New evidence on the impacts of cross-market hospital mergers on commercial prices and measures of quality.

OBJECTIVE: To examine the impact of "cross-market" hospital mergers on prices and quality and the extent to which serial acquisitions contribute to any measured effects. DATA SOURCES: 2009-2017 commercial claims from the Health Care Cost Institute (HCCI) and quality measures from Hospital Compare. STUDY DESIGN: Event study models in which the treated group consisted of hospitals that acquired hospitals further than 50 miles, and the control group was hospitals that were not part of any merger activity (as a target or acquirer) during the study period. DATA EXTRACTION METHODS: We extracted data for 214 treated hospitals and 955 control hospitals. PRINCIPAL FINDINGS: Six years after acquisition, cross-market hospital mergers had increased acquirer prices by 12.9% (CI: 0.6%-26.6%) relative to control hospitals, but had no discernible impact on mortality and readmission rates for heart failure, heart attacks and pneumonia. For serial acquirers, the price effect increased to 16.3% (CI: 4.8%-29.1%). For all acquisitions, the price effect was 21.8% (CI: 4.6%-41.7%) when the target's market share was greater than the acquirer's market share versus 9.7% (CI: -0.5% to 20.9%) when the opposite was true. The magnitude of the price effect was similar for out-of-state and in-state cross-market mergers. CONCLUSIONS: Additional evidence on the price and quality effects of cross-market mergers is needed at a time when over half of recent hospital mergers have been cross-market. To date, no hospital mergers have been challenged by the Federal Trade Commission on cross-market grounds. Our study is the third to find a positive price effect associated with cross-market mergers and the first to show no quality effect and how serial acquisitions contribute to the price effect. More research is needed to identify the mechanism behind the price effects we observe and analyze price effect heterogeneity.

Private Equity-Acquired Physician Practices And Market Penetration Increased Substantially, 2012-21.

Private equity (PE) firms have been acquiring physician practices at an increasing rate, raising concerns about such firms' penetration at the physician level into local markets and the impact on health care quality and prices. However, limited knowledge exists about the extent of PE firms' control in local markets. By linking data on PE acquisitions to physician data and using full-time-equivalent physicians as the base of assessment, we estimated the local market share of each PE firm within ten physician specialties at the Metropolitan Statistical Area (MSA) level. PE-acquired physician practice sites increased from 816 across 119 MSAs in 2012 to 5,779 across 307 MSAs in 2021. Single PE firms had significant market share, exceeding 30 percent in 108 MSA specialty markets and exceeding 50 percent in 50 of those markets. The findings raise concerns about competition and call for closer scrutiny by the Federal Trade Commission, state regulators, and policy makers.

The Rise Of Cross-Market Hospital Systems And Their Market Power In The US.

Although hospital consolidation within markets has been well documented, consolidation across markets has not, even though economic theory predicts-and evidence is emerging-that cross-market hospital systems raise prices by exerting market power across markets when negotiating with common customers (primarily insurers). This study analyzes hospital systems using the American Hospital Association Annual Survey Database and defines hospital geographic markets as commuting zones that link workers to places of employment. The share of community hospitals in the US that were part of hospital systems increased from 10 percent in 1970 to 67 percent in 2019, resulting in 3,436 hospitals within 368 systems in 2019. Of these systems, 216 (59 percent) owned hospitals in multiple commuting zones, in part because 55 percent of the 1,500 hospitals targeted for a merger or acquisition between 2010 and 2019 were located in a different commuting zone than the acquirer. Based on market-power differences among hospitals in systems, the number of systems in urban commuting zones that could potentially exert enhanced cross-market power increased from thirty-seven systems in 2009 to fifty-seven systems in 2019, an increase of 54 percent. The increase in cross-market hospital systems warrants concern and scrutiny because of the potential anticompetitive impact of hospital systems exerting market power across markets in negotiations with common customers.

Effect of State-Led Delivery System and Payment Reforms on Population-Level Detection and Management of Diabetes.

OBJECTIVE: The Centers for Medicare and Medicaid Services State Innovation Models (SIM) initiative has invested more than $1 billion to test state-led delivery system and payment reforms that can affect diabetes care management. We examined whether SIM implementation between 2013 and 2017 was associated with diagnosed diabetes prevalence or with hospitalization or 30-day readmission rate among diagnosed adults. RESEARCH DESIGN AND METHODS: The quasiexperimental design compared study outcomes before and after the SIM initiative in 12 SIM states versus five comparison states using difference-in-differences (DiD) regression models of 21,055,714 hospitalizations for adults age ≥18 years diagnosed with diabetes in 889 counties from 2010 to 2017 across the 17 states. For readmission analyses, comparative interrupted time series (CITS) models included 11,812,993 hospitalizations from a subset of nine states. RESULTS: Diagnosed diabetes prevalence changes were not significantly different between SIM states and comparison states. Hospitalization rates were inconsistent across models, with DiD estimates ranging from -5.34 to -0.37 and from -13.16 to 0.92, respectively. CITS results indicate that SIM states had greater increases in odds of 30-day readmission during SIM implementation compared with comparison states (round 1: adjusted odds ratio [AOR] 1.07; 95% CI 1.04, 1.11; P < 0.001; round 2: AOR 1.06; 95% CI 1.03, 1.10; P = 0.001). CONCLUSIONS: The SIM initiative was not sufficiently focused to have a population-level effect on diabetes detection or management. SIM states had greater increases in 30-day readmission for adults with diabetes than comparison states, highlighting potential unintended effects of engaging in the multipayer alignment efforts required of state-led delivery system and payment reforms.

Do State Bans of Most-Favored-Nation Contract Clauses Restrain Price Growth? Evidence From Hospital Prices.

Policy Points Looking for a way to curtail market power abuses in health care and rein in prices, 20 states have restricted most-favored-nation (MFN) clauses in some health care contracts. Little is known as to whether restrictions on MFN clauses slow health care price growth. Banning MFN clauses between insurers and hospitals in highly concentrated insurer markets seems to improve competition and lead to lower hospital prices. CONTEXT: Most-favored-nation (MFN) contract clauses have recently garnered attention from both Congress and state legislatures looking for ways to curtail market power abuses in health care and rein in prices. In health care, a typical MFN contract clause is stipulated by the insurer and requires a health care provider to grant the insurer the lowest (i.e., the most-favored) price among the insurers it contracts with. As of August 2020, 20 states restrict the use of MFN clauses in health care contracts (19 states ban their use in at least some health care contracts), with 8 states prohibiting their use between 2010 and 2016. METHODS: Using event study and difference-in-differences research designs, we compared prices for a standardized hospital admission in states that banned MFN clauses between 2010 and 2016 with standardized hospital admission prices in states without MFN bans. FINDINGS: Our results show that bans on MFN clauses reduced hospital price growth in metropolitan statistical areas (MSAs) with highly concentrated insurer markets. Specifically, we found that mean hospital prices in MSAs with highly concentrated insurer markets would have been $472 (2.8%) lower in 2016 had the MSAs been in states that banned MFN clauses in 2010. In 2016, the population in our sample that resided in MSAs with highly concentrated insurer markets was just under 75 million (23% of the US population). Hence, banning MFN clauses in all MSAs in our sample with highly concentrated insurer markets in 2010 would have generated savings on hospital expenditures in the range of $2.4 billion per year. CONCLUSIONS: Our empirical findings suggest banning MFN clauses between insurers and providers in highly concentrated insurer markets would improve competition and lead to lower prices and expenditures.

Challenges with Defining Pharmaceutical Markets and Potential Remedies to Screen for Industry Consolidation.

CONTEXT: Dramatic increases in pharmaceutical merger and acquisition (M&A) activity since 2010 suggest we are in the midst of a third wave of industry consolidation. METHODS: The authors reviewed 168 economic, legal, medical, industry, and government sources to examine the effects of consolidation on competition and innovation and to explore how industry attributes complicate M&A regulation in a pharmaceutical context. FINDINGS: The authors find that, in spite of certain metrics that might argue otherwise, consolidation consistently reduces innovation and harms the public good. They also find that several factors within the pharmaceutical industry impede proper evaluation of proposed mergers. Because consumer choice across substitutes is limited, pharmaceutical markets frustrate conventional methods of defining markets. Volume bargaining in the pharmaceutical supply chain and asset managers' common ownership of pharmaceutical firms further complicate the definitional process. Hence, the Herfindahl-Hirschman Index (HHI), one measure used by the Federal Trade Commission and the Department of Justice to screen for concerning M&A activity, sometimes depends on faulty market definitions and fails to capture the implications of consolidation for future market share. CONCLUSIONS: The authors describe ways to improve how pharmaceutical markets are defined, highlight quantitative alterations to HHI to account for common ownership, and propose areas requiring further research.

States' Merger Review Authority Is Associated With States Challenging Hospital Mergers, But Prices Continue To Increase.

States can challenge proposed hospital mergers by using antitrust laws to prevent anticompetitive harms. This observational study examined additional state laws-principally charitable trust, nonprofit corporation, health and safety, and certificate-of-need laws-that can serve as complements and substitutes for antitrust laws by empowering states to be notified of, review, and challenge proposed hospital mergers through administrative processes. During the period 2010-19, 862 hospital mergers were proposed, but only forty-two (4.9 percent) were challenged by states, including thirty-five by states without federal involvement, of which twenty-five (71.4 percent) originated in the eight states with the most robust merger review authority. The twenty-five challenges resulted in two mergers being blocked; three being abandoned; and twenty being approved with conditions, including seven with competitive-impact conditions. Hospital market concentration and prices increased at similar rates in these eight states versus other states, potentially because most challenges allowed mergers to proceed with conditions that did not adequately address competitive concerns. Although these findings do not reveal an optimal state framework, elements of advanced state merger review authority may have the potential to improve poorly functioning hospital markets.

The Association between Hospital-Physician Vertical Integration and Outpatient Physician Prices Paid by Commercial Insurers: New Evidence.

This study assessed the relationship between hospital ownership of physician organizations (known as hospital-physician vertical integration) and facility fees billed to commercial insurers and physician service prices. Healthcare claims came from the IBM® MarketScan® Commercial Database (2012-2016, N = 30,716,800 office visit claims [CPT codes 99211-99215]), and hospital-physician vertical integration measures were from SK&A Office Based Physicians Database provided by IQVIA. Multi-variate, fixed-effect models were used to regress prices on market-level hospital-physician vertical integration; models included geographic market and year fixed effects, claim-level variables, and time-varying market-level variables. Analyses did not find that market-level hospital-physician vertical integration was associated with the billing of facility fees for office visits. However, vertical integration was associated with office visit physician prices for some specialties. A 10-percentage-point increase in vertical integration was associated with a 1.0% price increase for primary care, a 0.6% increase for orthopedics, and a 0.5% increase for cardiology; no such association was found for obstetrics/gynecology or oncology. When comparing metropolitan statistical areas (MSAs) in the bottom quartile of changes in vertical integration from 2012 to 2016 to MSAs in the top quartile, we found the following relative price increases based on predicted values for claims in the top quartile: $1.64 (1.9% of mean 2012 predicted price) for primary care to $2.30 (3.1%) for orthopedics to $3.13 (3.4%) for cardiology. Differences in predicted price accounted for an estimated $45.8 million in additional expenditure on primary care office visits in the top quartile of MSAs in 2016. In summary, market-level hospital-physician vertical integration was positively associated with physician prices for select specialties, but was not associated with changes in the use of facility-fee billing. More evidence on the quality effects of hospital-physician vertical integration is needed, as price increases that are not accompanied by measurable quality improvements should be part of any regulatory review.

Assessing the Short-Term Association Between Rural Hospitals' Participation in Accountable Care Organizations and Changes in Utilization and Financial Performance.

PURPOSE: Although much research has been done on accountable care organizations (ACOs), little is known about their impact on rural hospitals. We examine the association between rural hospitals' participation in an ACO and their performance on utilization and financial measures. METHODS: This quasi-experimental study estimates the relationship between voluntary ACO participation and hospital metrics using propensity score-matched, longitudinal regression models with year and hospital fixed effects. Regression models controlled for secular trends and time-varying hospital and county characteristics. Hospital measures were from the American Hospital Association, RAND Hospital Data, and Leavitt Partners. The initial population comprises 643 rural hospitals that participated in an ACO for at least one year during the 2011 to 2018 study period and 1,541 rural hospitals that did not participate in an ACO. From this population we created a sample of propensity score-matched hospitals consisting of 525 ACO-participating and 525 comparable non-ACO hospitals. RESULTS: Rural hospitals' participation in an ACO is not associated with changes in hospital utilization or financial measures, nor is there an association between these performance metrics and whether another within-county hospital participated in an ACO. A secondary analysis limited to Critical Access Hospitals provides some evidence that inpatient utilization increases in the second year of ACO participation, though the increases are not significant in year 3 and beyond. CONCLUSION: We find no evidence that rural hospitals experience substantive changes in outpatient visits, inpatient utilization, or operating margin in the years immediately after joining an ACO.

The Early Impact of the Centers for Medicare & Medicaid Services State Innovation Models Initiative on 30-Day Hospital Readmissions Among Adults With Diabetes.

BACKGROUND: The Centers for Medicare & Medicaid Services (CMS) State Innovation Models (SIM) Initiative funds states to accelerate delivery system and payment reforms. All SIM states focus on improving diabetes care, but SIM's effect on 30-day readmissions among adults with diabetes remains unclear. METHODS: A quasi-experimental research design estimated the impact of SIM on 30-day hospital readmissions among adults with diabetes in 3 round 1 SIM states (N=671,996) and 3 comparison states (N=2,719,603) from 2010 to 2015. Difference-in-differences multivariable logistic regression models that incorporated 4-group propensity score weighting were estimated. Heterogeneity of SIM effects by grantee state and for CMS populations were assessed. RESULTS: In adjusted difference-in-difference analyses, SIM was associated with an increase in odds of 30-day hospital readmission among patients in SIM states in the post-SIM versus pre-SIM period relative to the ratio in odds of readmission among patients in the comparison states post-SIM versus pre-SIM (ratio of adjusted odds ratio=1.057, P=0.01). Restricting the analyses to CMS populations (Medicare and Medicaid beneficiaries), resulted in consistent findings (ratio of adjusted odds ratio=1.057, P=0.034). SIM did not have different effects on 30-day readmissions by state. CONCLUSIONS: We found no evidence that SIM reduced 30-day readmission rates among adults with diabetes during the first 2 years of round 1 implementation, even among CMS beneficiaries. It may be difficult to reduce readmissions statewide without greater investment in health information exchange and more intensive use of payment models that promote interorganizational coordination.

Exploratory analysis of the potential for advanced diagnostic testing to reduce healthcare expenditures of patients hospitalized with meningitis or encephalitis.

OBJECTIVE: To estimate healthcare expenditures that could be impacted by advanced diagnostic testing for patients hospitalized with meningitis or encephalitis. METHODS: Patients hospitalized with meningitis (N = 23,933) or encephalitis (N = 7,858) in the U.S. were identified in the 2010-2014 Truven Health MarketScan Commercial Claims and Encounters Database using ICD-9-CM diagnostic codes. The database included an average of 40.8 million commercially insured enrollees under age 65 per year. Clinical, demographic and healthcare utilization criteria were used to identify patient subgroups early in their episode who were at risk to have high inpatient expenditures. Healthcare expenditures of patients within each subgroup were bifurcated: those expenditures that remained five days after the patient could be classified into the subgroup versus those that had occurred previously. RESULTS: The hospitalization episode rate per 100,000 enrollee-years for meningitis was 13.0 (95% CI: 12.9-13.2) and for encephalitis was 4.3 (95% CI: 4.2-4.4), with mean inpatient expenditures of $36,891 (SD = $92,636) and $60,181 (SD = $130,276), respectively. If advanced diagnostic testing had been administered on the day that a patient could be classified into a subgroup, then a test with a five-day turnaround time could impact the following mean inpatient expenditures that remained by subgroup for patients with meningitis or encephalitis, respectively: had a neurosurgical procedure ($83,337 and $56,020), had an ICU stay ($34,221 and $46,051), had HIV-1 infection or a previous organ transplant ($37,702 and $62,222), were age <1 year ($35,371 and $52,812), or had a hospital length of stay >2 days ($18,325 and $30,244). DISCUSSION: Inpatient expenditures for patients hospitalized with meningitis or encephalitis were substantial and varied widely. Patient subgroups who had high healthcare expenditures could be identified early in their stay, raising the potential for advanced diagnostic testing to lower these expenditures.

Early Impact of the State Innovation Models Initiative on Diagnosed Diabetes Prevalence Among Adults and Hospitalizations Among Diagnosed Adults.

BACKGROUND: The State Innovation Models (SIM) Initiative invested $254 million in 6 states in Round 1 to accelerate delivery system and payment reforms. OBJECTIVE: The objective of this study was to examine the association of early SIM implementation and diagnosed diabetes prevalence among adults and hospitalization rates among diagnosed adults. RESEARCH DESIGN: Quasi-experimental design compares diagnosed diabetes prevalence and hospitalization rates before SIM (2010-2013) and during early implementation (2014) in 6 SIM states versus 6 comparison states. County-level, difference-in-differences regression models were estimated. SUBJECTS: The annual average of 4.5 million adults aged 20+ diagnosed with diabetes with 1.4 million hospitalizations in 583 counties across 12 states. MEASURES: Diagnosed diabetes prevalence among adults and hospitalization rates per 1000 diagnosed adults. RESULTS: Compared with the pre-SIM period, diagnosed diabetes prevalence increased in SIM counties by 0.65 percentage points (from 10.22% to 10.87%) versus only 0.10 percentage points (from 9.64% to 9.74%) in comparison counties, a difference-in-differences of 0.55 percentage points. The difference-in-differences regression estimates ranged from 0.49 to 0.53 percentage points (P<0.01). Regression results for ambulatory care-sensitive condition and all-cause hospitalization rates were inconsistent across models with difference-in-differences estimates ranging from -5.34 to -0.37 and from -13.16 to 0.92, respectively. CONCLUSIONS: SIM Round 1 was associated with higher diagnosed diabetes prevalence among adults after a year of implementation, likely because of SIM's emphasis on detection and care management. SIM was not associated with lower hospitalization rates among adults diagnosed with diabetes, but the SIM's long-term impact on hospitalizations should be assessed.

Clinical Metagenomic Sequencing for Diagnosis of Meningitis and Encephalitis.

BACKGROUND: Metagenomic next-generation sequencing (NGS) of cerebrospinal fluid (CSF) has the potential to identify a broad range of pathogens in a single test. METHODS: In a 1-year, multicenter, prospective study, we investigated the usefulness of metagenomic NGS of CSF for the diagnosis of infectious meningitis and encephalitis in hospitalized patients. All positive tests for pathogens on metagenomic NGS were confirmed by orthogonal laboratory testing. Physician feedback was elicited by teleconferences with a clinical microbial sequencing board and by surveys. Clinical effect was evaluated by retrospective chart review. RESULTS: We enrolled 204 pediatric and adult patients at eight hospitals. Patients were severely ill: 48.5% had been admitted to the intensive care unit, and the 30-day mortality among all study patients was 11.3%. A total of 58 infections of the nervous system were diagnosed in 57 patients (27.9%). Among these 58 infections, metagenomic NGS identified 13 (22%) that were not identified by clinical testing at the source hospital. Among the remaining 45 infections (78%), metagenomic NGS made concurrent diagnoses in 19. Of the 26 infections not identified by metagenomic NGS, 11 were diagnosed by serologic testing only, 7 were diagnosed from tissue samples other than CSF, and 8 were negative on metagenomic NGS owing to low titers of pathogens in CSF. A total of 8 of 13 diagnoses made solely by metagenomic NGS had a likely clinical effect, with 7 of 13 guiding treatment. CONCLUSIONS: Routine microbiologic testing is often insufficient to detect all neuroinvasive pathogens. In this study, metagenomic NGS of CSF obtained from patients with meningitis or encephalitis improved diagnosis of neurologic infections and provided actionable information in some cases. (Funded by the National Institutes of Health and others; PDAID ClinicalTrials.gov number, NCT02910037.).

Countywide physician organization learning collaborative and changes in hospitalization rates.

OBJECTIVES: In 2011, the California Right Care Initiative implemented a countywide physician organization learning collaborative called University of Best Practices (UBP) in San Diego County for major healthcare systems and physician organizations to share best practices in managing cardiovascular and cerebrovascular risk factors. Our objective was to examine whether UBP was associated with fewer hospitalizations for heart attacks and strokes. STUDY DESIGN: A quasi-experimental design was used to compare age-adjusted adult hospitalization rates before UBP initiation (2007-2010) against rates after UBP initiation (2011-2014) in San Diego County versus the rest of California. METHODS: Difference-in-differences (DID) logistic regression models were estimated using hospitalization data from the California Office of Statewide Health Planning and Development for 2007 to 2014, including 372,205 and 642,455 hospitalizations for heart attacks and strokes, respectively. RESULTS: In the UBP versus pre-UBP period, the odds of adults being hospitalized for a heart attack in San Diego County decreased (odds ratio [OR], 0.84), whereas the odds stayed the same for adults in the rest of California (OR, 1.00): DID ratio of OR, 0.84 (P <.001). This relative decrease was equivalent to 2735 (or 16.5%) fewer hospitalizations, totaling $61 million (2014 dollars). No robust association was found between UBP implementation and hospitalizations for strokes. CONCLUSIONS: A countywide physician organization learning collaborative was associated with fewer hospitalizations for heart attacks, but not for strokes. Healthcare systems and physician organizations should consider forming collaboratives to share best practices to manage patients' cardiovascular and cerebrovascular risk factors, which may lead to fewer hospitalizations and reduced healthcare costs.

Health Care Market Concentration Trends In The United States: Evidence And Policy Responses.

Policy makers and analysts have been voicing concerns about the increasing concentration of health care providers and health insurers in markets nationwide, including the potential adverse effect on the cost and quality of health care. The Council of Economic Advisers recently expressed its concern about the lack of estimates of market concentration in many sectors of the US economy. To address this gap in health care, this study analyzed market concentration trends in the United States from 2010 to 2016 for hospitals, physician organizations, and health insurers. Hospital and physician organization markets became increasingly concentrated over this time period. Concentration among primary care physicians increased the most, partially because hospitals and health care systems acquired primary care physician organizations. In 2016, 90 percent of Metropolitan Statistical Areas (MSAs) were highly concentrated for hospitals, 65 percent for specialist physicians, 39 percent for primary care physicians, and 57 percent for insurers. Ninety-one percent of the 346 MSAs analyzed may have warranted concern and scrutiny because of their concentration levels in 2016 and changes in their concentrations since 2010. Public policies that enhance competition are needed, such as stricter enforcement of antitrust laws, reducing barriers to entry, and restricting anticompetitive behaviors.

Consumers Buy Lower-Cost Plans On Covered California, Suggesting Exposure To Premium Increases Is Less Than Commonly Reported.

With the notable exception of California, states have not made enrollment data for their Affordable Care Act (ACA) Marketplace plans publicly available. Researchers thus have tracked premium trends by calculating changes in the average price for plans offered (a straight average across plans) rather than for plans purchased (a weighted average). Using publicly available enrollment data for Covered California, we found that the average purchased price for all plans was 11.6 percent less than the average offered price in 2014, 13.2 percent less in 2015, and 15.2 percent less in 2016. Premium growth measured by plans purchased was roughly 2 percentage points less than when measured by plans offered in 2014-15 and 2015-16. We observed shifts in consumer choices toward less costly plans, both between and within tiers, and we estimate that a $100 increase in a plan's net annual premium reduces its probability of selection. These findings suggest that the Marketplaces are helping consumers moderate premium cost growth.

Differing Impacts Of Market Concentration On Affordable Care Act Marketplace Premiums.

Recent increases in market concentration among health plans, hospitals, and medical groups raise questions about what impact such mergers are having on costs to consumers. We examined the impact of market concentration on the growth of health insurance premiums between 2014 and 2015 in two Affordable Care Act state-based Marketplaces: Covered California and NY State of Health. We measured health plan, hospital, and medical group market concentration using the well-known Herfindahl-Hirschman Index (HHI) and used a multivariate regression model to relate these measures to premium growth. Both states exhibited a positive association between hospital concentration and premium growth and a positive (but not statistically significant) association between medical group concentration and premium growth. Our results for health plan concentration differed between the two states: It was positively associated with premium growth in New York but negatively associated with premium growth in California. The health plan concentration finding in Covered California may be the result of its selectively contracting with health plans.

Republican States Bolstered Their Health Insurance Rate Review Programs Using Incentives From the Affordable Care Act.

The Affordable Care Act (ACA) included financial and regulatory incentives and goals for states to bolster their health insurance rate review programs, increase their anticipated loss ratio requirements, expand Medicaid, and establish state-based exchanges. We grouped states by political party control and compared their reactions across these policy goals. To identify changes in states' rate review programs and anticipated loss ratio requirements in the individual and small group markets since the ACA's enactment, we conducted legal research and contacted each state's insurance regulator. We linked rate review program changes to the Centers for Medicare and Medicaid Services' (CMS) criteria for an effective rate review program. We found, of states that did not meet CMS's criteria when the ACA was enacted, most made changes to meet those criteria, including Republican-controlled states, which generally oppose the ACA. This finding is likely the result of the relatively low administrative burden associated with reviewing health insurance rates and the fact that doing so prevents federal intervention in rate review. However, Republican-controlled states were less likely than non-Republican-controlled states to increase their anticipated loss ratio requirements to align with the federal retrospective medical loss ratio requirement, expand Medicaid, and establish state-based exchanges, because of their general opposition to the ACA. We conclude that federal incentives for states to strengthen their health insurance rate review programs were more effective than the incentives for states to adopt other insurance-related policy goals of the ACA.

States with stronger health insurance rate review authority experienced lower premiums in the individual market in 2010-13.

States have varying degrees of review authority over health insurance carriers' rates, including prior approval authority over proposed rates and requirements for loss ratios, the proportion of premium revenues spent on medical claims. The Affordable Care Act (ACA) requires carriers in certain categories of health insurance to provide public justification for rate increases of 10 percent or more. We collected data on how states changed their rate review authority and requirements during 2010-13, the years immediately after enactment of the ACA, and we combined these data with carrier filings. We found that adjusted premiums in the individual market in states that had prior-approval authority combined with loss ratio requirements were lower in 2010-13 ($3,489) than premiums in states with no rate review authority or that had only file-and-use regulations, which gave the states no authority to block rate increases ($3,617). Adjusted premiums declined modestly in prior-approval states with loss ratio requirements, from $3,526 in 2010 to $3,452 in 2013, while premiums increased from $3,422 to $3,683 in states with no rate review authority or file-and-use regulations only. Our findings suggest that states with prior approval authority and loss ratio requirements constrained health insurance premium increases.

Review of Medicare, Medicaid, and Commercial Quality of Care Measures: Considerations for Assessing Accountable Care Organizations.

Accountable care organizations (ACOs) have proliferated under the Affordable Care Act (ACA). If ACOs are to improve health care quality and lower costs, quality measures will be increasingly important in determining if provider consolidations associated with the development of ACOs are achieving their intended purpose. This article assesses quality measurement across public and private sectors. We reviewed available quality measures for a subset of programs in six organizations and assessed the number and domain of measures (structure, process, outcomes, and patient experience). Two-thirds of all quality measures were categorized as process measures. Outcome measures made up nearly 20 percent of measures. Patient experience and structure measures made up approximately 8 percent and 7 percent, respectively. We propose further improvements to quality measurement initiatives. For example, programs that reward providers should consider reward size and distribution within the organization. Quality improvement initiatives should consider what encourages provider buy-in and participation and the effects on populations with disproportionate health care needs. As the focus of quality initiatives may change from year to year, measures should be periodically revisited to ensure continued improvement and sustainability. Finally, we suggest quality measures that regulators could use prior to ACO formation or in the year or two following formation.