Reforming payments to healthcare providers: the key to slowing healthcare cost growth while improving quality?

The impact of an innovative payment method on medical expenditure, efficiency, and quality for inpatients with different types of medical insurance: evidence from a pilot city, China

BACKGROUND

Since 2020, China has implemented an innovative payment method called Diagnosis-Intervention Packet (DIP) in 71 cities nationwide. This study aims to assess the impact of DIP on medical expenditure, efficiency, and quality for inpatients covered by the Urban Employee Basic Medical Insurance (UEBMI) and Urban and Rural Residents Basic Medical Insurance (URRBMI). It seeks to explore whether there are differences in these effects among inpatients of the two insurance types, thereby further understanding its implications for health equity.

MATERIALS AND METHODS

We conducted interrupted time series analyses on outcome variables reflecting medical expenditure, efficiency, and quality for both UEBMI and URRBMI inpatients, based on a dataset comprising 621,125 inpatient reimbursement records spanning from June 2019 to June 2023 in City A. This dataset included 110,656 records for UEBMI inpatients and 510,469 records for URRBMI inpatients.

RESULTS

After the reform, the average expenditure per hospital admission for UEBMI inpatients did not significantly differ but continued to follow an upward pattern. In contrast, for URRBMI inpatients, the trend shifted from increasing before the reform to decreasing after the reform, with a decline of 0.5%. The average length of stay for UEBMI showed no significant changes after the reform, whereas there was a noticeable downward trend in the average length of stay for URRBMI. The out-of-pocket expenditure (OOP) per hospital admission, 7-day all-cause readmission rate and 30-day all-cause readmission rate for both UEBMI and URRBMI inpatients showed a downward trend after the reform.

CONCLUSION

The DIP reform implemented different upper limits on budgets based on the type of medical insurance, leading to varying post-treatment prices for UEBMI and URRBMI inpatients within the same DIP group. After the DIP reform, the average expenditure per hospital admission and the average length of stay remained unchanged for UEBMI inpatients, whereas URRBMI inpatients experienced a decrease. This trend has sparked concerns about hospitals potentially favoring UEBMI inpatients. Encouragingly, both UEBMI and URRBMI inpatients have seen positive outcomes in terms of alleviating patient financial burdens and enhancing the quality of care.

How medical insurance payment systems affect the physicians' provision behavior in China-based on experimental economics

Background

It introduced an artefactual field experiment to analyze the influence of incentives from fee-for-service (FFS) and diagnosis-intervention package (DIP) payments on physicians' provision of medical services.

Methods

This study recruited 32 physicians from a national pilot city in China and utilized an artefactual field experiment to examine medical services provided to patients with different health status.

Results

In general, the average quantities of medical services provided by physicians under the FFS payment were higher than the optimal quantities, the difference was statistically significant. While the average quantities of medical services provided by physicians under the DIP payment were very close to the optimal quantities, the difference was not statistically significant. Physicians provided 24.49, 14.31 and 5.68% more medical services to patients with good, moderate and bad health status under the FFS payment than under the DIP payment. Patients with good, moderate and bad health status experienced corresponding losses of 5.70, 8.10 and 9.42% in benefits respectively under the DIP payment, the corresponding reductions in profits for physicians were 10.85, 20.85 and 35.51%.

Conclusion

It found patients are overserved under the FFS payment, but patients in bad health status can receive more adequate treatment. Physicians' provision behavior can be regulated to a certain extent under the DIP payment and the DIP payment is suitable for the treatment of patients in relatively good health status. Doctors sometimes have violations under DIP payment, such as inadequate service and so on. Therefore, it is necessary to innovate the supervision of physicians' provision behavior under the DIP payment. It showed both medical insurance payment systems and patients with difference health status can influence physicians' provision behavior.

Differences in inpatient performance of public general hospitals following implementation of a points-counting payment based on diagnosis-related group: a robust multiple interrupted time series study in Wenzhou, China

OBJECTIVES

This study measures the differences in inpatient performance after a points-counting payment policy based on diagnosis-related group (DRG) was implemented. The point value is dynamic; its change depends on the annual DRGs' cost settlements and points of the current year, which are calculated at the beginning of the following year.

DESIGN

A longitudinal study using a robust multiple interrupted time series model to evaluate service performance following policy implementation.

SETTING

Twenty-two public general hospitals (8 tertiary institutions and 14 secondary institutions) in Wenzhou, China.

INTERVENTION

The intervention was implemented in January 2020.

OUTCOME MEASURES

The indicators were case mix index (CMI), cost per hospitalisation (CPH), average length of stay (ALOS), cost efficiency index (CEI) and time efficiency index (TEI). The study employed the means of these indicators.

RESULTS

The impact of COVID-19, which reached Zhejiang Province at the end of January 2020, was temporary given rapid containment following strict control measures. After the intervention, except for the ALOS mean, the change-points for the other outcomes (p<0.05) in tertiary and secondary institutions were inconsistent. The CMI mean turned to uptrend in tertiary (p<0.01) and secondary (p<0.0001) institutions compared with before. Although the slope of the CPH mean did not change (p>0.05), the uptrend of the CEI mean in tertiary institutions alleviated (p<0.05) and further increased (p<0.05) in secondary institutions. The slopes of the ALOS and TEI mean in secondary institutions changed (p<0.05), but not in tertiary institutions (p>0.05).

CONCLUSIONS

This study showed a positive effect of the DRG policy in Wenzhou, even during COVID-19. The policy can motivate public general hospitals to improve their comprehensive capacity and mitigate discrepancies in treatment expenses efficiency for similar diseases. Policymakers are interested in whether the reform successfully motivates hospitals to strengthen their internal impetus and improve their performance, and this is supported by this study.

Do responses to news matter? Evidence from interventional cardiology

We examine physician responses to a global information shock and how these impact their patients. We exploit international news over the safety of an innovation in healthcare, the drug-eluting stent. We use data on interventional cardiologists' use of stents to define and measure cardiologists' responsiveness to the initial positive news and link this to their patients' outcomes. We find substantial heterogeneity in responsiveness to news. Patients treated by cardiologists who respond slowly to the initial positive news have fewer adverse outcomes. This is not due to patient-physician sorting. Instead, our results suggest that the differences are partially driven by slow responders being better at deciding when (not) to use the new technology, which in turn affects their patient outcomes.

Financial incentives and health provider behaviour: Evidence from a capitation policy in Ghana

The capitation payment model has been used as a supply-side cost-containment tool in controlling physician behaviour. However, little is known regarding its effectiveness in controlling costs and discouraging use of low-value care. This study seeks to examine whether financial incentives in capitation influence provider behaviour, and if so, whether such behaviour compromises outcomes for inpatients with hypertension. To this end, we evaluate the effect on outpatient visits and inpatient outcomes of the introduction of capitation into a mixed payment system involving diagnosis-related groups and fee-for-service in the Ashanti region of Ghana. We use difference-in-differences with fixed effects and event study analysis of claims data over 48 months (2016-2019). We found that providers responded to financial incentives in capitation; outpatient visits were approximately 35% lower. However, we found no significant impact of capitation on inpatient outcomes; that is, the in-hospital death rate did not increase, and the length of hospital stay (which may be a rough indicator of the severity of illness) also did not increase. These findings indicate that patient health outcomes did not deteriorate. Evidence suggests that the observed reduction in outpatient visits may be in unnecessary or low-value visits, especially at lower levels of the healthcare system.

Factors Influencing Health Care Providers Payment Reforms in Central and Eastern European Countries

Central and Eastern European (CEE) countries have recently implemented reforms to health care provider payment systems, which include changing payment methods and related systems such as contracting, management information systems, and accountability mechanisms. This study examines factors influencing provider payment reforms implemented since 2010 in Bulgaria, Croatia, Czechia, Estonia, Latvia, Lithuania, Hungary, Poland, and Romania. A four-stage mixed methods approach was used: developing a theoretical framework and data collection form using existing literature, mapping payment reforms, consulting with national health policy experts, and conducting a comparative analysis. Qualitative analysis included inductive thematic analysis and deductive approaches based on an existing health policy model, distinguishing context, content, process, and actors. We analyzed 27 payment reforms that focus mainly on hospitals and primary health care. We identified 14 major factor themes influencing those reforms. These factors primarily related to the policy process (pilot study, coordination of implementation systems, availability of funds, IT systems, training for providers, reform management) and content (availability of performance indicators, use of clinical guidelines, favorability of the payment system for providers, tariff valuation). Two factors concerned the reform context (political willingness or support, regulatory framework, and bureaucracy) and two were in the actors' dimension (engagement of stakeholders, capacity of stakeholders). This study highlights that the content and manner of implementation (process) of a reform are crucial. Stakeholder involvement and their capacities could influence every dimension of the reform cycle. The nine countries analyzed share similarities in barriers and facilitators, suggesting the potential for cross-country learning.

Barriers and Facilitators to Health-Care Provider Payment Reform - A Scoping Literature Review

Background

Changes to provider payment systems are among the most common reforms in health care. They are important levers for policymakers to influence the health system performance. The aim of this study was to identify, systematize, and map the existing literature on the factors that influence health-care provider payment reforms.

Methods

A scoping review was conducted. Literature published in English between 2000 and 2022 was systematically searched in five databases, relevant organizations, and journals. Academic publications and grey literature on health-care provider payment reform and the factors influencing reform were considered. An inductive thematic analysis was applied to map the barriers and facilitators that influence payment reforms.

Results

The study included 51 publications. They were divided into four categories: empirical studies (n=17), literature reviews (n=6), discussion/policy papers (n=18), and technical reports/policy briefs (n=9). Most of the studies were conducted in developed economy countries (n=36). The most frequently reformed payment method was fee-for-service (n=37), and the newly implemented methods included bundled payments (n=16), pay-for-performance (n=15), and diagnosis-related groups (n=11). This study identified 43 sub-themes on barriers to provider payment reforms, which were grouped into eight main themes. It identified 51 sub-themes on facilitators, which were grouped into six themes. Barriers include stakeholder opposition, challenges related to reform design, hurdles in implementation structures, insufficient resources, challenges related to market structures, legal barriers, knowledge and information gaps, and negative publicity. Facilitators include stakeholder involvement, complementary reforms/policies, relevant prior experience, good leadership and management of change, sufficient resources, and external pressure to introduce reform.

Conclusion

The factors that influence health-care payment reforms are often contextual and interrelated, and encompass a variety of perspectives, including those of patients, providers, insurers, and policymakers. When planning reforms, one should anticipate potential barriers and devise appropriate interventions.

Registration

The study was registered with the Open Science Framework.

Providers, peers and patients. How do physicians' practice environments affect patient outcomes?

We study how physicians' practice environments affect their treatment decisions and quality of care. Using clinical registry data from Sweden, we compare stent choices of cardiologists moving across hospitals over time. To disentangle changes in practice styles attributable to hospital- and peer group-specific factors, we exploit quasi-random variation on cardiologists working together on the same days. We find that migrating cardiologists' stent choices rapidly adapt to their new practice environment after relocation and are equally driven by the hospital and peer environments. In contrast, while decision errors increase, treatment costs and adverse clinical events remain largely unchanged despite the altered practice styles.

The Next Generation of Payment Reforms for Population Health - An Actionable Agenda for 2035 Informed by Past Gains and Ongoing Lessons

Policy Points The predominantly fee-for-service reimbursement architecture of the US health care system contributes to waste and excess spending. While the past decade of payment reforms has galvanized the adoption of alternative payment models and generated moderate savings, uptake of truly population-based payment systems continues to lag, and interventions to date have had limited impact on care quality, outcomes, and health equity. To realize the promise of payment reforms as instruments for delivery system transformation, future policies for health care financing must focus on accelerating the diffusion of value-based payment, leveraging payments to redress inequities, and incentivizing partnerships with cross-sector entities to invest in the upstream drivers of health.

Cost Sharing and Cost Shifting Mechanisms under a per Diem Payment System in a County of China

Cost sharing and cost shifting mechanisms are of vital importance in a prospective payment system. This paper employed the difference-in-differences method to estimate the impacts of a per diem system with inverted-U-shape rates on medical costs and the length of stay based on data from a health insurance institution. The supply side cost sharing mechanism worked so that the new payment system significantly reduced medical costs by 17.59 percent while the average length of stay varied little. After further analyzing the mechanism, we found that heterogeneous effects emerged mainly due to the special rates design. The reform decreased the cases that incurred relatively high medical costs and lengths of stay. However, cost shifting existed so that physicians could be motivated to provide unnecessary services to the patients who should have been discharged before the average length of stay. Therefore, payment rates in the per diem system require a sophisticated design to constrain its distortion to medical service provision even though medical expenditures were successfully contained.

Competition and physician-induced demand in a healthcare market with regulated price: evidence from Ghana

Using panel data of administrative claims spanning 36 months (2017-2019) and an instrumental variable method, this study examines whether physician-induced demand for hypertension disease care exists in Ghana's healthcare system where price is regulated, and there is no co-payment. We find that an increase in competition-measured as a high doctor-to-population ratio at the district level-leads to an increase in the number of physician visits, suggesting physician-induced demand exists, and that effects are greater for large hospitals and public health providers. This result is further supported by alternative measures and specifications showing that physicians' revenue from medication and gross revenue increase as the physician density increases. These pattern suggest that physicians in high density areas, faced with a decrease in number of patients per physician, make up for the decline in income by inducing more patient visits.

Can a global budget improve health care efficiency? Experimental evidence from China

Health care in China suffers from substantial allocative inefficiency in the delivery system and technical inefficiency within hospitals. To ameliorate this problem in rural areas, the Analysis of Provider Payment Reforms on Advancing China's Health (APPROACH) project shifted the payment method of China's rural health insurance scheme for county hospitals from fee-for-service to a novel global budget. In particular, APPROACH global budget incentivized system-level allocative efficiency by reimbursing county hospitals at higher tariffs for gatekeeping and averting out-of-county (OOC) admissions among local patients they could treat. APPROACH conducted a large-scale randomized controlled trial of the global budget in 56 counties (22 million enrollees) of Guizhou province during 2016-2017. Applying randomization inference to claims data, we find a significant shift of inpatient utilization and expenditure from OOC hospitals to county hospitals. At county hospitals, average expenditure per admission and length of stay decreased, though not significantly. Effects on readmissions show no clear sign of compromised quality. We further find limited effect heterogeneity with respect to treatment and hospital characteristics. Overall, APPROACH global budget may offer a framework for improving health care efficiency without sacrificing quality.

Quality and costs in health care: using target costing in support of bundled payment programs

Purpose

The main purpose of this study is to provide healthcare institutions with a management accounting framework that helps them achieve their quality goals and cost targets when providing services under bundled payment schemes.

Design/methodology/approach

After providing a theoretical framework on both bundled payments and target costing, the success factors of the former are compared with the principles of the latter in order to analyze the compatibility and complementarity of these models. Afterwards, an example of their potential combination in practice is introduced and ideas for future research are suggested.

Findings

It is concluded that, apart from presenting similar underlying goals as regards quality and cost, bundled payments and target costing display elements in common that make them compatible from a theoretical standpoint.

Originality/value

Because bundled payments models are relatively new, studies on their compatibility with managerial techniques emerging from industries other than healthcare do not abound in the literature.

Machine learning versus regression modelling in predicting individual healthcare costs from a representative sample of the nationwide claims database in France

BACKGROUND

Innovative provider payment methods that avoid adverse selection and reward performance require accurate prediction of healthcare costs based on individual risk adjustment. Our objective was to compare the performances of a simple neural network (NN) and random forest (RF) to a generalized linear model (GLM) for the prediction of medical cost at the individual level.

METHODS

A 1/97 representative sample of the French National Health Data Information System was used. Predictors selected were: demographic information; pre-existing conditions, Charlson comorbidity index; healthcare service use and costs. Predictive performances of each model were compared through individual-level (adjusted R-squared (adj-R²), mean absolute error (MAE) and hit ratio (HiR)), and distribution-level metrics on different sets of covariates in the general population and by pre-existing morbid condition, using a quasi-Monte Carlo design.

RESULTS

We included 510,182 subjects alive on 31st December, 2015. Mean annual costs were 1894€ (standard deviation 9326€) (median 393€, IQ range 95€; 1480€), including zero-claim subjects. All models performed similarly after adjustment on demographics. RF model had better performances on other sets of covariates (pre-existing conditions, resource counts and past year costs). On full model, RF reached an adj-R² of 47.5%, a MAE of 1338€ and a HiR of 67%, while GLM and NN had an adj-R² of 34.7% and 31.6%, a MAE of 1635€ and 1660€, and a HiR of 58% and 55 M, respectively. RF model outperformed GLM and NN for most conditions and for high-cost subjects.

CONCLUSIONS

RF should be preferred when the objective is to best predict medical costs. When the objective is to understand the contribution of predictors, GLM was well suited with demographics, conditions and base year cost.

Payment schemes and treatment responses after a demand shock in mental health care

We study whether two groups of mental health care providers-each paid according to a different payment scheme-adjusted the duration of their patients' treatments after they faced an exogenous 20% drop in the number of patients. For the first group of providers, self-employed providers, we find that they did not increase treatment duration to recoup their income loss. Treatment duration thresholds in the stepwise fee-for-service payment function seem to have prevented these providers to treat patients longer. For the second group of providers, large mental health care institutions who were subject to a budget constraint, we find an average increase in treatment duration of 8%. Prior rationing combined with professional uncertainty can explain this increase. We find suggestive evidence for overtreatment of patients as the longer treatments did not result in better patient outcomes, i.e. better General Assessment of Functioning scores.

Hospital response to a case-based payment scheme under regional global budget: The case of Guangzhou in China

Both developed and developing countries have been searching for effective provider payment methods to control health expenditure inflation. In January 2018, Guangzhou city in Southern China initiated an innovative case-based payment method for inpatient care under the framework of the regional global budget, called the Diagnosis-Intervention Packet (DIP). Contrary to the usual practice of the case-based payment, the DIP payment scheme includes a price adjustment mechanism through which the actual reimbursement for each case is determined ex post. By employing the difference-in-difference method and data from Beijing and Guangzhou, we evaluate the effects of the DIP payment on medical expenditures and provider behaviors. We find that total health expenditures per case have decreased by 3.5%, which is mainly driven by a substantial decrease in drug expenditures. It suggests that the DIP payment reform achieved a short-term success in slowing down the growth of health expenditures. However, the average point volume per case for local inpatients with social health insurance coverage has increased by more than 3%, primarily due to an increasing likelihood of performing at least one procedure. We also find suggestive evidence of up-coding. All these results suggest that healthcare providers have taken strategic behaviors in response to the DIP payment. These findings hold lessons for the ongoing payment reforms in China and other countries.

The importance of surgeons and their peers in adoption and diffusion of innovation: An observational study of laparoscopic colectomy adoption and diffusion in England

Little is known about the role of clinicians in accounting for adoption and diffusion of medical innovations, especially within the English National Health System. This study examines the importance of surgical consultants and their work-based networks on the diffusion of an important innovation, minimally invasive elective laparoscopic colectomy for colorectal cancer. The study used linked patient-level and workforce data on 260,110 elective colectomies and 1288 consultants between 2000 and 2014, to examine adoption of laparoscopic colectomy pre- and post-introduction of clinical guidelines and total share of colectomies performed laparoscopically by adopters. Laparoscopy as a share of elective colectomy increased from 0% in 2000 to 53% in 2014. Surgeons, rather than hospitals, were the principal agents accounting for the increase and explain 46.6% of the variance in laparoscopic colectomy use. Female surgeons, surgeons trained outside the United Kingdom, and recent graduates had higher rates of laparoscopy adoption. More experienced surgeons and surgeons with more peers who perform laparoscopy were more likely to adopt, adopt early and have greater use of laparoscopy. Targeting clinicians, rather than hospitals, is central to increasing adoption and diffusion of new medical technologies.

A moneymaking scan: Dual reimbursement systems and supplier-induced demand for diagnostic imaging

In complex health systems with growing healthcare spending, combining reimbursement systems that incentivize cost-efficient healthcare provision within and across care sectors is key. This study investigates whether dual reimbursement systems lead hospitals to offset financial pressures in one care sector by inducing demand in another. We find that hospital imaging units induced demand for costly and unnecessary ambulatory imaging examinations reimbursed under fee-for-service, following a reform that introduced prospective payment and increased competition in the inpatient sector in Switzerland in 2012. Market structure, competitive pressures, and price regulations also influence demand inducement by varying the response to the reform. Reimbursement systems can influence supplier-induced demand in other care sectors within hospitals where revenue is tied to the intensity of care provision. In particular, the possibility to self-refer patients to high-margin diagnostic examinations bears negative consequences on healthcare expenditures and potentially patient health.

How can Saudi Arabia reform its public hospital payment models? A narrative review

BACKGROUND

The cost of Saudi healthcare continues to rise at an alarming rate, putting the sustainability of the public healthcare system into question. Data have shown that hospital and healthcare providers' services represent the bulk of this rising cost, which makes the calls to reform the Saudi healthcare system more focused on payment models than at any time before.

OBJECTIVE

The aim of this paper is to review various identified payment models that can be used to contain costs and improve the quality of the care provided.

METHOD

A literature review of articles addressing the issues of cost containment and improving the quality of healthcare by reforming the current Saudi healthcare payment policy were identified through the Ovid®, Medline, and Google® Scholar search engines.

RESULTS AND CONCLUSIONS

Many research articles and literature reviews have identified and discussed different models of healthcare payments. Some articles have focused on one payment model, while others have discussed different payment models that have been identified. There is an urgent need to reform the current system of healthcare payments to improve the quality of healthcare and maintain funding for universal healthcare coverage in the future. Future healthcare payment reforms should consider restructuring the current healthcare system, which is largely fragmented by providing incentives to different governmental healthcare sectors, in order to transform it into a more organized and coordinated system. Thus far, there is not a single payment model that can, by itself, reduce healthcare costs and improve healthcare quality. Future healthcare reforms should use a mixture of different payment models to pay hospitals and physicians.

Doctors' response to queues: Evidence from a Portuguese emergency department

We evaluate how doctors in an emergency department react to the number of patients waiting for treatment. Our outcomes reflect the time spent with the patient, the intensity of treatment, and discharge destination. Using visit-level data in a Lisbon-area hospital, we use a fixed effects model to exploit variation in the queue size while addressing endogeneity using the number of arrivals to the hospital in the previous 60 min as an instrumental variable. Furthermore, we estimate doctors' reactions separately for patients with different degrees of urgency, as measured by the Manchester triage system. Results show that doctors discharge patients more rapidly as queues become longer, and this effect is stronger for patients that do not have life-threatening conditions. We also find that the intensity of diagnosis/treatment procedures decreases when patients face longer queues, driven by the extensive margin. Finally, doctors are less likely to admit patients to inpatient care. We interpret the results in the light of the doctors' incentives literature, explaining how these agents behave in the context of a National Health Service, with no financial incentives.

Value Denominator: The Fundamentals of Costing for Orthopaedic Surgeons

In any discipline, improving quality and efficiency of services acts as a unifying goal. In health care, the goal of achieving high-value care is the new doctrine for all individual entities: payors, providers, and patients. Value is defined as the ratio of outcomes to costs incurred. Therefore, a strong understanding and interpretation of cost measures is crucial to accurately deriving health care value. Health care costing is not simply limited to the costs of implants or the procedure but the costs required to deliver treatment throughout the episode of care. Consequently, physicians serve a keystone role toward driving change in health care costs and initiate high-value care practices. However, physicians require a better understanding of health care costs and institutional accounting practices. To this effort, it is critical that health care providers begin to close the knowledge gap around health care costing and provide leadership when advocating for high-value patient care. This review is purposed to provide a basic review of fundamental components for health care economics, deciphering health care costing, and preview current strategies that prioritize high-value patient care.

Effects of episode-based payment on health care spending and utilization: Evidence from perinatal care in Arkansas

We study how physicians respond to financial incentives imposed by episode-based payment (EBP), which encourages lower spending and improved quality for an entire episode of care. Specifically, we study the impact of the Arkansas Health Care Payment Improvement Initiative, a multi-payer program that requires providers to enter into EBP arrangements for perinatal care, covering the majority of births in the state. Unlike fee-for-service reimbursement, EBP holds physicians responsible for all care within a discrete episode, rewarding physicians for efficient use of their own services and for efficient management of other health care inputs. In a difference-in-differences analysis of commercial claims, we find that perinatal spending in Arkansas decreased by 3.8% overall under EBP, compared to surrounding states. The decrease was driven by reduced spending on non-physician health care inputs, specifically the prices paid for inpatient facility care. We additionally find a limited improvement in quality of care under EBP.

Managing health expenditure inflation under a single-payer system: Taiwan's National Health Insurance

As nations strive to achieve and sustain universal health coverage (UHC), they seek answers as to what health system structures are more effective in managing health expenditure inflation. A fundamental macro-level choice a nation has to make is whether to adopt a single- or a multiple-payer health system. Using Taiwan's National Health Insurance (NHI) as a case, this paper examines how a single-payer system manages its health expenditure growth and draws lessons for other countries whose socioeconomic development is similar to Taiwan's. Our analyses show that as a single payer, Taiwan's NHI is able to exercise its monopsony power to manage its health expenditure growth. This is achieved primarily through the adoption of a system-wide global budget. The global budget sets a hard aggregate budget cap to limit NHI's total spending to its expected revenue, with the annual budget growth rate established by a process of negotiation among key stakeholders. The global budget system is complemented by comprehensive and continuous monitoring and review of encounter records of all providers and patients, enabled by the NHI's advanced information technology. However, by paying its providers using a point-based fee schedule, Taiwan's NHI suffers from inefficient service provision. In particular, providers have incentives to increase use of services and drugs with positive profit margins. Furthermore, Taiwan demonstrates that its control of NHI expenditure growth might be leading it to inadequately meet the changing needs of the population, resulting in the rapid growth of private insurance to cover services excluded or not fully covered by the NHI. If this trend persists and results in a two-tier system, Taiwan's NHI may risk compromising the equity it has achieved in the past two decades.

Payment and Care for Hematopoietic Cell Transplantation Patients: Toward a Specialized Medical Home for Complex Care Patients

Patient-centered medical home models are fundamental to the advanced alternative payment models defined in the Medicare Access and Children's Health Insurance Plan Reauthorization Act (MACRA). The patient-centered medical home is a model of healthcare delivery supported by alternative payment mechanisms and designed to promote coordinated medical care that is simultaneously patient-centric and population-oriented. This transformative care model requires shifting reimbursement to include a per-patient payment intended to cover services not previously reimbursed such as disease management over time. Payment is linked to quality measures, including proportion of care delivered according to predefined pathways and demonstrated impact on outcomes. Some medical homes also include opportunities for shared savings by reducing overall costs of care. Recent proposals have suggested expanding the medical home model to specialized populations with complex needs because primary care teams may not have the facilities or the requisite expertise for their unique needs. An example of a successful care model that may provide valuable lessons for those creating specialty medical home models already exists in many hematopoietic cell transplantation (HCT) centers that deliver multidisciplinary, coordinated, and highly specialized care. The integration of care delivery in HCT centers has been driven by the specialty care their patients require and by the payment methodology preferred by the commercial payers, which has included bundling of both inpatient and outpatient care in the peritransplant interval. Commercial payers identify qualified HCT centers based on accreditation status and comparative performance, enabled in part by center-level comparative performance data available within a national outcomes database mandated by the Stem Cell Therapeutic and Research Act of 2005. Standardization across centers has been facilitated via voluntary accreditation implemented by Foundation for the Accreditation of Cell Therapy. Payers have built on these community-established programs and use public outcomes and program accreditation as standards necessary for inclusion in specialty care networks and contracts. Although HCT centers have not been described as medical homes, most HCT providers have already developed the structures that address critical requirements of MACRA for medical homes.

Do health insurers innovate? Evidence from the anatomy of physician payments

One of private health insurers' main roles in the United States is to negotiate physician payment rates on their beneficiaries' behalf. We show that these rates are often set in reference to a government benchmark, and ask how often private insurers customize their fee schedules away from this default. We exploit changes in Medicare's payments and dramatic bunching in markups over Medicare's rates to address this question. Although Medicare's rates are influential, 25 percent of physician services in our data, representing 45 percent of covered spending, deviate from the benchmark. Heterogeneity in the pervasiveness and direction of deviations suggests that the private market coordinates around Medicare's pricing for simplicity but abandons it when sufficient value is at stake.

The market for paid sick leave

In many countries, general practitioners (GPs) are assigned the task of controlling the validity of their own patients' insurance claims. At the same time, they operate in a market where patients are customers free to choose their GP. Are these roles compatible? Can we trust that the gatekeeping decisions are untainted by private economic interests? Based on administrative registers from Norway with records on sick pay certification and GP-patient relationships, we present evidence to the contrary: GPs are more lenient gatekeepers the more competitive is the physician market, and a reputation for lenient gatekeeping increases the demand for their services.

Statement of the Problem: Health Reform, Value-Based Purchasing, Alternative Payment Strategies, and Children and Youth With Special Health Care Needs

There is increasing interest in maximizing health care purchasing value by emphasizing strategies that promote cost-effectiveness while achieving optimal health outcomes. These value-based purchasing (VBP) strategies have largely focused on adult health, and little is known about the impact of VBP program development and implementation on children, especially children and youth with special health care needs (CYSHCN). With the increasing emphasis on VBP, policymakers must critically analyze the potential impact of VBP for CYSCHN, because this group of children, by definition, uses more health care services than other children and inevitably incurs higher per person costs. We provide a history and definition of VBP and insurance design, noting its origin in employer-sponsored health insurance, and discuss various financing and payment strategies that may be pursued under a VBP framework. The relevance of these approaches for CYSHCN is discussed, and recommendations for next steps are provided. There is considerable work to be done if VBP strategies are to be applied to CYSHCN. Issues include the low prevalence of specific special health care need conditions, how to factor in a life course perspective, in which investments in children's health pay off over a long period of time, the marginal savings that may or may not accrue, the increased risk of family financial hardship, and the potential to exacerbate existing inequities across race, class, ethnicity, functional status, and other social determinants of health.

Elective hospital admissions: secondary data analysis and modelling with an emphasis on policies to moderate growth

Background

The English NHS faces financial pressures that may render the growth rates of elective admissions seen between 2001/2 and 2011/12 unsustainable. A better understanding of admissions growth, and the influence of policy, are needed to minimise the impact on health gain for patients.

Objectives

This project had several objectives: (1) to better understand the determinants of elective activity and policy to moderate growth at minimum health loss for patients; (2) to build a rich data set integrating health, practice and local area data to study general practitioner (GP) referrals and resulting admissions; (3) to predict patients whose treatment is unlikely to be cost-effective using patient-reported outcomes and to examine variation in provider performance; and (4) to study how policies that aim to reduce elective admissions may change demand for emergency care. The main drivers of elective admissions growth have increased either supply of or demand for care, and could include, for example, technical innovations or increased awareness of treatment benefits. Of the factors studied, neither system reform nor population ageing appears to be a key driver. The introduction of the prospective payment tariff ‘Payment by Results’ appears to have led to primary care trusts (PCTs) having increasingly similar lengths of stay. In deprived areas, increasing GP supply appears to moderate elective admissions. Reducing the incidence of single-handed practices tends to reduce referrals and admissions. Policies to reduce referrals are likely to reduce admissions but treatments may be particularly reduced in the lowest referring practices, in which resulting health loss may be greatest. In this model, per full-time equivalent, female and highly experienced GPs identify more patients admitted by specialists.

Results

It appears from our studies that some patient characteristics are associated with not achieving sufficient patient gain to warrant cost-effective treatment. The introduction of independent sector treatment centres is estimated to have caused an increase in emergency activity rates at local PCTs. The explanations offered for increasing elective admissions indicate that they are manageable by health policy.

Conclusions

Further work is required to understand some of the results identified, such as whether or not high-volume Clinical Commissioning Groups are fulfilling unmet need; why some practices refer at low rates relative to admissions; why the period effect, which results from factors that equally affect all in the study at a point in time, dominates in the age–period–cohort analysis; and exactly how the emergency and elective sections of hospital treatment interact. This project relies on the analysis of secondary data. This type of research does not easily facilitate the important input of clinical experts or service users. It would be beneficial if other methods, including surveys and consultation with key stakeholders, could be incorporated into future research now that we have uncovered important questions.

Funding

The National Institute for Health Research Health Services and Delivery Research programme.

Impact of Health System Affiliation on Hospital Resource Use Intensity and Quality of Care

OBJECTIVE

To assess the impact of hospital affiliation, centralization, and managed care plan ownership on inpatient cost and quality.

DATA SOURCES

Inpatient discharges from 3,957 community hospitals in 44 states and American Hospital Association Annual Survey data from 2010 to 2012.

STUDY DESIGN

We conducted a retrospective longitudinal regression analysis using hierarchical modeling of discharges clustered within hospitals.

DATA COLLECTION

Detailed discharge data including costs, length of stay, and patient characteristics from the Healthcare Cost and Utilization Project State Inpatient Databases were merged with hospital survey data from the American Hospital Association.

PRINCIPAL FINDINGS

Hospitals affiliated with health systems had a higher cost per discharge and better quality of care compared with independent hospitals. Centralized systems in particular had the highest cost per discharge and longest stays. Independent hospitals with managed care plans had a higher cost per discharge and better quality of care compared with other independent hospitals.

CONCLUSIONS

Increasing prevalence of health systems and hospital managed care ownership may lead to higher quality but are unlikely to reduce hospital discharge costs. Encouraging participation in innovative payment and delivery reform models, such as accountable care organizations, may be more powerful options.

Impact of oncologist payment method on health care outcomes, costs, quality: a rapid review

BACKGROUND

The incidence of cancer and the cost of its treatment continue to rise. The effect of these dual forces is a major burden on the system of health care financing. One cost containment approach involves changing the way physicians are paid. Payers are testing reimbursement methods such as capitation and prospective payment while also evaluating how the changes impact health outcomes, resource utilization, and quality of care. The purpose of this study is to identify evidence related to physician payment methods' impacts, with a focus on cancer control.

METHODS

We conducted a rapid review. This involved defining eligibility criteria, identifying a search strategy, performing study selection according to the eligibility criteria, and abstracting data from included studies. This process was accompanied by a gray literature search for special topics.

RESULTS

The incentives in fee-for-service payment systems generally lead to health care services being applied inconsistently because providers practice independently with few systems in place for developing treatment protocols and practice reviews. This inconsistency is pronounced in cancer care because much of the total per patient spending occurs in the last month of life. Some insurers are predicting that this variation can be reduced through the use of prospective or bundled payments combined with decision support systems. Workload, recruitment, and retention are all affected by changes to physician payment models; effects seem to be magnified in the specialist context as their several extra years of training lower their overall supply.

CONCLUSIONS

Experimentation with physician payment methods has tended to neglect cancer care providers. Policymakers designing cancer-focused physician reimbursement pilot programs should incorporate quality measurement since very ill patients may receive too little treatment when payment models do not cover oncologists' total costs, e.g., fee-for-service systems whose prices do not account for the possible presence of other diseases.

Provider practice style and patient health outcomes: The case of heart attacks

When a patient arrives at the Emergency Room with acute myocardial infarction (AMI), the provider on duty must quickly decide how aggressively the patient should be treated. Using Florida data on all such patients from 1992 to 2014, we decompose practice style into two components: The provider's probability of conducting invasive procedures on the average patient (which we characterize as aggressiveness), and the responsiveness of the choice of procedure to the patient's characteristics. We show that within hospitals and years, patients with more aggressive providers have consistently higher costs and better outcomes. Since all patients benefit from higher utilization of invasive procedures, targeting procedure use to the most appropriate patients benefits these patients at the expense of the less appropriate patients. We also find that the most aggressive and responsive physicians are young, male, and trained in top 20 schools.

Development of a technology-based behavioral vaccine to prevent adolescent depression: A health system integration model

Efforts to prevent depression have become a key health system priority. Currently, there is a high prevalence of depression among adolescents, and treatment has become costly due to the recurrence patterns of the illness, impairment among patients, and the complex factors needed for a treatment to be effective. Primary care may be the optimal location to identify those at risk by offering an Internet-based preventive intervention to reduce costs and improve outcomes. Few practical interventions have been developed. The models for Internet intervention development that have been put forward focus primarily on the Internet component rather than how the program fits within a broader context. This paper describes the conceptualization for developing technology based preventive models for primary care by integrating the components within a behavioral vaccine framework. CATCH-IT (Competent Adulthood Transition with Cognitive-behavioral, Humanistic and Interpersonal Training) has been developed and successfully implemented within various health systems over a period of 14 years among adolescents and young adults aged 13-24.

An assessment of fiscal space for health in Bhutan

Several factors are expected to put a strain on health financing in Bhutan. In a predominantly public-financed healthcare, ensuring that the health system gains sufficient fiscal space to ensure the sustainability of its financing is a critical policy concern. This fiscal space assessment bases its analysis on national surveys and statistics, international databases and review of official documents and reports. Assuming that the government health spending will continue to respond in the same way to growth as in the period 2002-2012, Bhutan can expect to see a robust increase in government investments in health. If elasticity of health expenditure with respect to GDP does not change significantly, projections indicate that per-capita government spending for health could more than double in the period 2012 to 2019. This increase from Ngultrum 2632 in 2012 to Ngultrum 6724 in 2019 could correspond to government health spending from 2.65% of GDP to 3.98% of GDP in the respective years. The country, however, needs to closely monitor and ensure that government investment in healthcare keeps pace with the growth of the national economy. Along with this, supplementary resources for healthcare could be explored through earmarked taxes and by generating efficiency gains. Copyright © 2015 John Wiley & Sons, Ltd.

Hospital and emergency department factors associated with variations in missed diagnosis and costs for patients age 65 years and older with acute myocardial infarction who present to emergency departments

OBJECTIVES

The objective was to measure the variation in missed diagnosis and costs of care for older acute myocardial infarction (AMI) patients presenting to emergency departments (EDs) and to identify the hospital and ED characteristics associated with this variation.

METHODS

Using 2004-2005 Medicare inpatient and outpatient records, the authors identified a cohort of AMI patients age 65 years and older who presented to the ED for initial care. The primary outcome was missed diagnosis of AMI, i.e., AMI hospital admission within 7 days of an ED discharge for a condition suggestive of cardiac ischemia. Costs were defined as Medicare hospital payments for all services associated with and immediately resulting from the ED evaluation. The effect of ED and hospital characteristics on quality and costs were estimated using multilevel models with hospital random effects.

RESULTS

There were 371,638 AMI patients age 65 and older included in the study, of whom 4,707 were discharged home from their initial ED visits and subsequently admitted to the hospital. The median unadjusted hospital-level missed diagnosis percentage was 0.52% (interquartile range [IQR] = 0 to 3.45%). ED characteristics protective of adverse outcomes include higher ED chest pain acuity (adjusted odds ratio [aOR] = 0.23, 99% confidence interval [CI] = 0.19 to 0.27) and American Board of Emergency Medicine (ABEM) certification (aOR = 0.60, 99% CI = 0.50 to 0.73). Protective hospital characteristics include larger hospital size (aOR = 0.46, 99% CI = 0.37 to 0.57) and academic status (aOR = 0.74, 99% CI = 0.58 to 0.94). All of these characteristics were associated with higher costs as well.

CONCLUSIONS

The proportion of missed AMI diagnoses and cost of care for patients age 65 years and older presenting to EDs with AMI varies across hospitals. Hospitals with more board-certified emergency physicians (EPs) and higher average acuity are associated with significantly higher quality. All hospital characteristics associated with better ED outcomes are associated with higher costs.

Payment reform and changes in health care in China

This paper is intended to assess the primary effects on cost, utilization and quality of care from payment reform of capitation and open enrollment in Changde city, Hunan Province of China. Open enrollment policy was introduced to deal with possible cream skimming associated with capitation. Based on the longitudinal Urban Resident Basic Medical Insurance (URBMI) Household Survey, this study analyses the URBMI data through a set of regression models. The original data included over five thousand inpatient admissions during the study period between 2008 and 2010. The study finds the payment reform to reduce its inpatient out-of-pocket cost by 19.7%, out-of-pocket ratio by 9.5%, and length of stay by 17.7%. However, the total inpatient cost, drug cost ratio, treatment effect, and patient satisfaction showed little difference between Fee-For-Service and capitation models. We conclude that the payment reform in Changde did not reduce overall inpatient expenditure, but it decreased the financial risk and length of stay of inpatient patients without compromising quality of care. The findings would contribute to the health care payment literatures from developing countries and open further research tracks on the ability of open enrollment to compensate for capitation drawbacks.

Resources allocation and health care needs in diabetes care in Danish GP clinics

BACKGROUND

In several countries, morbidity burdens have prompted authorities to change the system for allocating resources among patients from a demographic-based to a morbidity-based casemix system. In Danish general practice clinics, there is no morbidity-based casemix adjustment system.

AIM

The aim of this paper was to assess what proportions of the variation in fee-for-service (FFS) expenditures are explained by type 2 diabetes mellitus (T2DM) patients' co-morbidity burden and illness characteristics.

METHODS AND DATA

We use patient morbidity characteristics such as diagnostic markers and co-morbidity casemix adjustments based on resource utilisation bands and FFS expenditures for a sample of 6706 T2DM patients in 59 general practices for the year 2010. We applied a fixed-effect approach.

RESULTS

Average annual FFS expenditures were approximately 398 euro per T2DM patient. Expenditures increased progressively with the patients' degree of co-morbidity and were higher for patients who suffered from diagnostic markers. A total of 17-25% of the expenditure variation was explained by age, gender and patients' morbidity patterns.

CONCLUSION

T2DM patient morbidity characteristics are significant patient related FFS expenditure drivers in diabetes care. To address the specific health care needs of T2DM patients in GP clinics, our study indicates that it may be advisable to introduce a morbidity based casemix adjustment system.

Analyzing the health care cost curve: a case study

This case study uses data from a self-insured employer plan to perform an analysis into the properties of the health care cost curve. The analysis shows that one statistical property of the health care cost curve is that costs rise continuously, not on an annual or monthly basis. Graphical analysis indicates that managed care techniques used to restrain costs can also smooth utilization, producing the continuously growing cost curve observed. The analysis further illustrates that there is no one "cost curve"-analysis must be segmented by population. Finally, the power of predictive models to fit the cost curve varies by population. To the extent that these results generalize to other health plans, this analysis should be used to inform the implementation of strategies to bend the cost curve. Population health management programs and health policy should be based on continuous analysis and adaption rather than implemented as one-off changes.

Risk-adjusted payment and performance assessment for primary care

BACKGROUND

Many wish to change incentives for primary care practices through bundled population-based payments and substantial performance feedback and bonus payments. Recognizing patient differences in costs and outcomes is crucial, but customized risk adjustment for such purposes is underdeveloped.

RESEARCH DESIGN

Using MarketScan's claims-based data on 17.4 million commercially insured lives, we modeled bundled payment to support expected primary care activity levels (PCAL) and 9 patient outcomes for performance assessment. We evaluated models using 457,000 people assigned to 436 primary care physician panels, and among 13,000 people in a distinct multipayer medical home implementation with commercially insured, Medicare, and Medicaid patients.

METHODS

Each outcome is separately predicted from age, sex, and diagnoses. We define the PCAL outcome as a subset of all costs that proxies the bundled payment needed for comprehensive primary care. Other expected outcomes are used to establish targets against which actual performance can be fairly judged. We evaluate model performance using R(2)'s at patient and practice levels, and within policy-relevant subgroups.

RESULTS

The PCAL model explains 67% of variation in its outcome, performing well across diverse patient ages, payers, plan types, and provider specialties; it explains 72% of practice-level variation. In 9 performance measures, the outcome-specific models explain 17%-86% of variation at the practice level, often substantially outperforming a generic score like the one used for full capitation payments in Medicare: for example, with grouped R(2)'s of 47% versus 5% for predicting "prescriptions for antibiotics of concern."

CONCLUSIONS

Existing data can support the risk-adjusted bundled payment calculations and performance assessments needed to encourage desired transformations in primary care.

Payment reform and the changing landscape in medical practice: Implications for neurologists

The growth in health care spending in the United States, though slowed in the last few years, remains unsustainable. Since higher health care spending does not correlate with most measures of improved patient outcome, there are new attempts to define "value" in health care as the ratio of quality to cost. This article reviews newer proposed models for provider payment and organization and their possible effects on neurologic practice.

Examination of hospital characteristics and patient quality outcomes using four inpatient quality indicators and 30-day all-cause mortality

The study objective was to examine hospital mortality outcomes and structure using 2008 patient-level discharges from general community hospitals. Discharges from Florida administrative files were merged to the state mortality registry. A cross-sectional analysis of inpatient mortality was conducted using Inpatient Quality Indicators (IQIs) for acute myocardial infarction (AMI), congestive heart failure (CHF), stroke, pneumonia, and all-payer 30-day postdischarge mortality. Structural characteristics included bed size, volume, ownership, teaching status, and system affiliation. Outcomes were risk adjusted using 3M APR-DRG. Volume was inversely correlated with AMI, CHF, stroke, and 30-day mortality. Similarities and differences in the direction and magnitude of the relationship of structural characteristics to 30-day postdischarge and IQI mortality measures were observed. Hospital volume was inversely correlated with inpatient mortality outcomes. Other hospital characteristics were associated with some mortality outcomes. Further study is needed to understand the relationship between 30-day postdischarge mortality and hospital quality.

Health care reform: 2012 update

The recent landmark health care reform legislation seeks to expand health insurance coverage, change incentives, and improve the quality and flow of information. This article reviews the elements of health care reform most relevant to clinical gastroenterology, discusses the ongoing challenges that health care reform legislation faces, and considers the potential implications for clinical practice.

Payment Incentives and Integrated Care Delivery: Levers for Health System Reform and Cost Containment

The Patient Protection and Affordable Care Act encourages use of payment methods and incentives to promote integrated care delivery models including patient-centered medical homes, accountable care organizations, and primary care and behavioral health integration. These models rely on interdisciplinary provider teams to coordinate patient care; health information and other technologies to assure, monitor, and assess quality; and payment and financial incentives such as bundling, pay-for-performance, and gain-sharing to encourage value-based health care. In this paper, we review evidence about integrated care delivery, payment methods, and financial incentives to improve value in health care purchasing, and address how these approaches can be used to advance health system change.