Trauma Center Hospitals Charged Higher Prices For Some Nontrauma Care Than Non-Trauma Center Hospitals, 2012-18.

Rising prices are a major cause of increased health care spending and health insurance premiums in the US. Hospital prices, specifically-for both inpatient and outpatient care-are the largest driver of rising health care spending in the commercial insurance market. As a result, policy makers and employers are increasingly interested in understanding the determinants of hospital prices. Hospitals serving as trauma centers are often endowed by regulators with monopoly power over trauma services in their geographic areas, and this monopoly power may spill over to nontrauma services. This study focused on the growing number of designated trauma centers and how trauma center status affects hospital prices for other, nontrauma services. We found that hospitals designated as trauma centers charged higher prices for nontrauma inpatient admissions and nontrauma emergency department visits when compared with hospitals that were not designated as trauma centers, even after controlling for potential confounders.

The relationship between provider age and opioid prescribing behavior.

OBJECTIVES: The relationship between provider age and quality of care is theoretically indeterminate. Older providers are more experienced, which could lead to a positive relationship between age and quality, but providers' practice patterns could become outdated as technology and scientific knowledge change, which could lead to a negative relationship between age and quality. However, little work has investigated the provider age/quality relationship, and no work has investigated the relationship between provider age and opioid prescribing behavior. STUDY DESIGN: We analyze Medicare Part D data to investigate how opioid prescribing differs by provider age. METHODS: We use regression analysis to estimate the effect of provider age, holding other factors constant. RESULTS: We find that older providers prescribe significantly more opioids, with the gap between older and younger providers increasing from 2010 to 2015. CONCLUSIONS: Assuming that older physicians follow patterns of previous generations, anticipated retirement of older providers and entry by younger providers will tend to reduce opioid volumes, undoing at least in part the rapid increase since 2000.

The effects of medicare advantage on opioid use.

Despite a vast literature on the determinants of prescription opioid use, the role of health insurance plans has received little attention. We study how the form of Medicare beneficiaries' drug coverage affects the volume of opioids they consume. We find that enrollment in Medicare Advantage, which integrates drug coverage with other medical benefits, significantly reduces beneficiaries' likelihood of filling an opioid prescription, as compared to enrollment in a stand-alone drug plan. Approximately half of this effect was due to fewer fills from prescribers who write a very large number of opioid prescriptions.

Does Multispecialty Practice Enhance Physician Market Power?

In health care, vertical integration - common ownership of producers of complementary services - may have both pro- and anti-competitive effects. We use data on 40 million commercially-insured individuals from the Health Care Cost Institute to construct price indices for office visits to general-practice and specialist physicians for the years 2008-2012. Controlling for generalist market concentration, we find that generalists charge higher prices when they are integrated with specialists, and that the effect of integration is larger in more concentrated specialist markets. Conversely, controlling for specialist market concentration, specialists charge higher prices when integrated with generalists, with larger effects in more concentrated generalist markets. Our results suggest that multispecialty practice enhances physician market power.

Competition in Outpatient Procedure Markets.

BACKGROUND: More than half of all medical procedures performed in the United States occur in an outpatient setting, yet few studies have explored how competition among ambulatory surgery centers (ASCs) and hospitals affects prices for commercially insured outpatient services. OBJECTIVES: We examined the association between prices for commercially insured outpatient procedures and competition among ASCs and hospitals. RESEARCH DESIGN: Using claims from the Health Care Cost Institute for 2008-2012, we constructed county-level price indices for outpatient procedures in hospital outpatient departments and ASCs. Using regression analysis, we estimated the association between prices and ASC availability, outpatient and inpatient hospital competition, hospital/physician integration, and several other hospital market characteristics. Our estimates were identified from changes within counties over time. RESULTS: First, ASC availability was associated with decreases in overall outpatient procedure prices, mostly due to reductions in the prices paid to hospital outpatient departments. Second, competition among hospitals was also associated with decreases in outpatient procedure prices-and had an effect more than twice as large as the effect of ASC availability. Third, competition among ASCs was also associated with reductions in the prices paid to other ASCs. CONCLUSIONS: Our results suggest that competition from ASCs benefits consumers through lower prices for outpatient procedures. Any conclusions about the broader welfare implications of the rise in ASCs, however, must balance the price reductions that we found with the volume increases found in previous work, particularly the volume increases at physician-owned ASCs.

Neurophysiological monitoring during cervical spine surgeries: Longitudinal costs and outcomes.

OBJECTIVES: Well-designed longitudinal studies assessing effectiveness of intraoperative neurophysiologic monitoring (IONM) are lacking. We investigate IONM effects on cost and administrative markers for health outcomes in the year after cervical spine surgery. METHODS: We identified single-level cervical spine surgeries in commercial claims. We constructed linear regression models estimating the effect of IONM (controlling for patient demographics, pre-operative health, services during index admission) on total spending, neurological complications, readmissions, and outpatient opiate usage in the year following index surgery. RESULTS: IONM was associated with increased spending during index admission of $1229 (p = 0.001), but decreased spending post-discharge of $1615 (p = 0.010), for a net - $386 (p = 0.608) for the year after surgery. Shorter length of stay (0.116 days, p = 0.004) and fewer readmissions (20.5 per thousand, p = 0.036) accounted for some post-discharge savings. IONM was associated with decreased rates of nervous system complications (4/1000, p = 0.048) and post-discharge opiate use (17 prescriptions/1000, p = 0.050) in the year after index admission. CONCLUSIONS: IONM was associated with administrative markers suggesting improved health outcomes after cervical spine surgery without greater costs for the year. SIGNIFICANCE: This study suggests IONM may have lasting health and cost benefits.

ACA Marketplace premiums and competition among hospitals and physician practices.

OBJECTIVES: To examine the association between annual premiums for health plans available in Federally Facilitated Marketplaces (FFMs) and the extent of competition and integration among physicians and hospitals, as well as the number of insurers. STUDY DESIGN: We used observational data from the Center for Consumer Information and Insurance Oversight on the annual premiums and other characteristics of plans, matched to measures of physician, hospital, and insurer market competitiveness and other characteristics of 411 rating areas in the 37 FFMs. METHODS: We estimated multivariate models of the relationship between annual premiums and Herfindahl-Hirschman indices of hospitals and physician practices, controlling for the number of insurers, the extent of physician-hospital integration, and other plan and rating area characteristics. RESULTS: Premiums for Marketplace plans were higher in rating areas in which physician, hospital, and insurance markets were less competitive. An increase from the 10th to the 90th percentile of physician concentration and hospital concentration was associated with increases of $393 and $189, respectively, in annual premiums for the Silver plan with the second lowest cost. A similar increase in the number of insurers was associated with a $421 decrease in premiums. Physician-hospital integration was not significantly associated with premiums. CONCLUSIONS: Premiums for FFM plans were higher in markets with greater concentrations of hospitals and physicians but fewer insurers. Higher premiums make health insurance less affordable for people purchasing unsubsidized coverage and raise the cost of Marketplace premium tax credits to the government.

Hospital Ownership of Physicians: Hospital Versus Physician Perspectives.

Although there has been significant interest from health services researchers and policy makers about recent trends in hospitals' ownership of physician practices, few studies have investigated the strengths and weaknesses of available data sources. In this article, we compare results from two national surveys that have been used to assess ownership patterns, one of hospitals (the American Hospital Association survey) and one of physicians (the SK&A survey). We find some areas of agreement, but also some disagreement, between the two surveys. We conclude that full understanding of the causes and consequences of hospital ownership of physicians requires data collected at the both the hospital and the physician level. The appropriate measure of integration depends on the research question being investigated.

The effect of hospital/physician integration on hospital choice.

In this paper, we estimate how hospital ownership of physicians' practices affects their patients' hospital choices. We match data on the hospital admissions of Medicare beneficiaries, including the identity of their physician, with data on the identity of the owner of their physician's practice. We find that a hospital's ownership of a physician dramatically increases the probability that the physician's patients will choose the owning hospital. We also find that patients are more likely to choose a high-cost, low-quality hospital when their physician is owned by that hospital.

Medicare Advantage Plans Pay Hospitals Less Than Traditional Medicare Pays.

There is ongoing debate about how prices paid to providers by Medicare Advantage plans compare to prices paid by fee-for-service Medicare. We used data from Medicare and the Health Care Cost Institute to identify the prices paid for hospital services by fee-for-service (FFS) Medicare, Medicare Advantage plans, and commercial insurers in 2009 and 2012. We calculated the average price per admission, and its trend over time, in each of the three types of insurance for fixed baskets of hospital admissions across metropolitan areas. After accounting for differences in hospital networks, geographic areas, and case-mix between Medicare Advantage and FFS Medicare, we found that Medicare Advantage plans paid 5.6 percent less for hospital services than FFS Medicare did. Without taking into account the narrower networks of Medicare Advantage, the program paid 8.0 percent less than FFS Medicare. We also found that the rates paid by commercial plans were much higher than those of either Medicare Advantage or FFS Medicare, and growing. At least some of this difference comes from the much higher prices that commercial plans pay for profitable service lines.

Does health plan generosity enhance hospital market power?

We test whether the generosity of employer-sponsored health insurance facilitates the exercise of market power by hospitals. We construct indices of health plan generosity and the price and volume of hospital services using data from Truven MarketScan for 601 counties from 2001 to 2007. We use variation in the industry and union status of covered workers within a county over time to identify the causal effects of generosity. Although OLS estimates fail to reject the hypothesis that generosity facilitates the exercise of hospital market power, IV estimates show a statistically significant and economically important positive effect of plan generosity on hospital prices in uncompetitive markets, but not in competitive markets. Our results suggest that most of the aggregate effect of hospital market structure on prices found in previous work may be coming from areas with generous plans.

Patients' preferences explain a small but significant share of regional variation in medicare spending.

This study assessed the extent to which differences in patients' preferences across geographic areas explained differences in traditional fee-for-service Medicare spending across Dartmouth Atlas of Health Care Hospital Referral Regions (HRRs). Preference measures were based on results of a survey that asked patients questions about their physicians, their own health status, and the care they would want in their last six months of life. We found that patients' preferences explained 5 percent of the variation across HRRs in total Medicare spending. In comparison, supply factors, such as the number of physicians, specialists, and hospital beds, explained 23 percent, and patients' health and income explained 12 percent. We also explored the relative importance of preferences in determining three components of total spending: spending at the end of life, inpatient spending, and spending on physician services. Relative to supply factors, health, and income, patients' preferences explained the largest share of variation in end-of-life spending and the smallest share of variation in spending on physician services. We conclude that variation in preferences contributes to differences across areas in Medicare spending. Medicare policy must consider both supply factors and patients' preferences in deciding how much to accommodate area variation in spending and the extent to which that variation should be subsidized by taxpayers.

Vertical integration: hospital ownership of physician practices is associated with higher prices and spending.

We examined the consequences of contractual or ownership relationships between hospitals and physician practices, often described as vertical integration. Such integration can reduce health spending and increase the quality of care by improving communication across care settings, but it can also increase providers' market power and facilitate the payment of what are effectively kickbacks for inappropriate referrals. We investigated the impact of vertical integration on hospital prices, volumes (admissions), and spending for privately insured patients. Using hospital claims from Truven Analytics MarketScan for the nonelderly privately insured in the period 2001-07, we constructed county-level indices of prices, volumes, and spending and adjusted them for enrollees' age and sex. We measured hospital-physician integration using information from the American Hospital Association on the types of relationships hospitals have with physicians. We found that an increase in the market share of hospitals with the tightest vertically integrated relationship with physicians--ownership of physician practices--was associated with higher hospital prices and spending. We found that an increase in contractual integration reduced the frequency of hospital admissions, but this effect was relatively small. Taken together, our results provide a mixed, although somewhat negative, picture of vertical integration from the perspective of the privately insured.

Why Are Medicare and commercial insurance spending weakly correlated?

OBJECTIVE: To investigate the source of the weak correlation across geographic areas between Medicare and private insurance spending. STUDY DESIGN: Retrospective, descriptive analysis. METHODS: We obtained Medicare spending data at the hospital referral region (HRR) level for 2007 from the Dartmouth Atlas, and commercial claims from large employers for 2007 from the Truven MarketScan Database. We constructed county-level data on hospital market structure from Medicare patient flows and obtained county-level data on the Medicare wage index from the Centers for Medicare & Medicaid Services website. We aggregated these sources to the HRR level. We decomposed Medicare and private spending into 2 components: price and volume. We also decomposed Medicare and private prices into 2 components: a common measure of cost and a sector-specific markup. We computed correlations between Medicare and private prices and volumes, and the correlation of each sector's price and volume with cost and markup. RESULTS: We found that Medicare and private prices are strongly positively correlated, largely because both are keyed off of common costs. Consistent with previous work, we found that Medicare and private volumes are strongly positively correlated as well. CONCLUSIONS: The weak correlation between Medicare and private spending is consistent with these 2 empirical regularities. It is mathematically due to negative correlations between each sector's price and the other sector's volume. In particular, we found that private prices have important spillover effects on Medicare volume. Future research on the effects of competition should take account of this phenomenon.

Regulatory neutrality is essential to establishing a level playing field for accountable care organizations.

Accountable care organizations (ACOs) are among the most widely discussed models for encouraging movement away from fee-for-service payment arrangements. Although ACOs have the potential to slow health spending growth and improve quality of care, regulating them poses special challenges. Regulations, particularly those that affect both ACOs and Medicare Advantage plans, could inadvertently favor or disfavor certain kinds of providers or payers. Such favoritism could drive efficient organizations from the market and thus increase costs or reduce quality of and access to care. To avoid this type of outcome, we propose a general principle: Regulation of ACOs should strive to preserve a level playing field among different kinds of organizations seeking the same cost, quality, and access objectives. This is known as regulatory neutrality. We describe the implications of regulatory neutrality in four key areas: antitrust, financial solvency regulation, Medicare governance requirements, and Medicare payment models. We also discuss issues relating to short-term versus long-term perspectives--to promote the goal of regulatory neutrality and allow the most efficient organizations to prevail in the marketplace.

How should risk adjustment data be collected?

Risk adjustment has broad general application and is a key part of the Patient Protection and Affordable Care Act (ACA). Yet, little has been written on how data required to support risk adjustment should be collected. This paper offers analytical support for a distributed approach, in which insurers retain possession of claims but pass on summary statistics to the risk adjustment authority as needed. It shows that distributed approaches function as well as or better than centralized ones-where insurers submit raw claims data to the risk adjustment authority-in terms of the goals of risk adjustment. In particular, it shows how distributed data analysis can be used to calibrate risk adjustment models and calculate payments, both in theory and in practice--drawing on the experience of distributed models in other contexts. In addition, it explains how distributed methods support other goals of the ACA, and can support projects requiring data aggregation more generally. It concludes that states should seriously consider distributed methods to implement their risk adjustment programs.

The effect of bivalirudin on costs and outcomes of treatment of ST-segment elevation myocardial infarction.

BACKGROUND: Bivalirudin is commonly used during percutaneous coronary intervention (PCI) rather than unfractionated heparin. The higher cost of bivalirudin may be offset if it reduces costly bleeding complications and/or length of stay. We sought to assess the effect of using bivalirudin on the costs of care among patients with ST-segment elevation myocardial infarction (STEMI) undergoing PCI. METHODS: We analyzed data from 64,872 patients treated in 1 of 278 hospitals. The effect of overall hospital use of bivalirudin on clinical and economic outcomes was assessed using multivariable regression, based on average hospital use of treatments. RESULTS: The use of bivalirudin among patients with STEMI treated with PCI varied widely across hospitals, with a median of 6.9% (interquartile range 2.3%-18.6%). After controlling for patient and hospital characteristics, use of bivalirudin rather than heparin and a glycoprotein IIb/IIIa inhibitor reduced bleeding (odds ratio 0.47, P < .001), length of stay (-0.47 days, P < .03), and hospital costs (-14%, P < .04). CONCLUSIONS: Use of bivalirudin among patients with STEMI treated with PCI appears to reduce bleeding and overall costs.

Does patient satisfaction affect patient loyalty?

PURPOSE: This paper aims to investigate how patient satisfaction affects propensity to return, i.e. loyalty. DESIGN/METHODOLOGY/APPROACH: Data from 678 hospitals were matched using three sources. Patient satisfaction data were obtained from Press Ganey Associates, a leading survey firm; process-based quality measures and hospital characteristics (such as ownership and teaching status) and geographic areas were obtained from the Centers for Medicare and Medicaid Services. The frequency with which end-of-life patients return to seek treatment at the same hospital was obtained from the Dartmouth Atlas. The study uses regression analysis to estimate satisfaction's effects on patient loyalty, while holding process-based quality measures and hospital and market characteristics constant. FINDINGS: There is a statistically significant link between satisfaction and loyalty. Although satisfaction's effect overall is relatively small, contentment with certain hospitalization experience may be important. The link between satisfaction and loyalty is weaker for high-satisfaction hospitals, consistent with other studies in the marketing literature. RESEARCH LIMITATION/IMPLICATIONS: The US hospitals analyzed are not a random sample; the results are most applicable to large, non-profit teaching hospitals in competitive markets. PRACTICAL IMPLICATIONS: Satisfaction ratings have business implications for healthcare providers and may be useful as a management tool for private and public purchasers. ORIGINALITY/VALUE: The paper is the first to show that patient satisfaction affects actual hospital choices in a large sample. Because patient satisfaction ratings are also correlated with other quality measures, the findings suggest a pathway through which individuals naturally gravitate toward higher-quality care.

Vertical integration and optimal reimbursement policy.

Health care providers may vertically integrate not only to facilitate coordination of care, but also for strategic reasons that may not be in patients' best interests. Optimal Medicare reimbursement policy depends upon the extent to which each of these explanations is correct. To investigate, we compare the consequences of the 1997 adoption of prospective payment for skilled nursing facilities (SNF PPS) in geographic areas with high versus low levels of hospital/SNF integration. We find that SNF PPS decreased spending more in high integration areas, with no measurable consequences for patient health outcomes. Our findings suggest that integrated providers should face higher-powered reimbursement incentives, i.e., less cost-sharing. More generally, we conclude that purchasers of health services (and other services subject to agency problems) should consider the organizational form of their suppliers when choosing a reimbursement mechanism.

Evaluating the medical malpractice system and options for reform.

The U.S. medical malpractice liability system has two principal objectives: to compensate patients who are injured through the negligence of healthcare providers and to deter providers from practicing negligently. In practice, however, the system is slow and costly to administer. It both fails to compensate patients who have suffered from bad medical care and compensates those who haven't. According to opinion surveys of physicians, the system creates incentives to undertake cost-ineffective treatments based on fear of legal liability--to practice "defensive medicine." The failures of the liability system and the high cost of health care in the United States have led to an important debate over tort policy. How well does malpractice law achieve its intended goals? How large of a problem is defensive medicine and can reforms to malpractice law reduce its impact on healthcare spending? The flaws of the existing system have led a number of states to change their laws in a way that would reduce malpractice liability--to adopt "tort reforms." Evidence from several studies suggests that wisely chosen reforms have the potential to reduce healthcare spending significantly with no adverse impact on patient health outcomes.