative of the Affordable Care Act, imposes considerable financial penalties on hospitals with excess thirty-day readmissions for patients with selected high-volume conditions. We investigated the intended impact of the program by examining changes in thirty-day readmissions among Medicare patients admitted for three conditions targeted by the program in New York State, compared to Medicare patients with other conditions and with privately insured patients, before and after the program's introduction. We also examined potential unintended strategic responses by hospitals that might allow them to continue to treat target-condition patients while avoiding the readmission penalty. We found that thirty-day readmissions fell for the three conditions targeted by the HRRP, consistent with the goals of the program. Second, there also was a substantial fall in readmissions for a comparison group although not as large as for the target group, which suggests modest spillover effects in Medicare for other conditions. We did not find strong evidence of unintended effects associated with the program. These early findings suggest that the HRRP is affecting hospitals in the direction intended by the Affordable Care Act.

Affordable Care Organizations and Bundled Pricing: A New Philosophy of Care

Under the Patient Protection and Affordable Care Act (ACA), the Centers for Medicare and Medicaid Services' Innovation was chartered to develop new models of health care delivery. The changes meant a drastic need to restructure the health care system. To minimize costs and optimize quality, new laws encourage continuity in health care delivery within an integrated system. Affordable care organizations provided a model of high-quality care while reducing costs. Bundled payments can have a substantial effect on the national expenditures. This article examines new developments in bundle payments, affordable care organizations, and gainsharing agreements as they pertain to arthroplasty.

Shock, but no shift: Hospitals' responses to changes in patient insurance mix

Medicaid reimburses healthcare providers for services at a lower rate than any other type of insurance coverage. To account for the burden of treating Medicaid patients, providers claim that they must cost-shift by raising the rates of individuals covered by private insurance. Previous investigations of cost-shifting has produced mixed results. In this paper, I exploit a disabled Medicaid expansion where crowd-out was complete to investigate cost-shifting. I find that hospitals reduce the charge rates of the privately insured. Given that Medicaid is expanding in several states under the Affordable Care Act, these results may alleviate cost-shifting concerns of the reform.

The Burden of Pulmonary Nontuberculous Mycobacterial Disease in the United States

RATIONALE

State-specific case numbers and costs are critical for quantifying the burden of pulmonary nontuberculous mycobacterial disease in the United States.

OBJECTIVES

To estimate and project national and state annual cases of nontuberculous mycobacterial disease and associated direct medical costs.

METHODS

Available direct cost estimates of nontuberculous mycobacterial disease medical encounters were applied to nontuberculous mycobacterial disease prevalence estimates derived from Medicare beneficiary data (2003-2007). Prevalence was adjusted for International Classification of Diseases, 9th Revision, undercoding and the inclusion of persons younger than 65 years of age. U.S. Census Bureau data identified 2010 and 2014 population counts and 2012 primary insurance-type distribution. Medical costs were reported in constant 2014 dollars. Projected 2014 estimates were adjusted for population growth and assumed a previously published 8% annual growth rate of nontuberculous mycobacterial disease prevalence.

MEASUREMENTS AND MAIN RESULTS

In 2010, we estimated 86,244 national cases, totaling to $815 million, of which 87% were inpatient related ($709 million) and 13% were outpatient related ($106 million). Annual state estimates varied from 48 to 12,544 cases ($503,000-$111 million), with a median of 1,208 cases ($11.5 million). Oceanic coastline states and Gulf States comprised 70% of nontuberculous mycobacterial disease cases but 60% of the U.S. population. Medical encounters among individuals aged 65 years and older ($562 million) were twofold higher than those younger than 65 years of age ($253 million). Of all costs incurred, medications comprised 76% of nontuberculous mycobacterial disease expenditures. Projected 2014 estimates resulted in 181,037 national annual cases ($1.7 billion).

CONCLUSIONS

For a relatively rare disease, the financial cost of nontuberculous mycobacterial disease is substantial, particularly among older adults. Better data on disease dynamics and more recent prevalence estimates will generate more robust estimates.

Multimorbidity in chronic disease: impact on health care resources and costs

Effective and resource-efficient long-term management of multimorbidity is one of the greatest health-related challenges facing patients, health professionals, and society more broadly. The purpose of this review was to provide a synthesis of literature examining multimorbidity and resource utilization, including implications for cost-effectiveness estimates and resource allocation decision making. In summary, previous literature has reported substantially greater, near exponential, increases in health care costs and resource utilization when additional chronic comorbid conditions are present. Increased health care costs have been linked to elevated rates of primary care and specialist physician occasions of service, medication use, emergency department presentations, and hospital admissions (both frequency of admissions and bed days occupied). There is currently a paucity of cost-effectiveness information for chronic disease interventions originating from patient samples with multimorbidity. The scarcity of robust economic evaluations in the field represents a considerable challenge for resource allocation decision making intended to reduce the burden of multimorbidity in resource-constrained health care systems. Nonetheless, the few cost-effectiveness studies that are available provide valuable insight into the potential positive and cost-effective impact that interventions may have among patients with multiple comorbidities. These studies also highlight some of the pragmatic and methodological challenges underlying the conduct of economic evaluations among people who may have advanced age, frailty, and disadvantageous socioeconomic circumstances, and where long-term follow-up may be required to directly observe sustained and measurable health and quality of life benefits. Research in the field has indicated that the impact of multimorbidity on health care costs and resources will likely differ across health systems, regions, disease combinations, and person-specific factors (including social disadvantage and age), which represent important considerations for health service planning. Important priorities for research include economic evaluations of interventions, services, or health system approaches that can remediate the burden of multimorbidity in safe and cost-effective ways.