Why Some Nonelderly Adult Medicaid Enrollees Appear Ineligible Based on Their Annual Income.

CONTEXT: Recent studies have highlighted Medicaid enrollment among middle- and higher-income populations and questioned whether the program is reaching those for whom it is intended. METHODS: Medicaid enrollment and income in 2017 are measured using administrative tax data, monthly income is measured using survey data, and Medicaid enrollment pathways are identified in administrative data. FINDINGS: Among 38.8 million nonelderly adults in Medicaid at any point in 2017, 24.4 million had annual income below their state's typical eligibility threshold, and 14.4 million (37%) had income above the threshold. Among those above the threshold, 3.5 million enrolled through a pathway allowing higher income (pregnant women, the "medically needy", and others); we also estimate that over 12 million had at least one month with income below the threshold and roughly 4 million had at least five months with income below the eligibility threshold. CONCLUSION: Pathways allowing higher income account for one-quarter of enrollees with annual incomes above typical thresholds. Among low-income adults, month-to-month variation in income is common and can account for most or all of the remaining enrollees with annual incomes above typical thresholds. A complete accounting of eligibility status would require merged data on income, Medicaid enrollment, and family structure.

Among Medicare beneficiaries, Affordable Care Act coverage expansions reduced utilization of ambulatory care, particularly among duals.

We leveraged local area variation in the size of the Affordable Care Act (ACA) expansions of Medicaid and nongroup coverage and measured changes in Medicare utilization and spending from 2010 through 2018 using the universe of Medicare fee-for-service claims. We found that the ACA coverage expansions led to decreases in the share of Medicare beneficiaries receiving ambulatory care and decreases in spending per beneficiary on ambulatory care. The reductions in ambulatory care were larger among beneficiaries enrolled in both Medicare and Medicaid ("duals"). Our results suggest that coverage expansions may lead to congestion and reduced access to physicians for those who are continuously insured.

Prices Paid to Hospitals by Private Health Plans Are High Relative to Medicare and Vary Widely: Findings from an Employer-Led Transparency Initiative.

Large price discrepancies exist between what private health plans pay for hospital services and what Medicare pays. RAND Corporation researchers used data from three sources-self-insured employers, state-based all-payer claims databases, and health plans-to assess $13 billion in hospital spending in terms of hospital price levels, variation, and trends from 2015 through 2017 in 25 states. In this study, prices reflect the negotiated allowed amount paid per service, including amounts from both the health plan and the patient, with adjustments for the intensity of services provided. These negotiated prices are then compared with Medicare reimbursement rates for the same procedures and facilities to determine relative prices. Key audiences for this study are (1) self-insured employers that have participated in the study and that are assessing the reasonableness of the prices they are paying for hospital care, (2) other employers that are struggling with high and rising health care costs and that want to better understand patterns and trends in hospital prices, and (3) policymakers and researchers who are concerned with hospital pricing and price transparency. Employers can use this study to become better-informed purchasers, and this report illustrates for policymakers that it is feasible and worthwhile to use claims data from private health plans to measure and compare hospital prices at a high level of detail. This is the first broad-based study that reports prices paid by private health plans to hospitals identified by name and to groups of hospitals under joint ownership (hospital systems) identified by name.

Peering Behind the Veil: Trends in Types of Contracts Between Private Health Plans and Hospitals.

Contracting between private health plans and hospitals has been described as "chaos behind a veil of secrecy." We develop a novel algorithm that classifies inpatient claims as one of three contract types-discounted charges, fixed rates, or per diems-and apply it to the 2009-2014 Colorado All Payer Claims Database. Of $1.1 billion in classifiable private health plan payments for inpatient care in Colorado, we find that 42.1% were fixed rates, 41.1% were discounted charges, and 16.0% were per diems. We find wide variation in contract types among private health plans and hospital types, and a pronounced shift over the study period in private plans' contract types, away from discounted charges, and toward fixed rates. To test our algorithm's validity, we apply it to Colorado Medicare and Medicaid claims-both of which are known primarily to pay using fixed rates-and find, reassuringly, that 86.3% of Medicare payments (98.6% when we exclude Medicare claims with special payment rules) and 79.7% of Medicaid payments are classified as fixed rates.

Accounting for the burden and redistribution of health care costs: Who uses care and who pays for it.

OBJECTIVE: To measure the burden of financing health care costs and quantify redistribution among population groups. DATA SOURCES: A synthetic population using data combined from multiple sources, including the Survey of Income and Program Participation (SIPP), Medical Expenditure Panel Survey (MEPS), Kaiser Family Foundation (KFF)/Health Research Educational Trust (HRET) Employer Health Benefits Survey, American Community Survey (ACS), and National Health Expenditure Accounts (NHEA). STUDY DESIGN: We estimate two dollar amounts for each individual in the synthetic population: (a) payments to finance health care services, which includes all payments by a household and their employers to finance health care, including premiums, out-of-pocket payments, federal and state taxes, and other payments; and (b) the dollar value of health care services received, which equals the amount paid to providers for those services. DATA EXTRACTION METHODS: We linked the nationally representative survey data using statistical matching. We allocated health care expenditures from the NHEA to individuals and households based on expenditures reported in the MEPS. PRINCIPAL FINDINGS: We show that higher-income households pay the most to finance health care in dollar amounts, but the burden of payments as a share of income is greater among lower-income households. CONCLUSIONS: Accounting for all sources of payments provides a clear picture of the burden of financing health care costs, and how that burden is spread under our current financing system.

Medicaid Accountable Care Organizations and Childbirth Outcomes.

Some states have adopted Accountable Care Organization (ACO) models to transform their Medicaid programs, but little is known about their impact on health care outcomes and costs. Medicaid ACOs are uniquely positioned to improve childbirth outcomes because of the number of births covered by Medicaid. Using Healthcare Cost and Utilization Project hospital data, we examined the relationship between ACO adoption and (a) neonatal and maternal outcomes, and (b) cost per birth. We compared outcomes in states that have adopted ACO models in their Medicaid programs with adjacent states without ACO models. Implementation of Medicaid ACOs was associated with a moderate reduction in hospital costs per birth and decreased cesarean section rates. Results varied by state. We found no association between Medicaid ACOs and several birth outcomes, including infant inpatient mortality, low birthweight, neonatal intensive care unit utilization, and severe maternal morbidity. Improving these outcomes may require more time or targeted interventions.

Medicare Advantage Penetration and Hospital Costs Before and After the Affordable Care Act.

BACKGROUND: Research has suggested that growth in the Medicare Advantage (MA) program indirectly benefits the entire 65+-year-old population by reducing overall expenditures and creating spillover effects of patient care practices. Medicare programs and innovations initiated by the Affordable Care Act (ACA) have encouraged practices to adopt models applying to all patient populations, which may influence the continued benefits of MA program growth. OBJECTIVE: This study investigated the relationship between MA program growth and inpatient hospital costs and utilization before and after the ACA. METHODS: Primary data sources were 2005-2014 Health Care Cost and Utilization Project hospital data and 2004-2013 Centers for Medicare & Medicaid Services enrollment data. County-year-level regression analysis with fixed effects examined the relationship between Medicare managed care penetration and hospital cost per enrollee. We decomposed results into changes in utilization, severity, and severity-adjusted inpatient resource use. Analyses were stratified by whether the admission was urgent or nonurgent. PRINCIPAL FINDINGS: A 10% increase in MA penetration was associated with a 3-percentage point decrease in inpatient cost per Medicare enrollee before the ACA. This effect was more prominent in nonurgent admissions and diminished after the ACA. CONCLUSIONS: Results suggest that MA enrollment growth is associated with diminished spillover reductions in hospital admission costs after the ACA. We did not observe a strong relationship between MA enrollment and inpatient days per enrollee. Future research should examine whether spillover effects still are observed in outpatient settings.

A Comprehensive Assessment of Four Options for Financing Health Care Delivery in Oregon.

This article describes four options for financing health care for residents of the state of Oregon and compares the projected impacts and feasibility of each option. The Single Payer option and the Health Care Ingenuity Plan would achieve universal coverage, while the Public Option would add a state-sponsored plan to the Affordable Care Act (ACA) Marketplace. Under the Status Quo option, Oregon would maintain its expansion of Medicaid and subsidies for nongroup coverage through the ACA Marketplace. The state could cover all residents under the Single Payer option with little change in overall health care costs, but doing so would require cuts to provider payment rates that could worsen access to care, and implementation hurdles may be insurmountable. The Health Care Ingenuity Plan, a state-managed plan featuring competition among private plans, would also achieve universal coverage and would sever the employer-health insurance link, but the provider payment rates would likely be set too high, so health care costs would increase. The Public Option would be the easiest of the three options to implement, but because it would not affect many people, it would be an incremental improvement to the Status Quo. Policymakers will need to weigh these options against their desire for change to balance the benefits with the trade-offs.

Evaluating the Impact of Policies to Regulate Involuntary Out-of-Network Charges on New Jersey Hospitals.

Policymakers must balance the complex and sometimes conflicting objectives of ensuring access to care, limiting the financial burden on patients, and controlling overall costs. States differ in how they handle involuntary out-of-network charges-i.e., payment for care when a patient does not have the option of selecting a hospital in his or her health plan's network. New Jersey's current regulations emphasize patient protection, in that patients are only responsible for the portion of the cost that they would have incurred for in-network care, and health plans must pay the remainder of the provider's charges. This policy is seen as contentious by health plans, who argue that they have been made responsible for paying whatever charges a hospital submits, and proposals to limit payments for involuntary out-of-network care are being debated in the state legislature. This study seeks to inform the current debate (as of October 2016) by analyzing the role of out-of-network payments in New Jersey hospitals' financial performance and simulating the effect of policies to limit charges for involuntary out-of-network care. The authors' estimates suggest that implementing New Jersey Bill A1952, which proposes a limit of between 90 and 200 percent of Medicare rates for involuntary out-of-network hospital care, would have reduced payments for hospital care by commercial plans by between 6 and 10 percent during 2010 through 2014. Assuming no change in operating expenses and no recoupment of lost out-of-network revenues, the cap would have led to an operating loss at between 48 and 70 percent of hospitals.

Evaluation of Policy Options for Increasing the Availability of Primary Care Services in Rural Washington State.

The Washington State legislature has recently considered several policy options to address a perceived shortage of primary care physicians in rural Washington. These policy options include opening the new Elson S. Floyd College of Medicine at Washington State University in 2017; increasing the number of primary care residency positions in the state; expanding educational loan-repayment incentives to encourage primary care physicians to practice in rural Washington; increasing Medicaid payment rates for primary care physicians in rural Washington; and encouraging the adoption of alternative models of primary care, such as medical homes and nurse-managed health centers, that reallocate work from physicians to nurse practitioners (NPs) and physician assistants (PAs). RAND Corporation researchers projected the effects that these and other policy options could have on the state's rural primary care workforce through 2025. They project a 7-percent decrease in the number of rural primary care physicians and a 5-percent decrease in the number of urban ones. None of the policy options modeled in this study, on its own, will offset this expected decrease by relying on physicians alone. However, combinations of these strategies or partial reallocation of rural primary care services to NPs and PAs via such new practice models as medical homes and nurse-managed health centers are plausible options for preserving the overall availability of primary care services in rural Washington through 2025.

The Medicare Access And CHIP Reauthorization Act: Effects On Medicare Payment Policy And Spending.

In 2015, Congress repealed the Sustainable Growth Rate formula for Medicare physician payment, eliminating mandatory payment cuts when spending exceeded what was budgeted. In its place, Congress enacted the Medicare Access and CHIP Reauthorization Act (MACRA), which established a two-track performance-based payment system that encourages physicians to participate in alternative payment models. MACRA could have huge effects on health care delivery, but the nature of those effects is highly uncertain. Using the RAND Corporation's Health Care Payment and Delivery Simulation Model, we estimated the effects of MACRA on Medicare spending and utilization and examined how effects would differ under various scenarios. We estimate that MACRA will decrease Medicare spending on physician services by -$35 to -$106 billion (-2.3 percent to -7.1 percent) and change spending on hospital services by $32 to -$250 billion (0.7 percent to -5.1 percent) in 2015-30. The spending effects are critically dependent on the strength of incentives in the alternative payment models, particularly the incentives for physicians to reduce hospital spending and physician responses to MACRA payment rates.

Roles of prices, poverty, and health in Medicare and private spending in Texas.

OBJECTIVES: To investigate the roles of prices, poverty, and health in divergences between Medicare and private spending in Texas. STUDY DESIGN: Retrospective observational design using 2011 Blue Cross Blue Shield of Texas claims data and publicly available Medicare data. METHODS: We measured market-level spending per enrollee among the privately insured. Variation in Medicare and private spending per person are decomposed into prices and quantities, and their associations with poverty are measured. Markets are divided into 4 groups and are compared based on the ratio of Medicare to private spending: "high-private," "proportional," "high-Medicare," and "extremely high-Medicare." RESULTS: Among the privately insured, poverty appears to have large spillover effects; it is strongly associated with lower prices, quantities, and spending. Among Medicare beneficiaries, health status is a key driver of spending variation. The 2 markets with extremely high Medicare-to-private spending ratios (Harlingen and McAllen) are predominantly Hispanic communities with markedly higher rates of poverty and lack of insurance and also extremely low physician supply. The markets with relatively high private spending stand out for having good health-system performance and health outcomes, and higher than average hospital prices. CONCLUSIONS: Variation in private spending appears to reflect the ability of the local population to pay for healthcare, whereas variation in Medicare is more heavily driven by health status, and presumably, by clinical need. These findings highlight the inadvisability of using Medicare spending as a proxy for systemwide spending, and the need for comprehensive market-level spending data that allow comparisons among populations with different sources of insurance coverage.

Medicare and private spending trends from 2008 to 2012 diverge in Texas.

The recent relatively slow growth in health care spending masks significant differences among payers, clinical settings, and geographic areas. To better understand the spending slowdown, we focus on 2008-2012 trends in Texas among Medicare fee-for-service beneficiaries and enrollees in Blue Cross Blue Shield of Texas (BCBSTX). Spending per person for Medicare grew only 1.5% per year on average, compared with 5.2% for BCBSTX. In Medicare, utilization rates were relatively flat, while prices grew more slowly than input prices. In BCBSTX, spending growth was driven by increases in negotiated prices, in particular hospital prices. We find that geographic variation declined sharply in Medicare, due to drops in spending on post-acute care in two notoriously high-spending regions but rose slightly in BCBSTX. The aggregate spending trends mask two divergent stories: spending growth in Medicare is very slow, but price increases continue to drive unsustainable spending growth among the privately insured.

The Economic Incidence of Health Care Spending in Vermont.

In 2015, Vermont legislators may consider financing plans to implement Act 48, a law that aims to provide universal health care coverage to all Vermont residents starting in 2017. In this analysis, we estimate the economic incidence of payments for health care by Vermont residents and the value of health care benefits received by Vermont residents in 2012 and 2017, without the implementation of Act 48 reforms. The goal of the analysis was to understand how health care is currently paid for in Vermont, and to provide a baseline for understanding the possible effects of Act 48. We use data from the 2012 Vermont Household Health Interview Survey, the Vermont Health Care Uniform Evaluation and Reporting System, and administrative data on taxes to estimate payments in 2012. We then project these estimates forward to 2017, using the RAND COMPARE microsimulation to account for how health care coverage in Vermont will change as a result of the Affordable Care Act (ACA). We find that most Vermont residents receive more in health benefits than they pay for directly or through taxes. While lower-income individuals, on average, pay less than higher-income individuals, there is considerable variation across individuals in the level of payment for health care. Much of the current variation stems from the fractured nature of the health system, with some individuals receiving coverage through employers, some through the Exchange (i.e., the health insurance marketplace created by the ACA), and some through other sources. As Vermont considers health care reform, legislators may wish to consider options to reduce the degree of variation in payments made by individuals with similar income levels.

Effects of Health Care Payment Models on Physician Practice in the United States.

The project reported here, sponsored by the American Medical Association (AMA), aimed to describe the effects that alternative health care payment models (i.e., models other than fee-for-service payment) have on physicians and physician practices in the United States. These payment models included capitation, episode-based and bundled payment, shared savings, pay for performance, and retainer-based practice. Accountable care organizations and medical homes, which are two recently expanding practice and organizational models that frequently participate in one or more of these alternative payment models, were also included. Project findings are intended to help guide efforts by the AMA and other stakeholders to make improvements to current and future alternative payment programs and help physician practices succeed in these new payment models-i.e., to help practices simultaneously improve patient care, preserve or enhance physician professional satisfaction, satisfy multiple external stakeholders, and maintain economic viability as businesses. The article provides both findings and recommendations.

Specialty Payment Model Opportunities and Assessment: Oncology Simulation Report.

This article describes the results of a simulation analysis of a payment model for specialty oncology services that is being developed for possible testing by the Center for Medicare and Medicaid Innovation at the Centers for Medicare & Medicaid Services (CMS). CMS asked MITRE and RAND to conduct simulation analyses to preview some of the possible impacts of the payment model and to inform design decisions related to the model. The simulation analysis used an episode-level dataset based on Medicare fee-for-service (FFS) claims for historical oncology episodes provided to Medicare FFS beneficiaries in 2010. Under the proposed model, participating practices would continue to receive FFS payments, would also receive per-beneficiary per-month care management payments for episodes lasting up to six months, and would be eligible for performance-based payments based on per-episode spending for attributed episodes relative to a per-episode spending target. The simulation offers several insights into the proposed payment model for oncology: (1) The care management payments used in the simulation analysis-$960 total per six-month episode-represent only 4 percent of projected average total spending per episode (around $27,000 in 2016), but they are large relative to the FFS revenues of participating oncology practices, which are projected to be around $2,000 per oncology episode. By themselves, the care management payments would increase physician practices' Medicare revenues by roughly 50 percent on average. This represents a substantial new outlay for the Medicare program and a substantial new source of revenues for oncology practices. (2) For the Medicare program to break even, participating oncology practices would have to reduce utilization and intensity by roughly 4 percent. (3) The break-even point can be reduced if the care management payments are reduced or if the performance-based payments are reduced.

Variation in inpatient hospital prices and outpatient service quantities drive geographic differences in private spending in Texas.

OBJECTIVE: To measure the contribution of market-level prices, utilization, and health risk to medical spending variation among the Blue Cross Blue Shield of Texas (BCBSTX) privately insured population and the Texas Medicare population. DATA SOURCES: Claims data for all BCBSTX members and publicly available CMS data for Texas in 2011. STUDY DESIGN: We used observational data and decomposed overall and service-specific spending into health status and health status adjusted utilization and input prices and input prices adjusted for the BCBSTX and Medicare populations. PRINCIPAL FINDINGS: Variation in overall BCBSTX spending across HRRs appeared driven by price variation, whereas utilization variation factored more prominently in Medicare. The contribution of price to spending variation differed by service category. Price drove inpatient spending variation, while utilization drove outpatient and professional spending variation in BCBSTX. The context in which negotiations occur may help explain the patterns across services. CONCLUSIONS: The conventional wisdom that Medicare does a better job of controlling prices and private plans do a better job of controlling volume is an oversimplification. BCBSTX does a good job of controlling outpatient and professional prices, but not at controlling inpatient prices. Strategies to manage the variation in spending may need to differ substantially depending on the service and payer.

Cutting medicare hospital prices leads to a spillover reduction in hospital discharges for the nonelderly.

OBJECTIVE: To measure spillover effects of Medicare inpatient hospital prices on the nonelderly (under age 65). PRIMARY DATA SOURCES: Healthcare Cost and Utilization Project State Inpatient Databases (10 states, 1995-2009) and Medicare Hospital Cost Reports. STUDY DESIGN: Outcomes include nonelderly discharges, length of stay and case mix, staffed hospital bed-days, and the share of discharges and days provided to the elderly. We use metropolitan statistical areas as our markets. We use descriptive analyses comparing 1995 and 2009 and panel data fixed-effects regressions. We instrument for Medicare prices using accumulated changes in the Medicare payment formula. PRINCIPAL FINDINGS: Medicare price reductions are strongly associated with reductions in nonelderly discharges and hospital capacity. A 10-percent reduction in the Medicare price is estimated to reduce discharges among the nonelderly by about 5 percent. Changes in the Medicare price are not associated with changes in the share of inpatient hospital care provided to the elderly versus nonelderly. CONCLUSIONS: Medicare price reductions appear to broadly constrain hospital operations, with significant reductions in utilization among the nonelderly. The slow Medicare price growth under the Affordable Care Act may result in a spillover slowdown in hospital utilization and spending among the nonelderly.