Implementing the Affordable Care Act: state approaches to premium rate reforms in the individual health insurance market.

The Affordable Care Act protects people from being charged more for insurance based on factors like medical history or gender and establishes new limits on how insurers can adjust premiums for age, tobacco use, and geography. This brief examines how states have implemented these federal reforms in their individual health insurance markets. We identify state rating standards for the first year of full implementation of reform and explore critical considerations weighed by policymakers as they determined how to adopt the law's requirements. Most states took the opportunity to customize at least some aspect of their rating standards. Interviews with state regulators reveal that many states pursued implementation strategies intended primarily to minimize market disruption and premium shock and therefore established standards as consistent as possible with existing rules or market practice. Meanwhile, some states used the transition period to strengthen consumer protections, particularly with respect to tobacco rating.

The use of ambulatory patient groups for regulation of hospital ambulatory surgery revenue in Maryland.

The Maryland Health Services Cost Review Commission (HSCRC or the commission) is a government agency with the authority to establish rates for both inpatient and outpatient services for all general acute care hospitals in the state. By law and consistent with the state's unique Medicare waiver, all payers (including Medicare and Medicaid) must pay hospitals on the basis of these rates. The HSCRC has used diagnosis related groups to set case-mix-adjusted limits on the revenue per discharge for inpatient services (similar to Medicare inpatient prospective payment nationally) yet, the Maryland rate-setting system for outpatient services has not embodied incentives to control utilization of services. Beginning in the state's fiscal year 2008, the HSCRC is implementing regulation of ambulatory surgery services using ambulatory patient groups to provide better incentives to control utilization, and to facilitate comparisons of the case-mix-adjusted charges per ambulatory surgery case across hospitals. Maryland has been an innovator in the design and successful implementation of payment systems and other incentive mechanisms to constrain hospital cost, maintain payment equity, and ensure access to needed hospital care. The HSCRC's adoption of all patient refined diagnosis related groups and the hospital-specific relative value method for establishing diagnosis related group weights in 2005 was relevant to the Centers for Medicare and Medicaid Services' decision to move to Medicare severity diagnosis related groups beginning in federal fiscal year 2008, and to consider the use of hospital-specific relative value weights. The HSCRC's decision to use ambulatory patient groups for ambulatory surgery is an attempt to apply the most effective features of inpatient payment systems, prospective payment, including incentives to control service volumes. As such, it represents a radical departure from prevailing payment arrangements in that it seeks to remove the traditional distinction between inpatient and outpatient surgical services, a distinction that has blocked the development of effective and well-integrated outpatient payment systems for decades. This article describes the policy rationale for this system, the analysis that was performed, and the methods that will be used to control the revenue per case and compare the relative charges of the hospitals.

Hospital pricing reform in the public health care system--an empirical case study from Finland.

Finland's 1993 state subsidy reform encouraged hospital districts to determine their services as products and change their pricing from bed-day to case-based and fee-for-service types. The economic incentive in hospital production was investigated by exploring how different price types affected the use of lumbar discectomies, and hip and knee replacements. Procedure rates, pricing, need, demand and supply variables in 1991-1998 were analysed using panel data methods. Case-based prices increased lumbar discectomies about 8%. In hip replacement the effect was opposite (-11%). Only for knee replacements (1995-1998) did mixed fee-for-service and bed-day prices significantly increase production (21%).

Effect of Japanese government policy on hospital pharmaceutical profit levels.

OBJECTIVES: Our main objective is to examine whether the Japanese government's pharmaceutical price reduction policy has reduced the size of pharmaceutical profit traditionally enjoyed by health care providers. We discuss alternative measures that the government could introduce in an attempt to control drug costs. METHODS: We review Japan's pharmaceutical reimbursement system. We then analyse published and unpublished data in an attempt to reach our main objective. Calculations are made from raw data, provided by the National Hospital Federation of Japan, in order to discover the extent to which hospitals are experiencing financial difficulties. RESULTS: Due to pharmaceutical product shifting by hospitals from older, less profitable drugs to newer, more profitable ones, drug profit margins may not have fallen to the extent that is often reported in the Japanese press. Furthermore, increased prescribing, possibly due to the ageing of the population, may have maintained the total drug profits of hospitals, to a large extent, despite any reduction in profit margins. CONCLUSIONS: Although drug price reduction policy has had some success in controlling pharmaceutical expenditure, there is little evidence to suggest that total pharmaceutical profits for the provider units have been seriously undermined, despite the prevalence of this notion among hospital administrators. Nevertheless, in order to promote the more efficient and effective manufacture and utilization of pharmaceuticals, the government should seriously consider alternative methods for controlling pharmaceutical costs.

Medicare program; update of ratesetting methodology, payment rates, payment policies, and the list of covered surgical procedures for ambulatory surgical centers effective October 1, 1998--HCFA. Proposed rule.

In this rule we propose to--Update the criteria for determining which surgical procedures can be appropriately and safely performed in an ambulatory surgical center (ASC); Make additions to and deletions from the current list of Medicare covered ASC procedures based on the revised criteria; Rebase the ASC payment rates using cost, charge, and utilization data collected by a 1994 survey of ASCs; Refine the ratesetting methodology that was implemented by a final notice published on February 8, 1990 in the Federal Register; Require that ASC payment, coverage, and wage index updates be implemented annually on January 1 rather than having these updates occur randomly throughout the year; Reduce regulatory burden; and Make several technical policy changes. This proposed rule implements requirements of section 1833(i)(1) and (2) of the Social Security Act.

Re-minding our Ps and Qs: medical cost controls in Canada.

During the past few years the landscape of Canadian physician reimbursement policy has undergone dramatic change. Rapidly eroding fiscal environments for provincial (and federal) governments have forced provinces to "get serious" about controlling a significant, previously uncontrolled, budget line: physician expenditures. All provinces now impose medical expenditure caps, with eight of these being hard caps under which any overruns are the responsibility of the profession. In addition, policies in five provinces now include individual income caps. One of the effects of this new environment has been a rush to adopt supply-control policies. This paper explores a number of other side effects, such as heightened interest in alternative methods of payment, as well as the emergence of, and difficulties for, joint province/medical association management committees.