Reducing Medicare Advantage Benchmarks Will Decrease Plan Generosity, But Those Effects Will Likely Be Modest.

Concerns that Medicare Advantage (MA) plans are overpaid have motivated calls to reduce MA benchmarks-the dollar amounts set by the Centers for Medicare and Medicaid Services (CMS) against which MA plans bid to set premiums and fund extra benefits. However, cutting benchmarks may lead to higher MA enrollee premiums and decreased plan generosity. We assessed the relationships between MA benchmarks and plan generosity and benefits. We estimated that a $1,000 per year decrease in benchmarks would lead to small increases in annual premiums of about $60 and increases in annual deductibles of about $27. Copays would also increase modestly, and the propensity to offer benefits would generally decline by less than 5 percentage points, with the greatest impact being on the availability of dental, hearing, and vision benefits. These results suggest that although cuts to MA benchmarks would adversely affect plan generosity, those effects would be modest.

The Effect of Physician and Hospital Market Structure on Medical Technology Diffusion.

OBJECTIVE: To examine the influence of physician and hospital market structures on medical technology diffusion, studying the diffusion of drug-eluting stents (DESs), which became available in April 2003. DATA SOURCES/STUDY SETTING: Medicare claims linked to physician demographic data from the American Medical Association and to hospital characteristics from the American Hospital Association Survey. STUDY DESIGN: Retrospective claims data analyses. DATA COLLECTION/EXTRACTION METHODS: All fee-for-service Medicare beneficiaries who received a percutaneous coronary intervention (PCI) with a cardiac stent in 2003 or 2004. Each PCI record was joined to characteristics on the patient, the procedure, the cardiologist, and the hospital where the PCI was delivered. We accounted for the endogeneity of physician and hospital market structure using exogenous variation in the distances between patient, physician, and hospital locations. We estimated multivariate linear probability models that related the use of a DES in the PCI on market structure while controlling for patient, physician, and hospital characteristics. PRINCIPAL FINDINGS: DESs diffused faster in markets where cardiology practices faced more competition. Conversely, we found no evidence that the structure of the hospital market mattered. CONCLUSIONS: Competitive pressure to maintain or expand PCI volume shares compelled cardiologists to adopt DESs more quickly.

For Third Enrollment Period, Marketplaces Expand Decision Support Tools To Assist Consumers.

The design of the Affordable Care Act's online health insurance Marketplaces can improve how consumers make complex health plan choices. We examined the choice environment on the state-based Marketplaces and HealthCare.gov in the third open enrollment period. Compared to previous enrollment periods, we found greater adoption of some decision support tools, such as total cost estimators and integrated provider lookups. Total cost estimators differed in how they generated estimates: In some Marketplaces, consumers categorized their own utilization, while in others, consumers answered detailed questions and were assigned a utilization profile. The tools available before creating an account (in the window-shopping period) and afterward (in the real-shopping period) differed in several Marketplaces. For example, five Marketplaces provided total cost estimators to window shoppers, but only two provided them to real shoppers. Further research is needed on the impact of different choice environments and on which tools are most effective in helping consumers pick optimal plans.

Increased risk of respiratory illness associated with kerosene fuel use among women and children in urban Bangalore, India.

BACKGROUND: Kerosene is a widely used cooking and lighting fuel in developing countries. The potential respiratory health effects of cooking with kerosene relative to cooking with cleaner fuels such as liquefied petroleum gas (LPG) have not been well characterised. METHODS: We sampled 600 households from six urban neighbourhoods in Bangalore, India. Each household's primary cook, usually the woman of the house, was interviewed to collect information on current domestic fuel use and whether there was any presence of respiratory symptoms or illness in her or in the children in the household. Our analysis was limited to 547 adult females (ages 18-85) and 845 children (ages 0-17) in households exclusively cooking with either kerosene or LPG. We investigated the associations between kerosene use and the likelihood of having respiratory symptoms or illness using multivariate logistic regression models. RESULTS: Among adult women, cooking with kerosene was associated with cough (OR=1.88; 95% CI 1.19 to 2.99), bronchitis (OR=1.54; 95% CI 1.00 to 2.37), phlegm (OR=1.51; 95% CI 0.98 to 2.33) and chest illness (OR=1.61; 95% CI 1.02 to 2.53), relative to cooking with LPG in the multivariate models. Among children, living in a household cooking with kerosene was associated with bronchitis (OR=1.91; 95% CI 1.17 to 3.13), phlegm (OR=2.020; 95% CI 1.29 to 3.74) and chest illness (OR=1.70; 95% CI 0.99 to 2.90) after adjusting for other covariates. We also found associations between kerosene use and wheezing, difficulty breathing and asthma in adults and cough and wheezing in children, though these associations were not statistically significant. CONCLUSIONS: Women and children in households cooking with kerosene were more likely to have respiratory symptoms and illnesses compared with those in households cooking with LPG. Transitioning from kerosene to LPG for cooking may improve respiratory health among adult women and children in this population.

Scope-of-practice laws for nurse practitioners limit cost savings that can be achieved in retail clinics.

Retail clinics have the potential to reduce health spending by offering convenient, low-cost access to basic health care services. Retail clinics are often staffed by nurse practitioners (NPs), whose services are regulated by state scope-of-practice regulations. By limiting NPs' work scope, restrictive regulations could affect possible cost savings. Using multistate insurance claims data from 2004-07, a period in which many retail clinics opened, we analyzed whether the cost per episode associated with the use of retail clinics was lower in states where NPs are allowed to practice independently and to prescribe independently. We also examined whether retail clinic use and scope of practice were associated with emergency department visits and hospitalizations. We found that visits to retail clinics were associated with lower costs per episode, compared to episodes of care that did not begin with a retail clinic visit, and the costs were even lower when NPs practiced independently. Eliminating restrictions on NPs' scope of practice could have a large impact on the cost savings that can be achieved by retail clinics.

Trends underlying employer-sponsored health insurance growth for Americans younger than age sixty-five.

Little is known about the trends in health care spending for the 156 million Americans who are younger than age sixty-five and enrolled in employer-sponsored health insurance. Using a new source of health insurance claims data, we estimated per capita spending, utilization, and prices for this population between 2007 and 2011. During this period per capita spending on employer-sponsored insurance grew at historically slow rates, but still faster than per capita national health expenditures. Total per capita spending for employer-sponsored insurance grew at an average annual rate of 4.9 percent, with prescription spending growing at 3.3 percent and medical spending growing at 5.3 percent. Out-of-pocket medical spending increased at an average annual rate of 8.0 percent, whereas out-of-pocket prescription drug spending growth was flat. Growth in the use of medical services and prescription drugs slowed. Medical price growth accelerated, and prescription price growth decelerated. As a result, changes in utilization contributed less than changes in price did to overall spending growth for those with employer-sponsored insurance.

Does information matter? Competition, quality, and the impact of nursing home report cards.

OBJECTIVE: We evaluate the effects of the Nursing Home Quality Initiative (NHQI), which introduced quality measures to the Centers for Medicare and Medicaid Services' Nursing Home Compare website, on facility performance and consumer demand for services. DATA SOURCES: The nursing home Minimum Data Set facility reports from 1999 to 2005 merged with facility-level data from the On-Line Survey, Certification, and Reporting System. STUDY DESIGN: We rely on the staggered rollout of the report cards across pilot and nonpilot states to examine the effect of report cards on market share and quality of care. We also exploit differences in nursing home market competition at baseline to identify the impacts of the new information on nursing home quality. RESULTS: The introduction of the NHQI was generally unrelated to facility quality and consumer demand. However, nursing homes facing greater competition improved their quality more than facilities in less competitive markets. CONCLUSIONS: The lack of competition in many nursing home markets may help to explain why the NHQI report card effort had a minimal effect on nursing home quality. With the introduction of market-based reforms such as report cards, this result suggests policy makers must also consider market structure in efforts to improve nursing home performance.

Trends in unionization of nursing homes.

Unionization may have important implications for the delivery of nursing home care, but little is known about this phenomenon. Since 1985, the proportion of nursing home workers covered by union contracts declined from 14.6% to 9.9%. The first national-scale data on facility-level unionization reveals that unions are more common in nursing homes with more residents, in hospital-based or chain-affiliated facilities, and in facilities serving a higher proportion of Medicaid patients. With new federal policy proposals aimed at substantially lowering the cost of organizing workers, policymakers will want to consider the potential impact of nursing home unionization on worker, patient, and market outcomes.

National health care costs of peripheral arterial disease in the Medicare population.

Lower extremity peripheral arterial disease (PAD) is prevalent in the Medicare population and is associated with high rates of myocardial infarction, stroke, amputation, and death. Nevertheless, national health expenditures for PAD are not known. We hypothesized that PAD-related costs are high, increase with age, and that treatment rates would be less than known PAD prevalence. The objective was to determine national health care expenditures for PAD in the United States. PAD-related treatment costs were calculated in the elderly, non-disabled Medicare population. The cost analysis relied on the 5% control population for the linked SEER-Medicare data and Medicare claims for the calendar year 2001, identifying PAD cases based on diagnosis and procedure codes. Costs were aggregated separately for inpatient and outpatient treatment and estimates adjusted to reflect the Medicare population. A total of $4.37 billion was spent on PAD-related treatment and 88% of expenditures were for inpatient care. Medicare program outlays totaled $3.87 billion, while enrollees (or their supplemental insurance) spent the remaining $500 million. In total, 6.8% of the elderly Medicare population received treatment for PAD. Treatment increased with age at rates of 4.5%, 7.5%, and 11.8% for individuals aged 65-74, 75-84, and >85 years, respectively. PAD-related costs accounted for approximately 13% of all Medicare Part A and B expenditures for the PAD-treated cohort, and 2.3% of total Medicare Part A and B expenditures. In conclusion, US national PAD-related costs are high, associated with inpatient care, and increase with age. PAD is treated at rates lower than the known PAD prevalence as only approximately one-third of the population with known PAD had detectable PAD-related health care costs in our analysis. The potential impact of earlier PAD detection and use of outpatient preventive strategies on total national PAD health care costs is unknown.

The impact of Medicare coverage policies on health care utilization.

OBJECTIVE: To determine whether Medicare coverage policies affect utilization of services in Medicare. DATA SOURCES: We constructed an analysis data set for eight different procedures using secondary data obtained from Medicare claims (1999-2002) and Medicare coverage policies posted on Center for Medicare and Medicaid Services website. STUDY DESIGN: We analyzed the impact of coverage policies using difference-in-difference approach in a regression framework. PRINCIPAL FINDINGS: We found that in only one case (transesophageal echocardiography) out of eight did utilization change (reduced by 13.6 percent) after the effective date of the local policies. There is no systematic pattern that policies affect utilization, and the type of coverage policy does not seem to play an important role in its impact. CONCLUSIONS: Coverage policies have the potential but do not consistently impact utilization as policy makers intend and expect them to do. These findings raise significant policy questions about the effectiveness of Medicare coverage policies, which deserve further study.

Implementing evidence-based medicine through medicare coverage decisions.

Management of technology diffusion to improve quality and constrain spending in health care remains an elusive goal. Along with efforts to improve the quality of evidence, providers and payers must ensure that evidence actually effects changes in practice. Medicare coverage policies grant, limit, and condition payment based on evidentiary standards. This paper identifies the sizable barriers to implementation of evidence-based medicine in Medicare and proposes policy solutions to address them.

Hospital consolidation and racial/income disparities in health insurance coverage.

Non-Hispanic whites are significantly more likely to have health insurance coverage than most racial/ethnic minorities, and this differential grew during the 1990s. Similarly, wealthier Americans are more likely to have health insurance than the poor, and this difference also grew over the 1990s. This paper examines the role of provider competition in increasing these disparities in insurance coverage. Over the 1990s, the hospital industry consolidated; we analyze the impact of this consolidation on health insurance take-up for different racial/ethnic minorities and income groups. We found that the hospital consolidation wave increased health insurance disparities along racial and income dimensions.

Revisiting the relationship between managed care and hospital consolidation.

OBJECTIVE: This paper analyzes whether the rise in managed care during the 1990s caused the increase in hospital concentration. DATA SOURCES: We assemble data from the American Hospital Association, InterStudy and government censuses from 1990 to 2000. STUDY DESIGN: We employ linear regression analyses on long differenced data to estimate the impact of managed care penetration on hospital consolidation. Instrumental variable analogs of these regressions are also analyzed to control for potential endogeneity. DATA COLLECTION: All data are from secondary sources merged at the level of the Health Care Services Area. PRINCIPLE FINDINGS: In 1990, the mean population-weighted hospital Herfindahl-Hirschman index (HHI) in a Health Services Area was .19. By 2000, the HHI had risen to .26. Most of this increase in hospital concentration is due to hospital consolidation. Over the same time frame HMO penetration increased three fold. However, our regression analysis strongly implies that the rise of managed care did not cause the hospital consolidation wave. This finding is robust to a number of different specifications.

Regionalization versus competition in complex cancer surgery.

The empirical association between high hospital procedure volume and lower mortality rates has led to recommendations for the regionalization of complex surgical procedures. While regionalization may improve outcomes, it also reduces market competition, which has been found to lower prices and improve health care quality. This study estimates the potential net benefits of regionalizing the Whipple surgery for pancreatic cancer patients. We confirm that increased hospital volume and surgeon volume are associated with lower inpatient mortality rates. We then predict the price and outcome consequences of concentrating Whipple surgery at hospitals that perform at least two, four, and six procedures respectively per year. Our consumer surplus calculations suggest that regionalization can increase consumer surplus, but potential price increases extract over half of the value of reduced deaths from regionalization. We reach three conclusions. First, regionalization can increase consumer surplus, but the benefits may be substantially less than implied by examining only the outcome side of the equation. Second, modest changes in outcomes due to regionalization may lead to decreases in consumer surplus. Third, before any regionalization policy is implemented, a deep and precise understanding of the nature of both outcome/volume and price/competition relationships is needed.

Outcomes after open versus laparoscopic gastric bypass.

In expert hands, laparoscopic gastric bypass (LGB) is associated with reduced morbidity and mortality compared with open bariatric surgery. The purpose of our study was to determine whether or not the results of LGB have been realized in the general US population. We used data from the nationwide inpatient sample to define differences in outcomes after LGB versus open techniques (OGB). We calculated hospital stay, in-hospital mortality, and major complications for both OGB and LGB. We noted a total of 26,940 gastric bypass procedures: LGB was coded in 16.3% and OGB in 83.7%. The mean hospital stay, mortality, wound, gastrointestinal, pulmonary, and cardiovascular complications were significantly lower after LGB (P<0.001). After we adjusted for covariates, hospital stay, pulmonary morbidity, and mortality remained significantly lower after LGB (P<0.001). In conclusion, LGB is associated with significantly lower mean hospital stay and with reduced morbidity and mortality as compared with OGB.

A structured review of the effect of economic incentives on consumers' preventive behavior.

Improving participation in preventive activities will require finding methods to encourage consumers to engage in and remain in such efforts. This review assesses the effects of economic incentives on consumers' preventive health behaviors. A study was classified as complex preventive health if a sustained behavior change was required of the consumer; if it could be accomplished directly (e.g., immunizations), it was considered simple. A systematic literature review identified 111 randomized controlled trials of which 47 (published between 1966 and 2002) met the criteria for review. The economic incentives worked 73% of the time (74% for simple, and 72% for complex). Rates varied by the goal of the incentive. Incentives that increased ability to purchase the preventive service worked better than more diffuse incentives, but the type matters less than the nature of the incentive. Economic incentives are effective in the short run for simple preventive care, and distinct, well-defined behavioral goals. Small incentives can produce finite changes, but it is not clear what size of incentive is needed to yield a major sustained effect.

Competition, payers, and hospital quality.

OBJECTIVE: To estimate the effects of competition for both Medicare and HMO patients on the quality decisions of hospitals in Southern California. DATA SOURCE: Secondary discharge data from the Office of Statewide Health Planning and Development for the State of California for the period 1989-1993. STUDY DESIGN: Outcome variables are the risk-adjusted hospital mortality rates for pneumonia (estimated by the authors) and acute myocardial infarction (AMI) (reported by the state of California). Measures of competition are constructed for each hospital and payer type. The competition measures are formulated to mitigate the possibility of endogeneity bias. The relationships between risk-adjusted mortality and the different competition measures are estimated using ordinary least squares. PRINCIPAL FINDINGS: The study finds that an increase in the degree of competition for health maintenance organization (HMO) patients is associated with a decrease in risk-adjusted hospital mortality rates. Conversely, an increase in competition for Medicare enrollees is associated with an increase in risk-adjusted mortality rates for hospitals. CONCLUSIONS: In conjunction with previous research, the estimates indicate that increasing competition for HMO patients appears to reduce prices and save lives and hence appears to improve welfare. However, increases in competition for Medicare appear to reduce quality and may reduce welfare. Increasing competition has little net effect on hospital quality in our sample.

Hospital advertising in California, 1991-1997.

This paper examines the advertising behavior of California hospitals from 1991 to 1997. Using highly detailed hospital-level information, we found that hospital advertising in California increased dramatically: annual spending on advertising grew (inflation adjusted) more than sixfold over the period. In addition, advertising expenditures varied significantly across hospitals. We found that hospital advertising increased with market concentration; with the number of nearby potential patients; with the percentage of nearby patients insured through Medicare, health maintenance organizations (HMOs), and indemnity insurance; and with chain affiliation. For-profit hospitals were not found to advertise more than their not-for-profit counterparts.