The Association Between Provider Price and Complication Rates for Outpatient Surgical Services

The effect of hospital discharge price increases on publicly reported measures of quality

OBJECTIVE

To determine if increases in hospital discharge prices are associated with improvements in clinical quality or patient experience.

DATA SOURCES

This study used Medicare cost report data and publicly available Medicare.gov Care Compare quality measures for approximately 3000 short-term care general hospitals between 2011 and 2018.

STUDY DESIGN

We separately regressed quality measure scores on a lag of case mix adjusted discharge price, hospital fixed effects, and year indicators. Clinical quality measures included 30-day readmission rates for acute myocardial infarction, chronic obstructive pulmonary disease, heart failure, hip and knee replacement, and pneumonia; risk-adjusted 30-day mortality rates for acute myocardial infarction, chronic obstructive pulmonary disease, heart failure, and stroke; and 90-day complication rate for hip and knee replacement. Patient experience measures included the summary star rating and 10 domain measures reported through the Hospital Consumer Assessment of Healthcare Providers and Systems survey. We tested for heterogeneous effects by hospital ownership, number of beds, the commercial share of overall discharges, and market concentration.

DATA COLLECTION/EXTRACTION METHODS

We linked hospitals identified in Medicare cost reports to Medicare.gov Care Compare quality measures. We excluded hospitals for which we could not identify a discharge price or that had an unrealistic price.

PRINCIPAL FINDINGS

There was no positive association between lagged discharge price and any clinical quality measure. For patient experience measures, a 2% increase in discharge price was not associated with overall patient satisfaction but was associated with small, statistically significant increases ranging from 0.01% to 0.02% (relative to mean scores) for seven of ten domain measures. There was a positive association for five of ten patient experience measures in competitive markets and one measure in both moderately concentrated and heavily concentrated markets.

CONCLUSIONS

We found no evidence that hospitals use higher prices to make investments in clinical quality; patient experience improved, but only negligibly.

Analysis of Affordable Health Care

BACKGROUND

Lack of affordable health care affects the uninsured, commercially insured, and Medicare beneficiaries. Yet, the wide variation in providers' prices and practice styles suggests that more affordable care already may be available and data on low value and wasteful care suggest that lower cost care need not come at the expense of better quality. Although price variation has received the most attention in the literature and legislation, total cost of care is a function of both unit prices (fees) and the quantity of services.

OBJECTIVE

To partition provider-specific variation in total annual risk-adjusted per capita expenditures on health care services into variation in unit prices (fees) versus quantities of services, and to explore the relationship between low value, avoidable, discretionary, and recommended care to total health expenditures. The analysis is important because both prices and quantities of services can affect affordability and reductions in prices versus quantities have very different effects on providers' profits.

SETTING

2018 data from the Minnesota State Employees Group Insurance Program (SEGIP) that offers a tiered cost-sharing health insurance benefit design to 130,000 State employees and their dependents (SEGIP "members").

EXPOSURE

Each year during open enrollment, SEGIP members choose a primary care clinic (PCC). The PCC can make decisions regarding both unit prices and prescribed services. PCCs are placed in one of four cost-sharing tiers based on the total annual risk-adjusted per capita health expenditures for the SEGIP members who choose their clinic. Members choosing higher cost PCCs face higher deductibles, copayments, and maximum out-of-pocket spending limits.

MEASURES

Overall prices and use of inpatient, outpatient hospital, professional, and pharmaceutical services, total and avoidable use of emergency department visits and inpatient admissions, low value care, testing for patients with pneumonia, and recommended preventive care.

RESULTS

Differences in total risk-adjusted annual per capita health expenditures across the care systems were substantial. Higher cost providers had both higher unit prices and higher use of services. Variation in the quantity of health care services explained more of the variance in total spending than variation in prices. Prices for professional services and use of inpatient, outpatient hospital, and pharmaceutical services, and ambulatory care sensitive admissions, contributed significantly to high total expenditures. Lower cost PCCs in the lowest cost-sharing tier had higher rates of low value care and lower emergency department visits per capita. Neither the number of investigations for patients with pneumonia nor the receipt of recommended mammography screening varied systematically by tier.

CONCLUSIONS

Efforts to identify and expand sources of affordable care, including improved information and incentives for consumers, need to account for variation in both prices and quantities of services. Efforts to encourage more efficient use of health care services by providers need to consider the effect of those efforts on the provider's internal costs and thus their profits.

Clinic price reductions in a tiered total cost benefit design

OBJECTIVES

To understand responses of primary care clinics to inclusion in a tiered total cost of care insurance benefit design.

STUDY DESIGN

We used a qualitative design beginning with longitudinal analysis of administrative data on consumer clinic choice, clinic tier placement, and clinic actions, followed by in-depth interviews with key informants from clinics, administering health plans, and program administrators.

METHODS

We collected data via semistructured interviews with purposively sampled key informants selected from clinics that prospectively reduced prices to move to, or remain in, a tier with lower cost sharing. Data from interview transcripts were coded using qualitative coding software and analyzed for thematic responses.

RESULTS

Our findings suggest that clinics respond to the incentives in the tiered cost-sharing benefit design. Two motivations cited by clinics are (1) concern over developing a reputation as a high-cost clinic and (2) concern about the possible loss of patients due to higher cost sharing. Some clinics have agreed to price reductions or risk-sharing arrangements to move to, or remain in, a tier with lower cost sharing. Clinic informants reported that price reductions alone are not scalable. They sought greater transparency in tier assignment and increased data sharing to help them reduce costly or unnecessary utilization.

CONCLUSIONS

Managers of primary care clinics respond to a tiered benefit design that holds them accountable for total cost of care. They respond by offering price discounts and expressing interest in reducing costly referrals and unnecessary use of services.

The problematic place of private payment for healthcare in Australia

Private funding and private hospital provision play a key role in Australian healthcare. However, this role is inherently inequitable, creating a two-speed health system. Canada should avoid expanding private involvement in paying for healthcare.

Paying Patients To Switch: Impact Of A Rewards Program On Choice Of Providers, Prices, And Utilization

Employers and insurers are experimenting with benefit strategies that encourage patients to switch to lower-price providers. One increasingly popular strategy is to financially reward patients who receive care from such providers. We evaluated the impact of a rewards program implemented in 2017 by twenty-nine employers with 269,875 eligible employees and dependents. For 131 elective services, patients who received care from a designated lower-price provider received a check ranging from $25 to $500, depending on the provider's price and service. In the first twelve months of the program we found a 2.1 percent reduction in prices paid for services targeted by the rewards program. The reductions in price resulted in savings of $2.3 million, or roughly $8 per person, per year. These effects were primarily seen in magnetic resonance imaging and ultrasounds, with no observed price reduction among surgical procedures.