Health Insurance Coverage-Is Broader Always Better?

This Viewpoint discusses the traditional goals of health insurance and contrasts those with the current needs of insurance beneficiaries.

Do Insurers With Greater Market Power Negotiate Consistently Lower Prices for Hospital Care? Evidence From Hospital Price Transparency Data.

This study examined if greater insurer market power was associated with consistently lower negotiated prices within each hospital for 44 shoppable and emergency procedures, using price transparency data disclosed by 1,506 hospitals in metropolitan areas. We used multi-level fixed effects models to estimate the within-hospital variation in plan-level insurer-negotiated prices (from the largest insurer, the second largest insurer, other major insurers, and nonmajor insurers) and cash-pay prices as a function of insurer market power. For shoppable services, relative to nonmajor insurers, the largest, second largest, and other major insurers negotiated 23%, 16%, and 3% lower prices, respectively, while cash prices were 17% higher. For emergency room visits, while the largest insurers paid 5% less than nonmajor insurers, the second largest and other major insurers did not pay lower prices. Stratified analyses by type of shoppable services found varying magnitudes and patterns of price discounts associated with insurer market power.

Spending on Dual Over-the-Counter and Prescription Drugs in the Medicare Part D Program.

This study compares Medicare and patient spending for dual over-the-counter and prescription drugs with their over-the-counter cash prices.

Characteristics of Prescription Drug Fills Using Pharmacy-Pharmacy Benefit Manager Discount Programs: The "GoodRx" Model.

OBJECTIVES: This study aimed to characterize products using pharmacy-pharmacy benefit manager (PBM) discounts and to estimate the association among such discounts, prescription utilization, and out-of-pocket costs. METHODS: This is a retrospective cohort study using IQVIA's Formulary Impact Analyzer, which contains anonymized, individual-level pharmacy claims representing US retail pharmacy transactions. We focused on 20 products with the greatest number of transactions using a pharmacy-PBM discount. Our unit of analysis was a treatment episode, defined as the length of time from an incident fill to no continuous use for 60 consecutive days after allowing for indefinite stockpiling. Outcome measures included products with greatest pharmacy-PBM discount use, characteristics of treatment episodes, and out-of-pocket costs with and without pharmacy-PBM discount. RESULTS: Across all products, 3.82% of transactions and 7.69% of treatment episodes were accompanied by a pharmacy-PBM discount. Commonly discounted products included generic treatments for chronic disease (lisinopril, levothyroxine, metformin) and neuropsychiatric conditions (alprazolam, amphetamine, buprenorphine, hydrocodone). The median postdiscount out-of-pocket cost was >2.5-fold higher during treatment episodes with a discount than those without ($15.15, interquartile range [IQR] $8.53-32.00, vs $5.88, IQR $1.40-15.00). Median treatment episode duration was 249 days (IQR 132-418) with discount use compared with 236 days (IQR 121-396) without discount use, although treatment episodes that began with a discount had fewer transactions per treatment episode and were shorter (median 212 days, IQR 114-360) than those that did not (313 days, IQR 178-500). CONCLUSIONS: Pharmacy-PBM discounts may foster market competition and improve access for under- and uninsured individuals; however, these programs may not generate savings for many insured individuals.

Hospital Prices in Medicaid Managed Care.

This cross-sectional study uses hospitals' self-disclosed pricing information to characterize Medicaid managed care hospital prices.

Pharmacy Benefit Managers: History, Business Practices, Economics, and Policy.

Importance: Pharmacy benefit managers (PBMs) play a major role in the provision of pharmacy services by acting as intermediaries between pharmacies, plan sponsors (insurance companies and employers), pharmaceutical manufacturers, and drug wholesalers. As their role and visibility have increased, PBMs have come under increased scrutiny from policymakers. However, no prior literature has systematically described the history, business practices, and policymaking of PBMs. Objective: To provide an overview of the PBM industry, including its history, the evolution of services provided by PBMs, an assessment of the current policy landscape, and analysis of how proposed policies could affect PBM practices and patient care. Evidence: This work reviews historical events; previous and current industry practices and publications; prior academic literature, existing statutes, regulations, and court cases; and recent legislative reforms and agency actions regarding PBMs. Findings: Pharmacy benefit managers evolved in parallel with the pharmaceutical manufacturing and health insurance industries. The evolution of the PBM industry has been characterized by horizontal and vertical integration and market concentration. The PBM provides 5 key functions: formulary design, utilization management, price negotiation, pharmacy network formation, and mail order pharmacy services. Criticism of the PBM industry centers around the lack of competition, pricing, agency problems, and lack of transparency. Legislation to address these concerns has been introduced at the state and federal levels, but the potential for these policies to address concerns about PBMs is unknown and may be eclipsed by private sector responses. Conclusions and Relevance: Pharmacy benefit managers are intermediaries in the pharmaceutical supply chain and perform multiple roles in the management and distribution of pharmaceuticals to patients. When regulating PBMs, it is important to adopt policies that address market failure problems by improving PBM competition as opposed to policies designed to serve the narrow financial interests of other market participants (eg, pharmacies, pharmaceutical manufacturers) without meeting the needs of consumers.

Pharmacy Benefit Manager Pricing and Spread Pricing for High-Utilization Generic Drugs.

This cross-sectional study uses Medicare Part D claims for high-utilization generic drugs to analyze gross profits accumulated by pharmacy benefit managers, pharmacies, wholesalers, and manufacturers in the pharmaceutical supply chain.

Spending on and Use of Clinician-Administered Drugs in Medicare.

Importance: Medicare Part B drug expenditures have increased in recent years. This trend is likely to persist given the increased use and availability of biologics. Objectives: To assess the extent to which Medicare Part B spending growth was associated with changes in price vs quantity, and how these trends interacted with entry of new drugs into the marketplace. Design, Setting, and Participants: This cross-sectional study quantified the degree of spending concentration and the association between price and use of Part B drugs among fee-for-service Medicare beneficiaries. Data on use and spending for separately payable Part B drugs were included. Source data were aggregated to the drug-year level and reported from 2016 to 2020. Descriptive decomposition and index analyses quantified the relative association of price and use changes separately for existing single-source drugs, existing drugs that faced competition, and new drugs that entered the market. Data analysis was performed from June to December 2022. Main Outcomes and Measures: Part B drug spending by the fee-for-service Medicare program and beneficiaries, as well as use, defined as dosage units and beneficiaries using the drugs. Results: The study included 535 unique Part B drug products. From 2016 to 2020, 15 or fewer products comprised half of all Part B drug expenditures. The set of 7 drugs that comprised the top 25% of spending was very consistent over time, and all were biologics. Part B drug products that cost $1.85 or less per administration accounted for more than half of the doses administered in 2020. Spending on Part B drugs increased by $15 billion from 2016 to 2020. The entry of new, nonbiosimilar drugs during this period accounted for $12 billion of this increased spending (80%), while shifts in use and price increases among existing single-source brand drugs accounted for the remaining increase in spending. Part B spending decreased among the subset of existing drugs facing generic or biosimilar competition. Among single-source drugs on the market in 2016, the index that varied dosage units exceeded the index that varied price in all years, confirming that changes in use were associated more with spending growth for those drugs. Conclusions and Relevance: In this cross-sectional study of Medicare Part B drug expenditures, spending was found to be concentrated among a small number of drugs. The entry of new products was a key factor associated with recent increases in Part B drug spending. These findings suggest that policies targeting top-selling drugs may have greater potential to curb Part B drug spending than those targeting price growth.

Hospital Prices For Commercial Plans Are Twice Those For Medicare Advantage Plans When Negotiated By The Same Insurer.

Most major insurers operate in both the commercial health insurance and Medicare Advantage (MA) markets. We investigated the ratio of commercial-to-MA prices negotiated by the same insurer, in the same hospital and for the same services, using 2022 price information disclosed by hospitals in compliance with the hospital price transparency rule. Insurers negotiated median hospital prices for commercial plans that were two to three times higher than their MA prices in the same hospital for the same service. The median commercial-to-MA price ratio in the same hospital varied, from 1.8 for surgery and medicine services to 2.2 for laboratory tests and emergency department visits and 2.4 for imaging services. In multivariable Poisson regression analysis, higher ratios were associated with system-affiliated, nonprofit, and teaching hospitals, as well as with large national insurers. These findings reflect the differences in financial incentives and regulatory policies in the commercial and MA markets. Because insurers respond to differing incentives by obtaining different negotiated prices across markets, policy and practice efforts that alter incentives for insurers may have the potential to lower commercial prices.

The Volume and Cost of Quality Metric Reporting.

Importance: US hospitals report data on many health care quality metrics to government and independent health care rating organizations, but the annual cost to acute care hospitals of measuring and reporting quality metric data, independent of resources spent on quality interventions, is not well known. Objective: To evaluate externally reported inpatient quality metrics for adult patients and estimate the cost of data collection and reporting, independent of quality-improvement efforts. Design, Setting, and Participants: Retrospective time-driven activity-based costing study at the Johns Hopkins Hospital (Baltimore, Maryland) with hospital personnel involved in quality metric reporting processes interviewed between January 1, 2019, and June 30, 2019, about quality reporting activities in the 2018 calendar year. Main Outcomes and Measures: Outcomes included the number of metrics, annual person-hours per metric type, and annual personnel cost per metric type. Results: A total of 162 unique metrics were identified, of which 96 (59.3%) were claims-based, 107 (66.0%) were outcome metrics, and 101 (62.3%) were related to patient safety. Preparing and reporting data for these metrics required an estimated 108 478 person-hours, with an estimated personnel cost of $5 038 218.28 (2022 USD) plus an additional $602 730.66 in vendor fees. Claims-based (96 metrics; $37 553.58 per metric per year) and chart-abstracted (26 metrics; $33 871.30 per metric per year) metrics used the most resources per metric, while electronic metrics consumed far less (4 metrics; $1901.58 per metric per year). Conclusions and Relevance: Significant resources are expended exclusively for quality reporting, and some methods of quality assessment are far more expensive than others. Claims-based metrics were unexpectedly found to be the most resource intensive of all metric types. Policy makers should consider reducing the number of metrics and shifting to electronic metrics, when possible, to optimize resources spent in the overall pursuit of higher quality.

Financial Characteristics of Nonprofit Social Welfare Organizations in the US Health Care System.

This cross-sectional study examines the purpose, revenues, profitability, and lobbying expenses of social welfare organizations in the US health care system.

Comparison of Commercial Negotiated Price and Cash Price Between Physician-Owned Hospitals and Other Hospitals in the Same Hospital Referral Region.

This cross-sectional study compares commercial negotiated prices and cash prices between physician-owned hospitals and other hospitals in the same hospital referral region (HRR) using price information available through the Hospital Price Transparency Rule.

The Relationships Among Cash Prices, Negotiated Rates, And Chargemaster Prices For Shoppable Hospital Services.

Hospitals must disclose their cash prices, commercial negotiated rates, and chargemaster prices for seventy common, shoppable services under the hospital price transparency rule. Examining prices reported by 2,379 hospitals as of September 9, 2022, we found that a given hospital's cash prices and commercial negotiated rates both tended to reflect a predetermined and consistent percentage discount from its chargemaster prices. On average, cash prices and commercial negotiated rates were 64 percent and 58 percent of the corresponding chargemaster prices for the same procedures at the same hospital and in the same service setting, respectively. Cash prices were lower than the median commercial negotiated rates in 47 percent of instances, and most likely so at hospitals with government or nonprofit ownership, located outside of metropolitan areas, or located in counties with relatively high uninsurance rates or low median household incomes. Hospitals with stronger market power were most likely to offer cash prices below their median negotiated rates, whereas hospitals in areas where insurers had stronger market power were less likely to do so.

Trends in Premiums, Claims, and Enrollment for Fully Insured Large Group, Small Group, and Individual Health Plans From 2011 to 2021.

This economic evaluation compares trends in premiums, claims, and enrollment among fully insured large group, small group, and individual health plans in the US from 2001 to 2021.

Factors Associated With Hospital Commercial Negotiated Price for Magnetic Resonance Imaging of Brain.

This cross-sectional study investigates hospital characteristics associated with commercial negotiated price for magnetic resonance imaging of brain.

U.S. Hospitals' Administrative Expenses Increased Sharply During COVID-19.

BACKGROUND: In response to the declining utilization and patient revenue due to the COVID-19 pandemic, the U.S. hospital industry furloughed at least 1.4 million health care workers to contain their clinical-related expenses. However, it remains unclear how hospitals responded by adjusting their administrative expenses, which account for more than a quarter of U.S. hospitals' spending, a proportion substantially higher than that of other industrialized countries. Examining changes in hospitals' administrative expenses during the COVID-19 pandemic is important for understanding hospitals' cost-containment behaviors under operational shocks during a pandemic. OBJECTIVE: To assess changes in hospitals' administrative expenses and clinical expenses during the COVID-19 pandemic in 2020. DESIGN: Time-series observational study. PARTICIPANTS: 1420 Medicare-certified general acute-care hospitals with fiscal years starting in January and continuously operating during 2016-2020. MAIN MEASURES: Hospitals' annual administrative expenses and clinical expenses. KEY RESULTS: Hospitals' median administrative and clinical expenses both increased consistently around 4% each year from 2016 to 2019. From 2019 to 2020, the median administrative expenses grew by 6.2% while the median clinical expenses grew by 0.6%. The interrupted time-series regression estimated an additional 6.4% (95% CI, 4.5 to 8.2%) increase in administrative expenses in 2020, relative to the pre-COVID annual increase of 3.9% (95% CI, 3.3 to 4.4%), while an additional increase in clinical expenses in 2020 (0.5%; 95% CI, -0.3 to 1.4%) did not differ from the pre-COVID annual increase of 3.7% (95% CI, 3.5 to 4%). Stratified analysis showed hospitals with larger utilization volume, located in states with lower COVID-19 burden, or situated in counties with higher median household income experienced larger increase in administrative expenses in 2020. CONCLUSIONS: In 2020, administrative expenses grew much faster than clinical expenses, resulting in a larger share of hospital financial resources allocated to administrative activities. Higher administrative expenses might reflect hospitals' operational effort in response to the pandemic or inefficient cost management.