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THE PRICE AIN'T RIGHT? HOSPITAL PRICES AND HEALTH SPENDING ON THE PRIVATELY INSURED.

ABSTRACT: We use insurance claims data covering 28% of individuals with employer-sponsored health insurance in the United States to study the variation in health spending on the privately insured, examine the structure of insurer-hospital contracts, and analyze the variation in hospital prices across the nation. Health spending per privately insured beneficiary differs by a factor of three across geographic areas and has a very low correlation with Medicare spending. For the privately insured, half of the spending variation is driven by price variation across regions, and half is driven by quantity variation. Prices vary substantially across regions, across hospitals within regions, and even within hospitals. For example, even for a nearly homogeneous service such as lower-limb magnetic resonance imaging, about a fifth of the total case-level price variation occurs within a hospital in the cross section. Hospital market structure is strongly associated with price levels and contract structure. Prices at monopoly hospitals are 12% higher than those in markets with four or more rivals. Monopoly hospitals also have contracts that load more risk on insurers (e.g., they have more cases with prices set as a share of their charges). In concentrated insurer markets the opposite occurs-hospitals have lower prices and bear more financial risk. Examining the 366 mergers and acquisitions that occurred between 2007 and 2011, we find that prices increased by over 6% when the merging hospitals were geographically close (e.g., 5 miles or less apart), but not when the hospitals were geographically distant (e.g., over 25 miles apart).

SUBMITTER: Cooper Z

PROVIDER: S-EPMC7517591 | biostudies-literature | 2019 Feb

REPOSITORIES: biostudies-literature

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THE PRICE AIN'T RIGHT? HOSPITAL PRICES AND HEALTH SPENDING ON THE PRIVATELY INSURED.

Cooper Zack Z Craig Stuart V SV Gaynor Martin M Van Reenen John J

The quarterly journal of economics 20180904 1

We use insurance claims data covering 28% of individuals with employer-sponsored health insurance in the United States to study the variation in health spending on the privately insured, examine the structure of insurer-hospital contracts, and analyze the variation in hospital prices across the nation. Health spending per privately insured beneficiary differs by a factor of three across geographic areas and has a very low correlation with Medicare spending. For the privately insured, half of the ...[more]

PMID: 32981974

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Project description:ImportanceLittle is known about small-area variations in health care spending and utilization across the 3 major funders of health care in the US: Medicare, Medicaid, and private insurers.ObjectiveTo measure regional health spending and utilization across Medicare, Medicaid, and the privately insured; to observe whether there are regions that are simultaneously low spending for all 3 payers; and to determine what factors are correlated with regional spending and utilization by payer.Design, setting, and participantsObservational cross-sectional analysis of the US health system in 2016 and 2017 for 241 of 306 hospital referral regions (HRRs) and 2 states. Participants include individuals with employer-sponsored coverage from Aetna, Humana, or UnitedHealth; individuals with Medicaid fee-for-service coverage in 2016 and 2017; and individuals with Medicare coverage. The analysis was carried out from January 2020 to May 2022.Main outcomes and measuresSpending per beneficiary and inpatient days per beneficiary by payer and overall.ResultsThe data include 25 381 167 individuals with employer-sponsored coverage, 69 891 299 with Medicaid coverage in 2016 and 2017, and 26 711 426 individuals with Medicare fee-for-service coverage. The percentage of enrollees who identified as female was 54.1% in the Medicaid program, 56.2% in the Medicare program, and 50.4% in private insurance. The mean (SD) age was 26.9 (21.8) years for Medicaid and 75.0 (7.9) years for Medicare enrollees; for private insurance enrollees, just age brackets were reported: 18 to 24 years (15.9%), 25 to 34 years (24.2%), 35 to 44 years (21.3%), 45 to 54 years (20.8%), and 55 to 64 years (17.8%). In 2017, the mean (SD) HRR-level spending per beneficiary was $4441 ($710) for private insurance, $10 281 ($1294) for Medicare, and $6127 ($1428) for Medicaid. Across HRRs, the correlation coefficients and 95% CIs were 0.020 (-0.106 to 0.146; P = .76) for private insurance and Medicare spending, 0.213 (0.090 to 0.330; P < .001) for private insurance and Medicaid, and 0.162 (0.037 to 0.282; P < .01) for Medicare and Medicaid. Just 3 HRRs (Boulder, Colorado; Bloomington, Illinois; and Olympia, Washington) were in the lowest spending quintile for all 3 insurance programs; 4 HRRs were in the highest (The Bronx, New York; Manhattan, New York; White Plains, New York; and Dallas, Texas). By contrast, the correlation coefficients and 95% CIs for utilization, measured in hospital days, were 0.465 (0.361 to 0.559; P < .001) for private insurance and Medicare, 0.527 (0.429 to 0.612; P < .001) for private insurance and Medicaid, and 0.278 (0.157 to 0.390; P < .001) for Medicare and Medicaid.Conclusions and relevanceThese findings suggest that payer-specific factors are correlated with health spending variation among Medicare beneficiaries, Medicaid beneficiaries, and the commercially insured and that payer-specific policies will be necessary to improve efficiency in the US health sector.

Project description:ImportanceTo improve health care price transparency and promote cost-conscious selection of health care organizations and practitioners, the Centers for Medicare & Medicaid Services (CMS) required that hospitals share payer-specific negotiated prices for selected shoppable health services by January 2021. While this regulation improves price transparency, it is unclear whether disclosed prices reflect total costs of care, since many hospital-based services are delivered and billed separately by independent practitioners or other health care entities.ObjectiveTo assess the extent to which prices disclosed under the new hospital price transparency regulation are correlated with total costs of care among commercially insured individuals.Design, setting, and participantsThis cross-sectional study used a large database of commercial claims from 2018 to analyze encounters at US hospitals for shoppable health care services for which price disclosure is required by CMS. Data were analyzed from November 2020 to February 2021.ExposuresWhether the service was billed by the hospital or another entity.Main outcomes and measuresOutcomes of interest were the percentage of encounters with at least 1 service billed by an entity other than the hospital providing care, number of billing entities, amounts billed by nonhospital entities, and the correlation between hospital and nonhospital reimbursements.ResultsThe study analyzed 4 545 809 encounters for shoppable care. Independent health care entities were involved in 7.6% (95% CI, 6.7% to 8.4%) to 42.4% (95% CI, 39.1% to 45.6%) of evaluation and management encounters, 15.9% (95% CI, 15.8% to 16%) to 22.2% (95% CI, 22% to 22.4%) of laboratory and pathology services, 64.9% (95% CI, 64.2% to 65.7%) to 87.2% (95% CI, 87.1% to 87.3%) of radiology services, and more than 80% of most medicine and surgery services. The median (IQR) reimbursement of independent practitioners ranged from $61 ($52-$102) to $412 ($331-$466) for evaluation and management, $5 ($4-$6) to $7 ($4-$12) for laboratory and pathology, $26 ($20-$32) to $210 ($170-$268) for radiology, and $47 ($21-$103) to $9545 ($7750-$18 277) for medicine and surgery. The reimbursement for services billed by the hospital was not strongly correlated with the reimbursement of independent clinicians, ranging from r = -0.11 (95% CI, -0.69 to 0.56) to r = 0.53 (95% CI, 0.13 to 0.78).Conclusions and relevanceThis cross-sectional study found that independent practitioners were frequently involved in the delivery of shoppable hospital-based care, and their reimbursement may have represented a substantial portion of total costs of care. These findings suggest that disclosed hospital reimbursement was usually not correlated with total cost of care, limiting the potential benefits of the hospital price transparency rule for improving consumer decision-making.

Project description:ImportanceHealth care professionals have shown significant interest in nonoperative management for uncomplicated appendicitis, but long-term population-level data are lacking.ObjectiveTo compare the outcomes of nonoperatively managed appendicitis against appendectomy.Design, setting, and participantsThis national retrospective cohort study used claims data from a private insurance database to compare patients admitted with uncomplicated appendicitis from January 1, 2008, through December 31, 2014, undergoing appendectomy vs nonoperative management. Coarsened exact matching was applied before multivariate analysis to reduce imbalance between groups. Data were analyzed from February 12 through May 1, 2018.ExposuresAppendectomy (control arm) or nonoperative management (treatment arm).Main outcomes and measuresShort-term primary clinical outcomes included emergency department visits, hospital readmission, abdominal abscess, and Clostridium difficile infections. Long-term primary clinical outcomes were small-bowel obstructions, incisional hernias, and appendiceal cancers. Nonoperative management failure was defined by hospital readmission with appendicitis diagnosis and an appendicitis-associated operation or procedure. Secondary outcomes included number of follow-up visits, length and cost of index hospitalization, and total cost of appendicitis-associated care. Covariates included age, sex, region, insurance plan type, admission year, and Charlson comorbidity index.ResultsOf 58 329 patients with uncomplicated appendicitis (52.7% men; mean [SD] age, 31.9 [16.5] years), 55 709 (95.5%) underwent appendectomy and 2620 (4.5%) underwent nonoperative management. Patients in the nonoperative management group were more likely to have appendicitis-associated readmissions (adjusted odds ratio, 2.13; 95% CI, 1.63-2.77; P < .001) and to develop an abscess (adjusted odds ratio, 1.42; 95% CI, 1.05-1.92; P = .02). Patients in the nonoperative management group required more follow-up visits in the year after index admission (unadjusted mean [SD], 1.6 [6.3] vs 0.3 [1.4] visits; adjusted +1.11 visits; P < .001) and had lower index hospitalization cost (unadjusted mean [SD], $11 502 [$9287] vs $13 551 [$10 160]; adjusted -$2117, P < .001), but total cost of appendicitis care was higher when follow-up care was considered (unadjusted, $14 934 [$31 122] vs $14 186 [$10 889]; adjusted +$785; P = .003). During a mean (SD) of 3.2 (1.7) years of follow-up, failure of nonoperative management occurred in 101 patients (3.9%); median time to recurrence was 42 days (interquartile range, 8-125 days). Among the patients who experienced treatment failure, 44 did so within 30 days.Conclusions and relevanceAccording to results of this study, nonoperative management failure rates were lower than previously reported. Nonoperative management was associated with higher rates of abscess, readmission, and higher overall cost of care. These data suggest that nonoperative management may not be the preferred first-line therapy for all patients with uncomplicated appendicitis.

Project description:BackgroundGlobal spending on health was continuing to rise over the past 20 years. To reduce the growth rates, alleviate information asymmetry, and improve the efficiency of healthcare markets, global health systems have initiated price and quality transparency tools in the hospital industry in the last two decades. OBJECTIVE : The objective of this review is to synthesize whether, to what extent, and how hospital price and quality transparency tools affected 1) the price of healthcare procedures and services, 2) the payments of consumers, and 3) the premium of health insurance plans bonding with hospital networks.MethodsA literature search of EMBASE, Web of Science, Econlit, Scopus, Pubmed, CINAHL, and PsychINFO was conducted, from inception to Oct 31, 2021. Reference lists and tracked citations of retrieved articles were hand-searched. Study characteristics were extracted, and included studies were scored through a risk of bias assessment framework. This systematic review was reported according to the PRISMA guidelines and registered in PROSPERO with registration No. CRD42022319070.ResultsOf 2157 records identified, 18 studies met the inclusion criteria. Near 40 percent of studies focused on hospital quality transparency tools, and more than 90 percent of studies were from the US. Hospital price transparency reduced the price of laboratory and imaging tests except for office-visit services. Hospital quality transparency declined the level or growth rates of healthcare spending, while it adversely and significantly raised the price of healthcare services and consumers' payment in higher-ranked or rated facilities, which was referred to as the reputation premium in the healthcare industry. Hospital quality transparency not only leveraged private insurers bonding with a higher-rated hospital network to increase premiums, but also induced their anticipated pricing behaviors.ConclusionHospital price and quality transparency was not effective as expected. Future research should explore the understudied consequences of hospital quality transparency programs, such as the reputation/rating premium and its policy intervention.

Project description: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.ContextMost-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.MethodsUsing 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.FindingsOur 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.ConclusionsOur 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.

Dataset Information

THE PRICE AIN'T RIGHT? HOSPITAL PRICES AND HEALTH SPENDING ON THE PRIVATELY INSURED.

Publications

THE PRICE AIN'T RIGHT? HOSPITAL PRICES AND HEALTH SPENDING ON THE PRIVATELY INSURED.

Similar Datasets

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