The Impact of Financial Assistance Programs on Health Care Utilization: Evidence from Kaiser Permanente.

Most hospitals have financial assistance programs for low-income patients. We use administrative data from Kaiser Permanente to study the effects of financial assistance on healthcare utilization. Using a regression discontinuity design based on an income threshold for program eligibility, we find that financial assistance increases the likelihood of an inpatient, ambulatory and emergency department encounter by 3.6 pp (59%), 13.4 pp (20%), and 6.7 pp (53%), respectively, though effects dissipate three quarters after program receipt. Financial assistance also increases the detection and management of treatment-sensitive conditions (e.g., drugs treating diabetes), suggesting financial assistance may increase receipt of high-value care.

Financial Incentives to Facilities and Clinicians Treating Patients With End-stage Kidney Disease and Use of Home Dialysis: A Randomized Clinical Trial.

Importance: Home dialysis rates for end-stage kidney disease (ESKD) treatment are substantially lower in the US than in other high-income countries, yet there is limited knowledge on how to increase these rates. Objective: To report results from the first year of a nationwide randomized clinical trial that provides financial incentives to ESKD facilities and managing clinicians to increase home dialysis rates. Design, Setting, and Participants: Results were analyzed from the first year of the End-Stage Renal Disease Treatment Choice (ETC) model, a multiyear, mandatory-participation randomized clinical trial designed and implemented by the US Center for Medicare & Medicaid Innovation. Data were reported on Medicare patients with ESKD 66 years or older who initiated treatment with dialysis in 2021, with data collection through December 31, 2021; the study included all eligible ESKD facilities and managing clinicians. Eligible hospital referral regions (HRRs) were randomly assigned to the ETC (91 HRRs) or a control group (211 HRRs). Interventions: The ESKD facilities and managing clinicians received financial incentives for home dialysis use. Main Outcomes and Measures: The primary outcome was the percentage of patients with ESKD who received any home dialysis during the first 90 days of treatment. Secondary outcomes included other measures of home dialysis and patient volume and characteristics. Results: Among the 302 HRRs eligible for randomization, 18 621 eligible patients initiated dialysis treatment during the study period (mean [SD] age, 74.8 [1.05] years; 7856 women [42.1%]; 10 765 men [57.9%]; 859 Asian [5.2%], 3280 [17.7%] Black, 730 [4.3%] Hispanic, 239 North American Native, and 12 394 managing clinicians. The mean (SD) share of patients with any home dialysis during the first 90 days was 20.6% (7.8%) in the control group and was 0.12 percentage points higher (95% CI, -1.42 to 1.65 percentage points; P = .88) in the ETC group, a statistically nonsignificant difference. None of the secondary outcomes differed significantly between groups. Conclusions and Relevance: The trial results found that in the first year of the US Center for Medicare & Medicaid Innovation-designed ETC model, HRRs assigned to the model did not have statistically significantly different rates in home dialysis compared with control HRRs. This raises questions about the efficacy of the financial incentives provided, although further evaluation is needed, as the size of these incentives will increase in subsequent years. Trial Registration: ClinicalTrials.gov Identifier: NCT05005572.

Trends in Medical Debt During the COVID-19 Pandemic.

This cross-sectional study evaluates the association between the COVID-19 pandemic and reported new medical debt from 2018 to 2021 across the US.

VOLUNTARY REGULATION: EVIDENCE FROM MEDICARE PAYMENT REFORM.

Government programs are often offered on an optional basis to market participants. We explore the economics of such voluntary regulation in the context of a Medicare payment reform, in which one medical provider receives a single, predetermined payment for a sequence of related healthcare services, instead of separate service-specific payments. This "bundled payment" program was originally implemented as a 5-year randomized trial, with mandatory participation by hospitals assigned to the new payment model; however, after two years, participation was made voluntary for half of these hospitals. Using detailed claim-level data, we document that voluntary participation is more likely for hospitals that can increase revenue without changing behavior ("selection on levels") and for hospitals that had large changes in behavior when participation was mandatory ("selection on slopes"). To assess outcomes under counterfactual regimes, we estimate a stylized model of responsiveness to and selection into the program. We find that the current voluntary regime generates inefficient transfers to hospitals, and that alternative (feasible) designs could reduce these inefficient transfers and raise welfare. Our analysis highlights key design elements to consider under voluntary regulation.

Hospital Lawsuits Over Unpaid Bills Increased By 37 Percent In Wisconsin From 2001 To 2018.

We analyzed Wisconsin court records from the period 2001-18 to document trends in hospital lawsuits to recover patients' unpaid medical bills. These lawsuits increased 37 percent during this period, from 1.12 per 1,000 residents in 2001 to 1.53 per 1,000 residents in 2018, with lawsuits being disproportionately directed at Black patients and patients living in poorer and less densely populated counties.

Medical Debt in the US, 2009-2020.

Importance: Medical debt is an increasing concern in the US, yet there is limited understanding of the amount and distribution of medical debt, and its association with health care policies. Objective: To measure the amount of medical debt nationally and by geographic region and income group and its association with Medicaid expansion under the Affordable Care Act. Design, Setting, and Participants: Data on medical debt in collections were obtained from a nationally representative 10% panel of consumer credit reports between January 2009 and June 2020 (reflecting care provided prior to the COVID-19 pandemic). Income data were obtained from the 2014-2018 American Community Survey. The sample consisted of 4.1 billion person-month observations (nearly 40 million unique individuals). These data were used to estimate the amount of medical debt (nationally and by geographic region and zip code income decile) and to examine the association between Medicaid expansion and medical debt (overall and by income group). Exposures: Geographic region (US Census region), income group (zip code income decile), and state Medicaid expansion status. Main Outcomes and Measures: The stock (all unpaid debt listed on credit reports) and flow (new debt listed on credit reports during the preceding 12 months) of medical debt in collections that can be collected on by debt collectors. Results: In June 2020, an estimated 17.8% of individuals had medical debt (13.0% accrued debt during the prior year), and the mean amount was $429 ($311 accrued during the prior year). The mean stock of medical debt was highest in the South and lowest in the Northeast ($616 vs $167; difference, $448 [95% CI, $435-$462]) and higher in poor than in rich zip code income deciles ($677 vs $126; difference, $551 [95% CI, $520-$581]). Between 2013 and 2020, the states that expanded Medicaid in 2014 experienced a decline in the mean flow of medical debt that was 34.0 percentage points (95% CI, 18.5-49.4 percentage points) greater (from $330 to $175) than the states that did not expand Medicaid (from $613 to $550). In the expansion states, the gap in the mean flow of medical debt between the lowest and highest zip code income deciles decreased by $145 (95% CI, $95-$194) while the gap increased by $218 (95% CI, $163-$273) in the nonexpansion states. Conclusions and Relevance: This study provides an estimate of the amount of medical debt in collections in the US based on consumer credit reports from January 2009 to June 2020, reflecting care delivered prior to the COVID-19 pandemic, and suggests that the amount of medical debt was highest among individuals living in the South and in lower-income communities. However, further study is needed regarding debt related to COVID-19.

Randomized trial shows healthcare payment reform has equal-sized spillover effects on patients not targeted by reform.

Changes in the way health insurers pay healthcare providers may not only directly affect the insurer's patients but may also affect patients covered by other insurers. We provide evidence of such spillovers in the context of a nationwide Medicare bundled payment reform that was implemented in some areas of the country but not in others, via random assignment. We estimate that the payment reform-which targeted traditional Medicare patients-had effects of similar magnitude on the healthcare experience of nontargeted, privately insured Medicare Advantage patients. We discuss the implications of these findings for estimates of the impact of healthcare payment reforms and more generally for the design of healthcare policy.

Externalities and Taxation of Supplemental Insurance: A Study of Medicare and Medigap.

Most health insurance uses cost-sharing to reduce excess utilization. Supplemental insurance can blunt the impact of this cost-sharing, increasing utilization and exerting a negative externality on the primary insurer. This paper estimates the effect of private Medigap supplemental insurance on public Medicare spending using Medigap premium discontinuities in local medical markets that span state boundaries. Using administrative data on the universe of Medicare beneficiaries, we estimate that Medigap increases an individual's Medicare spending by 22.2 percent. We calculate that a 15 percent tax on Medigap premiums generates savings of $12.9 billion annually with a standard error of $4.9 billion.

Mandatory Medicare Bundled Payment Program for Lower Extremity Joint Replacement and Discharge to Institutional Postacute Care: Interim Analysis of the First Year of a 5-Year Randomized Trial.

Importance: Bundled payments are an increasingly common alternative payment model for Medicare, yet there is limited evidence regarding their effectiveness. Objective: To report interim outcomes from the first year of implementation of a bundled payment model for lower extremity joint replacement (LEJR). Design, Setting, and Participants: As part of a 5-year, mandatory-participation randomized trial by the Centers for Medicare & Medicaid Services, eligible metropolitan statistical areas (MSAs) were randomized to the Comprehensive Care for Joint Replacement (CJR) bundled payment model for LEJR episodes or to a control group. In the first performance year, hospitals received bonus payments if Medicare spending for LEJR episodes was below the target price and hospitals met quality standards. This interim analysis reports first-year data on LEJR episodes starting April 1, 2016, with data collection through December 31, 2016. Exposure: Randomization of MSAs into the CJR bundled payment model group (75 assigned; 67 included) or to the control group without the CJR model (121 assigned; 121 included). Instrumental variable analysis was used to evaluate the relationship between inclusion of MSAs in the CJR model and outcomes. Main Outcomes and Measures: The primary outcome was share of LEJR admissions discharged to institutional postacute care. Secondary outcomes included the number of days in institutional postacute care, discharges to other locations, Medicare spending during the episode (overall and for institutional postacute care), net Medicare spending during the episode, LEJR patient volume and patient case mix, and quality-of-care measures. Results: Among the 196 MSAs and 1633 hospitals, 131 285 eligible LEJR procedures were performed during the study period (mean volume, 110 LEJR episodes per hospital) among 130 343 patients (mean age, 72.5 [SD, 0.91] years; 65% women; 90% white). The mean percentage of LEJR admissions discharged to institutional postacute care was 33.7% (SD, 11.2%) in the control group and was 2.9 percentage points lower (95% CI, -4.95 to -0.90 percentage points) in the CJR group. Mean Medicare spending for institutional postacute care per LEJR episode was $3871 (SD, $1394) in the control group and was $307 lower (95% CI, -$587 to -$27) in the CJR group. Mean overall Medicare spending per LEJR episode was $22 872 (SD, $3619) in the control group and was $453 lower (95% CI, -$909 to $3) in the CJR group, a statistically nonsignificant difference. None of the other secondary outcomes differed significantly between groups. Conclusions and Relevance: In this interim analysis of the first year of the CJR bundled payment model for LEJR among Medicare beneficiaries, MSAs covered by CJR, compared with those that were not, had a significantly lower percentage of discharges to institutional postacute care but no significant difference in total Medicare spending per LEJR episode. Further evaluation is needed as the program is more fully implemented. Trial Registration: ClinicalTrials.gov Identifier: NCT03407885; American Economic Association Registry Identifier: AEARCTR-0002521.

Do Larger Health Insurance Subsidies Benefit Patients or Producers? Evidence from Medicare Advantage.

A central question in the debate over privatized Medicare is whether increased government payments to private Medicare Advantage (MA) plans generate lower premiums for consumers or higher profits for producers. Using difference­in­differences variation brought about by a sharp legislative change, we find that MA insurers pass through 45 percent of increased payments in lower premiums and an additional 9 percent in more generous benefits. We show that advantageous selection into MA cannot explain this incomplete pass­through. Instead, our evidence suggests that market power is important, with premium pass­through rates of 13 percent in the least competitive markets and 74 percent in the most competitive.

Provider Incentives and Healthcare Costs: Evidence from Long-Term Care Hospitals.

We study the design of provider incentives in the post-acute care setting - a high-stakes but under-studied segment of the healthcare system. We focus on long-term care hospitals (LTCHs) and the large (approximately $13,500) jump in Medicare payments they receive when a patient s stay reaches a threshold number of days. Discharges increase substantially after the threshold, with the marginal discharged patient in relatively better health. Despite the large financial incentives and behavioral response in a high mortality population, we are unable to detect any compelling evidence of an impact on patient mortality. To assess provider behavior under counterfactual payment schedules, we estimate a simple dynamic discrete choice model of LTCH discharge decisions. When we conservatively limit ourselves to alternative contracts that hold the LTCH harmless, we find that an alternative contract can generate Medicare savings of about $2,100 per admission, or about 5% of total payments. More aggressive payment reforms can generate substantially greater savings, but the accompanying reduction in LTCH profits has potential out-of-sample consequences. Our results highlight how improved financial incentives may be able to reduce healthcare spending, without negative consequences for industry profits or patient health.

Bankruptcy as Implicit Health Insurance.

This paper examines the implicit health insurance that households receive from the ability to declare bankruptcy. Exploiting multiple sources of variation in asset exemption law, I show that uninsured households with a greater financial cost of bankruptcy make higher out-of-pocket medical payments, conditional on the amount of care received. In turn, I find that households with greater wealth at risk are more likely to hold health insurance. The implicit insurance from bankruptcy distorts the insurance coverage decision. Using a microsimulation model, I calculate that the optimal Pigovian penalties are three-quarters as large as the average penalties under the Affordable Care Act.

Pricing and Welfare in Health Plan Choice.

Premiums in health insurance markets frequently do not reflect individual differences in costs, either because consumers have private information or because prices are not risk rated. This creates inefficiencies when consumers self-select into plans. We develop a simple econometric model to study this problem and estimate it using data on small employers. We find a welfare loss of 2-11 percent of coverage costs compared to what is feasible with risk rating. Only about one-quarter of this is due to inefficiently chosen uniform contribution levels. We also investigate the reclassification risk created by risk rating individual incremental premiums, finding only a modest welfare cost.