Hospital Prices for Physician-Administered Drugs for Patients with Private Insurance.

BACKGROUND: Hospitals can leverage their position between the ultimate buyers and sellers of drugs to retain a substantial share of insurer pharmaceutical expenditures. METHODS: In this study, we used 2020-2021 national Blue Cross Blue Shield claims data regarding patients in the United States who had drug-infusion visits for oncologic conditions, inflammatory conditions, or blood-cell deficiency disorders. Markups of the reimbursement prices were measured in terms of amounts paid by Blue Cross Blue Shield plans to hospitals and physician practices relative to the amounts paid by these providers to drug manufacturers. Acquisition-price reductions in hospital payments to drug manufacturers were measured in terms of discounts under the federal 340B Drug Pricing Program. We estimated the percentage of Blue Cross Blue Shield drug spending that was received by drug manufacturers and the percentage retained by provider organizations. RESULTS: The study included 404,443 patients in the United States who had 4,727,189 drug-infusion visits. The median price markup (defined as the ratio of the reimbursement price to the acquisition price) for hospitals eligible for 340B discounts was 3.08 (interquartile range, 1.87 to 6.38). After adjustment for drug, patient, and geographic factors, price markups at hospitals eligible for 340B discounts were 6.59 times (95% confidence interval [CI], 6.02 to 7.16) as high as those in independent physician practices, and price markups at noneligible hospitals were 4.34 times (95% CI, 3.77 to 4.90) as high as those in physician practices. Hospitals eligible for 340B discounts retained 64.3% of insurer drug expenditures, whereas hospitals not eligible for 340B discounts retained 44.8% and independent physician practices retained 19.1%. CONCLUSIONS: This study showed that hospitals imposed large price markups and retained a substantial share of total insurer spending on physician-administered drugs for patients with private insurance. The effects were especially large for hospitals eligible for discounts under the federal 340B Drug Pricing Program on acquisition costs paid to manufacturers. (Funded by Arnold Ventures and the National Institute for Health Care Management.).

Association Between the Implementation of a Population-Based Primary Care Payment System and Achievement on Quality Measures in Hawaii.

Importance: Hawaii Medical Service Association (HMSA), the Blue Cross Blue Shield of Hawaii, introduced Population-based Payments for Primary Care (3PC), a new capitation-based primary care payment system, in 2016. The effect of this system on quality measures has not been evaluated. Objective: To evaluate whether the 3PC system was associated with changes in quality, utilization, or spending in its first year. Design, Setting, and Participants: Observational study using HMSA claims and clinical registry data from January 1, 2012, to December 31, 2016, and a propensity-weighted difference-in-differences method to compare 77 225 HMSA members in Hawaii attributed to 107 primary care physicians (PCPs) and 4 physician organizations participating in the first wave of the 3PC and 222 233 members attributed to 312 PCPs and 14 physician organizations that continued in a fee-for-service model in 2016 but had 3PC start dates thereafter. Exposures: Participation in the 3PC system. Main Outcomes and Measures: The primary outcome was the change in a composite measure score reflecting the probability that a member achieved an eligible measure out of 13 pooled Healthcare Effectiveness Data and Information Set quality measures. Primary care visits and total cost of care were among 15 secondary outcomes. Results: In total, the study included 299 458 HMSA members (mean age, 42.1 years; 51.5% women) and 419 primary care physicians (mean age, 54.9 years; 34.8% women). The risk-standardized composite measure scores for 2012 to 2016 changed from 75.1% to 86.6% (+11.5 percentage points) in the 3PC group and 74.3% to 83.5% (+9.2 percentage points) in the non-3PC group (differential change, 2.3 percentage points [95% CI, 2.1 to 2.6 percentage points]; P < .001). Of 15 prespecified secondary end points for utilization and spending, 11 showed no significant difference. Compared with the non-3PC group, the 3PC system was associated with a significant reduction in the mean number of primary care visits (3.3 to 3.0 visits vs 3.3 to 3.1 visits; adjusted differential change, -3.9 percentage points [95% CI, -4.6 to -3.2 percentage points]; P < .001), but there was no significant difference in mean total cost of care ($3344 to $4087 vs $2977 to $3564; adjusted differential change, 1.0% [95% CI, -1.3% to 3.4%]; P = .39). Conclusions and Relevance: In its first year, the 3PC population-based primary care payment system in Hawaii was associated with small improvements in quality and a reduction in PCP visits but no significant difference in the total cost of care. Additional research is needed to assess longer-term outcomes as the program is more fully implemented and to determine whether results are generalizable to other health care markets.

Changes in health care spending and quality 4 years into global payment.

BACKGROUND: Spending and quality under global budgets remain unknown beyond 2 years. We evaluated spending and quality measures during the first 4 years of the Blue Cross Blue Shield of Massachusetts Alternative Quality Contract (AQC). METHODS: We compared spending and quality among enrollees whose physician organizations entered the AQC from 2009 through 2012 with those among persons in control states. We studied spending changes according to year, category of service, site of care, experience managing risk contracts, and price versus utilization. We evaluated process and outcome quality. RESULTS: In the 2009 AQC cohort, medical spending on claims grew an average of $62.21 per enrollee per quarter less than it did in the control cohort over the 4-year period (P<0.001). This amount is equivalent to a 6.8% savings when calculated as a proportion of the average post-AQC spending level in the 2009 AQC cohort. Analogously, the 2010, 2011, and 2012 cohorts had average savings of 8.8% (P<0.001), 9.1% (P<0.001), and 5.8% (P=0.04), respectively, by the end of 2012. Claims savings were concentrated in the outpatient-facility setting and in procedures, imaging, and tests, explained by both reduced prices and reduced utilization. Claims savings were exceeded by incentive payments to providers during the period from 2009 through 2011 but exceeded incentive payments in 2012, generating net savings. Improvements in quality among AQC cohorts generally exceeded those seen elsewhere in New England and nationally. CONCLUSIONS: As compared with similar populations in other states, Massachusetts AQC enrollees had lower spending growth and generally greater quality improvements after 4 years. Although other factors in Massachusetts may have contributed, particularly in the later part of the study period, global budget contracts with quality incentives may encourage changes in practice patterns that help reduce spending and improve quality. (Funded by the Commonwealth Fund and others.).

Effects of Global Payment and Accountable Care on Tobacco Cessation Service Use: An Observational Study.

BACKGROUND: Tobacco use is the leading cause of preventable death and disability. New payment and delivery system models including global payment and accountable care have the potential to increase use of cost-effective tobacco cessation services. OBJECTIVE: To examine how the Alternative Quality Contract (AQC) established in 2009 by Blue Cross Blue Shield of Massachusetts (BCBSMA) has affected tobacco cessation service use. DESIGN: We used 2006-2011 BCBSMA claims and enrollment data to compare adults 18-64 years in AQC provider organizations to adults in non-AQC provider organizations. We examined the AQC's effects on all enrollees; a subset at high risk of tobacco-related complications due to certain medical conditions; and behavioral health service users. MAIN MEASURES: We examined use of: (1) any cessation treatment (pharmacotherapy or counseling); (2) varenicline or bupropion; (3) nicotine replacement therapies (NRTs); (4) cessation counseling; and (4) combination therapy (pharmacotherapy plus counseling). We also examined duration of pharmacotherapy use and number of counseling visits among users. KEY RESULTS: Rates of tobacco cessation treatment use were higher following implementation of the AQC relative to the comparison group overall (2.02 vs. 1.87 %, p < 0.0001), among enrollees at risk for tobacco-related complications (4.97 vs. 4.66 %, p < 0.0001), and among behavioral health service users (3.67 vs. 3.25 %, p < 0.0001). Statistically significant increases were found for use of varenicline or bupropion alone, counseling alone, and combination therapy, but not for NRT use, pharmacotherapy duration, or number of counseling visits among users. CONCLUSIONS: In its initial three years, the AQC was associated with increases in use of tobacco cessation services.

Modification of Treatment of Certain Health Organizations. Final regulations.

This document contains final regulations that provide guidance to Blue Cross and Blue Shield organizations, and certain other organizations, on computing and applying the medical loss ratio and the consequences for not meeting the medical loss ratio threshold. The final regulations reflect the enactment of a technical correction to section 833(c)(5) of the Internal Revenue Code by the Consolidated and Further Continuing Appropriations Act of 2015. The final regulations affect Blue Cross and Blue Shield organizations, and certain other organizations involved in providing health insurance.

Computation of, and rules relating to, medical loss ratio. Final regulations.

This document contains final regulations that provide guidance to Blue Cross and Blue Shield organizations, and certain other qualifying health care organizations, on computing and applying the medical loss ratio added to the Internal Revenue Code by the Patient Protection and Affordable Care Act.

Use of big data by Blue Cross and Blue Shield of North Carolina.

The health care industry is grappling with the challenges of working with and analyzing large, complex, diverse data sets. Blue Cross and Blue Shield of North Carolina provides several promising examples of how big data can be used to reduce the cost of care, to predict and manage health risks, and to improve clinical outcomes.

Four-year evolution of a large, state-wide patient-centered medical home designation program in Michigan.

BACKGROUND: The patient-centered medical home (PCMH) has been recognized as a strategy to redesign and improve the delivery of primary health care. Collaboration between Blue Cross Blue Shield of Michigan (BCBSM) and 39 Physician Organizations in Michigan laid the foundation for a state-wide medical home program. OBJECTIVE: The objective of the study was to describe a unique methodology developed and implemented by BCBSM to designate primary care physician practices as medical homes. METHODS: Since 2009, practices were designated annually as medical homes on the basis of (1) implementation of PCMH-related capabilities, and (2) performance on quality-of-care and health resource utilization measures. An overall score for each practice was calculated. Practices were ranked relative to each other, with the top portion of the continuum representing an achievable level of performance. RESULTS: The number of practices designated as medical homes more than tripled since the program's inception: 302 (1283 physicians) in 2009, 513 (1876 physicians) in 2010, 772 (2547 physicians) in 2011, and 994 (3028 physicians) in 2012. Designated practices reported implementing more than double the PCMH capabilities of nondesignated practices, yet all practices increased their number of implemented capabilities during the 4 years. DISCUSSION: This program represents the largest state-based PCMH program in the United States. Over the 4-year period, 1130 unique practices have received designation, representing 3469 unique physicians. An estimated 1.4 million BCBSM members in Michigan received care from these practices. This program will continue to develop, drawing on changes in the health system landscape, collaboration with the physician community, and knowledge gained from PCMH evaluations.

Changes in health care spending and quality for Medicare beneficiaries associated with a commercial ACO contract.

IMPORTANCE: In a multipayer system, new payment incentives implemented by one insurer for an accountable care organization (ACO) may also affect spending and quality of care for another insurer's enrollees served by the ACO. Such spillover effects reflect the extent of organizational efforts to reform care delivery and can contribute to the net impact of ACOs. OBJECTIVE: We examined whether the Blue Cross Blue Shield (BCBS) of Massachusetts' Alternative Quality Contract (AQC), an early commercial ACO initiative associated with reduced spending and improved quality for BCBS enrollees, was also associated with changes in spending and quality for Medicare beneficiaries, who were not covered by the AQC. DESIGN, SETTING, AND PARTICIPANTS: Quasi-experimental comparisons from 2007-2010 of elderly fee-for-service Medicare beneficiaries in Massachusetts (1,761,325 person-years) served by 11 provider organizations entering the AQC in 2009 or 2010 (intervention group) vs beneficiaries served by other providers (control group). Using a difference-in-differences approach, we estimated changes in spending and quality for the intervention group in the first and second years of exposure to the AQC relative to concurrent changes for the control group. Regression and propensity score methods were used to adjust for differences in sociodemographic and clinical characteristics. MAIN OUTCOMES AND MEASURES: The primary outcome was total quarterly medical spending per beneficiary. Secondary outcomes included spending by setting and type of service, 5 process measures of quality, potentially avoidable hospitalizations, and 30-day readmissions. RESULTS: Before entering the AQC, total quarterly spending per beneficiary for the intervention group was $150 (95% CI, $25-$274) higher than for the control group and increased at a similar rate. In year 2 of the intervention group's exposure to the AQC, this difference was reduced to $51 (95% CI, -$109 to $210; P = .53), constituting a significant differential change of -$99 (95% CI, -$183 to -$16; P = .02) or a 3.4% savings relative to an expected quarterly mean of $2895. Savings in year 1 were not significant (differential change, -$34; 95% CI, -$83 to $16; P = .18). Year 2 savings derived largely from lower spending on outpatient care (differential change, -$73; 95% CI, -$97 to -$50; P < .001), particularly for beneficiaries with 5 or more conditions, and included significant differential changes in spending on procedures, imaging, and tests. Annual rates of low-density lipoprotein cholesterol testing differentially improved for beneficiaries with diabetes in the intervention group by 3.1 percentage points (95% CI, 1.4-4.8 percentage points; P < .001) and for those with cardiovascular disease by 2.5 percentage points (95% CI, 1.1-4.0 percentage points; P < .001), but performance on other quality measures did not differentially change. CONCLUSIONS AND RELEVANCE: The AQC was associated with lower spending for Medicare beneficiaries but not with consistently improved quality. Savings among Medicare beneficiaries and previously demonstrated savings among BCBS enrollees varied similarly across settings, services, and time, suggesting that organizational responses were associated with broad changes in patient care.

Finding their way home. Despite mixed evidence, providers and payers are adopting patient-centered medical homes to improve health and cut costs.

Medical homes are proliferating, though not everyone is convinced they'll produce savings. Don't tell that to the Michigan Blues, which since 2008 has helped more than 1,200 primary-care practices qualify as medical homes, with another 1,000 in the process. The insurer calculates that the project saved it $155 million in 2012 alone. "Those are dollar savings observed in claims data--these are not back-of-the-envelope calculations," says Dr. David Share, of the Michigan Blues.

Market power and contract form: evidence from physician group practices.

We examine how the market power of physician groups affects the form of their contracts with health insurers. We develop a simple model of physician contracting based on 'behavioral economics' and test it with data from two sources: a survey of physician group practices in Minnesota; and the physician component of the Community Tracking Survey. In both data sets we find that increases in groups' market power are associated with proportionately more fee-for-service revenue and less revenue from capitation.

Determinants of Value in Coronary Artery Bypass Grafting.

Background Over 180 000 coronary artery bypass grafting (CABG) procedures are performed annually, accounting for $7 to $10 billion in episode expenditures. Assessing tradeoffs between spending and quality contributing to value during 90-day episodes has not been conducted but is essential for success in bundled reimbursement models. We, therefore, identified determinants of variability in hospital 90-day episode value for CABG. Methods Medicare and private payor admissions for isolated CABG from 2014 to 2016 were retrospectively linked to clinical registry data for 33 nonfederal hospitals in Michigan. Hospital composite risk-adjusted complication rates (≥1 National Quality Forum-endorsed, Society of Thoracic Surgeons measure: deep sternal wound infection, renal failure, prolonged ventilation >24 hours, stroke, re-exploration, and operative mortality) and 90-day risk-adjusted, price-standardized episode payments were used to categorize hospitals by value by defining the intersection between complications and spending. Results Among 2573 total patients, those at low- versus high-value hospitals had a higher percentage of prolonged length of stay >14 days (9.3% versus 2.4%, P=0.006), prolonged ventilation (17.6% versus 4.8%, P<0.001), and operative mortality (4.8% versus 0.6%, P=0.001). Mean total episode payments were $51 509 at low-compared with $45 526 at high-value hospitals (P<0.001), driven by higher readmission ($3675 versus $2177, P=0.005), professional ($7462 versus $6090, P<0.001), postacute care ($7315 versus $5947, P=0.031), and index hospitalization payments ($33 474 versus $30 800, P<0.001). Among patients not experiencing a complication or 30-day readmission (1923/2573, 74.7%), low-value hospitals had higher inpatient evaluation and management payments ($1405 versus $752, P<0.001) and higher utilization of inpatient rehabilitation (7% versus 2%, P<0.001), but lower utilization of home health (66% versus 73%, P=0.016) and emergency department services (13% versus 17%, P=0.034). Conclusions To succeed in emerging bundled reimbursement programs for CABG, hospitals and physicians should identify strategies to minimize complications while optimizing inpatient evaluation and management spending and use of inpatient rehabilitation, home health, and emergency department services.

Sources of Hospital Variation in Postacute Care Spending After Cardiac Surgery.

BACKGROUND: Postacute care is a major driver of cardiac surgical episode spending, but the sources of variation in spending have not been explored. The objective of this study was to identify sources of variation in postacute care spending within 90-days of discharge following coronary artery bypass grafting (CABG) and aortic valve replacement (AVR) and the relationship between postacute care spending and other postdischarge utilization. METHODS AND RESULTS: A retrospective analysis was conducted of public and private administrative claims for Michigan residents insured by Medicare fee-for-service and Blue Cross Blue Shield of Michigan/Blue Care Network commercial and Medicare Advantage plans undergoing CABG (n=11 208) or AVR (n=6122) in 33 nonfederal acute care Michigan hospitals between January 1, 2015 and December 31, 2018. Postacute care use was present in 9662 (86.2%) CABG episodes and 4242 (69.3%) AVR episodes, with respective mean (SD) 90-day spending of $4398±$6124 and $3465±$5759. Across hospitals, mean postacute care spending ranged from $3280 to $8186 for CABG and $2246 to $7710 for AVR. Inpatient rehabilitation and skilled nursing facility care accounted for over 80% of the variation spending between low and high postacute care spending hospitals. At the hospital-level, postacute care spending was modestly correlated across procedures and payers. Spending associated with readmissions, emergency department visits, and outpatient facility care was significantly different between low and high postacute care spending hospitals in CABG and AVR episodes. CONCLUSIONS: There was wide hospital variation in postacute care spending after cardiac surgery, which was primarily driven by differential use and intensity in facility-based postacute care. Optimizing facility-based postacute care after cardiac surgery offers unique opportunities to reduce potentially unwarranted care variation.

Health care utilization in patients with eating disorders.

OBJECTIVE: To examine health care costs among patients with eating disorders (EDs) using the Blue Cross Blue Shield of North Dakota claims database system. METHOD: Four groups of individuals enrolled between 1999 and 2005 were identified: (1) a group diagnosed with EDs at the beginning of the study period, in 2000 or 2001; (2) a group diagnosed with EDs later in the study period, in 2004 or 2005; (3) a comparison group with depression; and (4) a non-eating disordered comparison group. RESULTS: Health care costs were high for patients diagnosed with an ED during the period when the diagnosis was made but remained elevated in the years following. Such costs were consistently higher than those for the non-eating disordered comparison group, but similar to the depression comparison group. DISCUSSION: Health care costs remained elevated after a diagnosis of an ED for an extended period of time.