Reference-based benefit design changes consumers' choices and employers' payments for ambulatory surgery

If Patients Don't Use Available Health Service Pricing Information, Is Transparency Still Important?

The US health system is replete with health service pricing idiosyncrasies and opacity unrelated to quality. Online tools intended to make health care purchasing resemble consumerism by making prices transparent have had little if any effect on improving health care market functioning and changing patient behavior. Although price transparency is still in its infancy, it holds promise to be as useful to patient-consumers as it has been to large purchasers (eg, employers) of health services and policymakers. But even if price information is not routinely used by patients, transparency of such information still has ethical importance in a market in which patients pay increasingly high out-of-pocket costs.

Unplanned hospital visits after ambulatory surgical care

Objectives

We sought to assess the rate of unplanned hospital visits among patients undergoing ambulatory surgery.

Summary background data

The majority of surgeries performed in the United States now take place in outpatient settings. Post-discharge hospital visit rates have been shown to vary widely, suggesting variation in surgical or discharge care quality. Complicating efforts to address quality, most facilities and surgeons are unaware of their patients’ hospital visits after surgery since patients may present to a different hospital.

Methods

We used state-level, administrative data from the Agency for Healthcare Research and Quality’s Healthcare Cost and Utilization Project from California to assess unplanned hospital visits after ambulatory surgery. To compare rates across centers, we determined the age, sex, and procedure-adjusted rates of hospital visits for each facility using 2-level, hierarchical, generalized linear models using methods similar to existing Centers for Medicare and Medicaid Services measures.

Results

Among a total of 1,260,619 ambulatory same-day surgeries from 440 surgical facilities, the risk adjusted 30-day rate of unplanned hospital visits was 4.8%, with emergency department visits of 3.1% and hospital admissions of 1.7%. Several patient characteristics were associated with increased risk of unplanned hospitals visits, including increased age, increased number of comorbidities (using the Elixhauser score), and type of procedure (p<0.001).

Conclusions

The overall rate unplanned hospital visits within 30 days after same-day surgery is low but variable, suggesting a difference in the quality of care provided. Further, these rates are higher among specific patient populations and procedure types, suggesting areas for targeted improvement.

An Employer-Provider Direct Payment Program Is Associated With Lower Episode Costs

Bundled payment has shown promise in reducing medical spending while maintaining quality. However, its impact among commercially insured populations has not been well studied. We examined the impacts on episode cost and patient cost sharing of a program that applies bundled payments for orthopedic and surgical procedures in a commercially insured population. The program we studied negotiates preferred prices for selected providers that cover the procedure and all related care within a thirty-day period after the procedure and waives cost sharing for patients who receive care from these providers. After implementation, episode prices for three selected surgical procedures declined by $4,229, a 10.7 percent relative reduction. Employers captured approximately 85 percent of the savings, or $3,582 per episode (a 9.5 percent relative decrease), and patient cost-sharing payments decreased by $498 per episode (a 27.7 percent relative decrease).

Does the Implementation of Reference Pricing Result in Reduced Utilization? Evidence From Inpatient and Outpatient Procedures

Reference pricing (RP) is an insurance design that can be used to incentivize patients to use low-price settings. While RP is not intended to affect overall utilization, it could unintentionally reduce utilization. We examined whether utilization was reduced when a large employer adopted RP for selected elective surgeries, including inpatient joint replacement surgery and outpatient cataract surgery, colonoscopy, and arthroscopic surgery. Data included a treatment group subject to RP implementation and a comparison group that was not. We applied autoregressive integrated moving average analysis as comparison-population interrupted time-series analysis to determine whether there were procedure reductions following RP implementation. We find no evidence of short-term decreases (within 3 months of RP implementation). However, we find very modest declines of approximately 14 (20%) fewer arthroscopic knee surgeries 6 months after RP implementation and 129 (17.2%) fewer colonoscopies 8 months after RP implementation. There were no declines in the other procedures examined.

Elective Percutaneous Coronary Intervention in Ambulatory Surgery Centers

OBJECTIVES

The aim of this study was to explore characteristics and outcomes of patients undergoing elective percutaneous coronary intervention (PCI) in ambulatory surgery centers (ASCs).

BACKGROUND

Little is known about patients who underwent ASC PCI before Medicare reimbursement was instituted in 2020.

METHODS

Using commercial insurance claims from MarketScan, adults who underwent hospital outpatient department (HOPD) or ASC PCI for stable ischemic heart disease from 2007 to 2016 were studied. Propensity score analysis was used to measure the association between treatment setting and the primary composite outcome of 30-day myocardial infarction, bleeding complications, and hospital admission.

RESULTS

The unmatched sample consisted of 95,492 HOPD and 849 ASC PCIs. Patients who underwent ASC PCI were more likely to be younger than 65 years, to live in the southern United States, and to have managed or consumer-driven health insurance. ASC PCI was also associated with decreased fractional flow reserve utilization (odds ratio [OR]: 0.31; 95% confidence interval [CI]: 0.20 to 0.48; p < 0.001). In unmatched, multivariate analysis, ASC PCI was associated with increased odds of the primary outcome (OR: 1.25; 95% CI: 1.01 to 1.56; p = 0.039) and bleeding complications (OR: 1.80; 95% CI: 1.11 to 2.90; p = 0.016). In propensity-matched analysis, ASC PCI was not associated with the primary outcome (OR: 1.23; 95% CI: 0.94 to 1.60; p = 0.124) but was significantly associated with increased bleeding complications (OR: 2.49; 95% CI: 1.25 to 4.95; p = 0.009).

CONCLUSIONS

Commercially insured patients undergoing ASC PCI were less likely to undergo fractional flow reserve testing and had higher odds of bleeding complications than HOPD-treated patients. Further study is warranted as Medicare ASC PCI volume increases.

Is there variation in private payor payments to cancer surgeons? A cross-sectional study in the USA

OBJECTIVES

Although demand for price transparency in healthcare is growing, variation in private payors' payments to surgeons for oncologic resection has not been well characterised. Our aim was to assess variation of private payors' payments to surgeons for cancer resection using data based on fee-for-service allowed amounts, billed by a large mix of commercial payors and third-party administrators.

SETTING

Fair Health (FH), an independent, not-for-profit organisation that collects and compiles claims data from payors nationwide. FH maintains the nation's largest repository of privately billed medical and dental claims representing over 125 million covered lives in the USA.

PARTICIPANTS

We performed a cross-sectional study assessing private payer data for five common types of cancer surgery: simple mastectomy (SM), modified radical mastectomy (MRM), open lobectomy, video-assisted thoracoscopic surgery (VATS) lobectomy and radical prostatectomy during 2012 and 2013.

PRIMARY AND SECONDARY OUTCOME MEASURES

To assess variation across regions, we compared regional median allowed payments. To assess intraregion variability, we evaluated the distribution of regional IQRs of allowed payments.

RESULTS

Median allowed payments varied substantially across regions. For SM, median allowed payments ranged from $550 in the least expensive to $1380 in the costliest region. For MRM, the range was $842-$1760, for lobectomy $326-$3066, for VATS $317-$3307 and for prostatectomy $1716-$4867. There was also substantial variation within geographic areas. For example, the mean IQRs in surgeon payment within regions were: SM $577 (25th percentile) to $1132 (75th percentile); MRM $850-$1620; lobectomy $861-$2767; VATS $1024-$3122; and prostatectomy $2286-$3563.

CONCLUSIONS

There is a wide range of variation both across and within geographic regions in allowed amounts of surgeon payments for common oncologic resections. Transparency about these allowed amounts may have a profound impact on patient and employer choice and facilitate future assessments of value in cancer care.

The Influence of Cost Information on Treatment Choice: A Mixed-Methods Study

PURPOSE

To test the null hypothesis that exposure to societal cost information does not affect choice of treatment for carpal tunnel syndrome (CTS).

METHODS

We enrolled 304 participants using the Amazon Mechanical Turk platform to complete a survey in which participants were given the choice between carpal tunnel release (CTR) or a less-expensive option (orthosis wear) in a hypothetical mild CTS scenario. Patients were randomized to receive information about the societal cost of CTR (cost cohort) or no cost information (control). The primary outcome was the probability of choosing CTR measured on a 6-point ordinal scale. We employed qualitative content analysis to evaluate participants' rationale for their choice. We also explored agreement with various attitudes toward health care costs on an ordinal scale.

RESULTS

Participants in the cost cohort exhibited a greater probability of choosing surgery than those in the control cohort. The relative risk of choosing surgery after exposure to societal cost information was 1.43 (95% confidence interval, 1.11-1.85). Among participants who had not previously been diagnosed with CTS (n = 232), the relative risk of choosing surgery after exposure to societal cost information was 1.55 (95% confidence interval, 1.17-2.06). Lack of personal monetary responsibility frequently emerged as a theme in those in the cost cohort who chose surgery. The majority (94%) of participants expressed at least some agreement that health care cost is a major problem whereas only 58% indicated that they consider the country's health care costs when making treatment decisions.

CONCLUSIONS

Participants who received societal cost information were more likely to choose the more expensive treatment option (CTR) for mild CTS.

CLINICAL RELEVANCE

Exposure to societal cost information may influence patient decision making in elective hand surgery. A complete understanding of this influence is required prior to implementing processes toward greater cost transparency for diagnostic/treatment options. Sharing out-of-pocket costs with patients may be a beneficial approach because discussing societal cost information alone will likely not improve value of care.

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.

Reference-Based Benefits for Colonoscopy and Arthroscopy: Large Differences in Patient Payments Across Procedures but Similar Behavioral Responses

This study examines how reference-based benefits (RBB) affect patient out-of-pocket payments across outpatient procedures. The California Public Employees' Retirement System (CalPERS) implemented RBB asymmetrically for outpatient procedures in 2012, only applying RBB to outpatient procedures performed in a hospital outpatient department (HOPD), and not applying RBB to outpatient procedures performed in a lower cost ambulatory surgery center. Using claims data (2009-2013) on arthroscopy and colonoscopy services, we found that for colonoscopy, CalPERS patients paid an average of 63.9% (p < .01) more for HOPDs than ambulatory surgery centers in 2012. For arthroscopy, no statistically different cost sharing was found on average. However, high-priced HOPDs were 17.3% and 17.9% less likely to be chosen by CalPERS patients in 2012 for colonoscopy and arthroscopy, respectively. These magnitudes increased in 2013 to 25.2% and 24.2% less, respectively. Overall, responsiveness to RBB with regard to the most expensive HOPDs was similar despite varying cost sharing by procedure.

Analysis of failed discharge after ambulatory surgery: unanticipated admission

BACKGROUND

Advantages of ambulatory surgery are lost when patients need an unplanned admission. This retrospective cohort study investigated reasons for failed discharge and unanticipated admission of adult patients after day surgery.

METHODS

Ambulatory patients (n = 145) requiring unanticipated admission were compared to patients (n = 4980) not requiring admission and timely discharged from a total of 5156 ambulatory surgical procedures. Demographic data, organisational data, reason for admission, type of anesthesia, surgical discipline, length of procedure, ASA classification, surgical completion time and severity of illness score were collected from both groups. Reason for admission was classified according to four subtypes. Logistic regression analysis was used.

RESULTS

Incidence of unanticipated admission following day care surgery was 2.89%. The reasons for admission were mainly organisational issues (45.52%), time of completion surgery in the afternoon between 12 pm and 3 pm (OR 1.73; 95% CI 1.05-2.86) and surgery that ends after 3 pm (OR 6.52; 95% CI 4.11-10.34). Surgical factors associated with unanticipated admission (38.62%) were length of surgery of one to three hours (OR 2.05; 95% CI 1.27-3.29), length of surgery more than three hours (OR 8.31; 95% CI 3.56-19.40). Additionally, anaesthetic (10.34%) and medical (5.52%) reasons were found, e.g. ASA class II (OR 1.61; 95% CI 1.06-2.44), ASA class III (OR 2.19; 95% CI 1.10-4.34); moderate severity of illness score (OR 1.72; 95% CI 1.03-2.88) and major of severity of illness score (OR 7.85; 95% CI 2.31-26.62).

CONCLUSIONS

Unanticipated admissions following day surgery occur mainly due to social/organisational and surgical reasons. However, medical and anaesthetic reasons also explain 15.86% of the unanticipated admissions.

Patient responsiveness to a differential deductible: empirical results from The Netherlands

Health insurers may use financial incentives to encourage their enrollees to choose preferred providers for medical treatment. Empirical evidence whether differences in cost-sharing rates across providers affects patient choice behavior is, especially from Europe, limited. This paper examines the effect of a differential deductible to steer patient provider choice in a Dutch regional market for varicose veins treatment. Using individual patients' choice data and information about their out-of-pocket payments covering the year of the experiment and 1 year before, we estimate a conditional logit model that explicitly controls for pre-existing patient preferences. Our results suggest that in this natural experiment designating preferred providers and waiving the deductible for enrollees using these providers significantly influenced patient choice. The average cross-price elasticity of demand is found to be 0.02, indicating that patient responsiveness to the cost-sharing differential itself was low. Unlike fixed cost-sharing differences, the deductible exemption was conditional on the patient's other medical expenses occurring in the policy year. The differential deductible did, therefore, not result in a financial benefit for patients with annual costs exceeding their total deductible.

Reference pricing: The case of screening colonoscopies

We study the introduction of reference pricing to the California Public Employees' Retirement System. Reference pricing changes the relative price of using a hospital versus an ambulatory surgery center (ASC) for patients receiving a colonoscopy, leading to as good as random variation in patients' use of ASCs. We find a 10 percentage point increase in the share of patients using an ASC, leading to a $2300 to $1700 reduction in prices paid for patients who switch to ASCs. Our results suggest that the use of ASCs has a causal effect on prices paid and has no negative effect on patient health outcomes.

How robust are reference pricing studies on outpatient medical procedures? Three different preprocessing techniques applied to difference-in differences

The evaluation of policies that are not randomly assigned on outcomes generated by nonlinear data generating processes often requires modeling assumptions for which there is little theoretical guidance. This paper revisits previously published difference-in-differences results of an important example, the introduction of reference pricing to common outpatient procedures, to assess the robustness of the estimated impacts by using different matching, and reweighting techniques to preprocess the data. These techniques improve covariate balance and reduce model dependence. Specifically, we examine the robustness of the effect of reference pricing on patient site-of-care choice, total expenditures, and complication rates. We apply three preprocessing methods: propensity score reweighting, exact matching, and genetic matching. Propensity score reweighting is a technique for achieving covariate balance but does not balance higher-order moments and may lead to bias and inefficiency in estimating treatment effects in the context of nonlinear data generating processes. In contrast, exact matching and genetic matching are designed to balance higher-order moments. We find that although the use of the preprocessing techniques is a valuable robustness check showing that some results are sensitive to the method used, the three approaches generally yield results that do not statistically differ from the published results.

Firm responses to targeted consumer incentives: Evidence from reference pricing for surgical services

This paper examines how health care providers respond to a reference pricing insurance program that increases consumer cost sharing when consumers choose high-priced surgical providers. We use geographic variation in the population covered by the program to estimate supply-side responses. We find limited evidence of market segmentation and price reductions for providers with baseline prices above the reference price. Finally, approximately 75% of the reduction in provider prices is in the form of a positive externality that benefits a population not subject to the program.

Trends in Use of Ambulatory Surgery Centers for Cataract Surgery in the United States, 2001-2014

Importance

Cataract surgery is commonly performed at ambulatory surgery centers (ASCs) and hospital outpatient departments (HOPDs). These venues differ in many ways, including surgical efficiency, patient throughput, patient safety, and costs per surgery.

Objective

To determine trends in use of ASCs and HOPDs for cataract surgery from 2001 to 2014 and factors affecting the site of surgery.

Design, Setting, and Participants

This retrospective longitudinal cohort analysis involved individuals 40 years and older who underwent cataract surgery between January 2001 and December 2014 from a nationwide US managed care network. Data were analyzed from February 2016 to February 2017.

Main Outcomes and Measures

We identified all enrollees who underwent cataract surgery and determined whether the surgery was performed at an ASC or HOPD. We calculated the proportion of surgeries performed at each site each year from 2001 to 2014. Multivariable logistic regression identified characteristics of enrollees who had cataract surgery at an ASC vs a HOPD. We also assessed geographic variation in the proportion of cataract surgeries performed at ASCs in 306 communities throughout the United States.

Results

Of the 369 320 enrollees included in this study, 208 319 (56.4%) were female, and the mean (SD) age was 66.3 (10.4) years. All enrollees underwent cataract surgery (531 325 surgeries) from 2001 to 2014. Of these, 237 046 (64.2%) underwent cataract surgery at an ASC. The proportion of cataract surgeries performed at ASCs increased from 43.6% in 2001 to 73.0% in 2014. Compared with enrollees with incomes less than $40 000, those with incomes greater than $100 000 were 20% more likely to undergo cataract surgery at an ASC (odds ratio, 1.20; 95% CI, 1.12-1.29). Enrollees with better overall health were no more likely to undergo cataract surgery at an ASC (odds ratio, 1.00; 95% CI, 0.99-1.00) than at an HOPD. Enrollees who lived in communities without certificate of need laws were more than twice as likely to have surgery at an ASC (odds ratio, 2.49; 95% CI, 2.35-2.63). The proportion of cataract surgeries performed at ASCs from 2012 to 2014 varied considerably, from 1.6% in La Crosse, Wisconsin, to 98.8% in Pueblo, Colorado.

Conclusions and Relevance

We observed a large shift in the site of cataract surgery from HOPDs to ASCs from 2001 to 2014. Future research is needed to assess the effect of this transition in site of surgical care on patient access to surgery, surgical outcomes, patient safety, and societal costs.

The moral hazard effects of consumer responses to targeted cost-sharing

This paper examines the effects of the reference pricing program implemented by the California Public Employees Retirement System (CalPERS) in 2012. The program uses targeted cost-sharing to incentivize patient price shopping. We find that the program leads to a 10.3% increase in the use of low-price providers and reduces the average cost per procedure by 12.5%. We further estimate that the program reduces medical spending by $218.8 per procedure, which we estimate is approximately 53.7% of the excessive spending that is due to patient choice of higher price providers caused by insurance coverage, at the expense of a $94.3 (or 12.5%) reduction in consumer surplus. The cost savings from the reference pricing program is about two to three times as large as the reduction from implementing a high-deductible health plan, while the accompanying consumer surplus reduction is much smaller under reference pricing.

Association of Reference Pricing with Drug Selection and Spending

Background In the United States, prices for therapeutically similar drugs vary widely, which has prompted efforts by public and private insurers to steer patients toward the lower-priced options. Under reference pricing, the insurer or employer establishes a maximum contribution it will make toward the price of a drug or procedure, and the patient pays the remainder. Methods We used difference-in-differences multivariable regression methods to analyze changes in prescriptions and pricing for 1302 drugs in 78 therapeutic classes in the United States, before and after implementation of reference pricing by an alliance of private employers. We assessed trends for the study group relative to those for an employee group that was not subject to reference pricing. The study included 1,122,741 prescriptions that were reimbursed during the period from 2010 through 2014. Results Implementation of reference pricing was associated with a higher percentage of prescriptions that were filled for the lowest-priced reference drug within its therapeutic class (difference in probability, 7.0 percentage points; 95% confidence interval [CI], 4.0 to 9.9), a lower average price paid per prescription (-13.9%; 95% CI, -23.8 to -2.7), and a higher rate of copayment by patients (5.2%; 95% CI, 0.2 to 10.4) than in the comparison group. During the first 18 months after implementation, spending for employers was $1.34 million lower and the amount of copayments for employees was $0.12 million higher than in the comparison group. Conclusions Implementation of reference pricing was associated with significant changes in drug selection and spending for a population of patients covered by employment-based insurance in the United States. (Funded by the Agency for Healthcare Research and Quality and the Genentech Foundation.).

Healthcare policy and urologic practice

PURPOSE OF REVIEW

Healthcare policy is currently a topic of national debate, with numerous implications for the practice of urology.

RECENT FINDINGS

Healthcare policy has broad reaching effects, both predicted and unforeseen. The effects of healthcare policy are manifested through clinical practice guidelines, payment reform and the overall structure of the healthcare system. This review describes each of these topics and their impact on clinical practice, with a specific focus on urology and urologic practice.

SUMMARY

Guidelines are useful for guiding and determining what is considered appropriate clinical practice, but there are drawbacks including poor implementation and overabundance. Payment reform is constantly evolving, with multiple efforts being implemented to move away from a fee-for-service model of reimbursement. The structure of healthcare delivery is moving toward more outpatient procedures, with varying amount of physician ownership of facilities and equipment, which is itself a controversial topic.

Cost Comparison of Outpatient Versus Inpatient Unicompartmental Knee Arthroplasty

Background:

Outpatient unicompartmental knee arthroplasty (UKA) has been shown to be safe and feasible when compared with inpatient surgery; however, no studies have evaluated the cost-effectiveness and cost-benefit of performing outpatient versus inpatient UKA.

Hypothesis:

Significant cost savings can be achieved by transitioning UKAs from an inpatient to an outpatient procedure in an outpatient surgical facility, with no appreciable difference in complication or readmission rates.

Study Design:

Economic and decision analysis; Level of evidence, 3.

Methods:

A retrospective chart review of 25 consecutive medial UKAs was performed. A total of 10 inpatient UKAs with a mean length of stay of 1.6 days (range, 1-4 days) and 12 outpatient UKAs were included in the final analysis. A simple difference in costs incurred, reimbursements, and percentage difference between inpatient and outpatient surgery in an outpatient surgical facility was calculated. Charges were subdivided into surgical facility fees, inpatient room charges, operating room supply fees, and other fees. Secondary outcome measures included reason for greater than 1 day stay for the inpatient UKAs, complications, readmissions, and the type of regional anesthesia utilized.

Results:

The outpatient UKA charges were a mean $20,500 less per patient than the inpatient average charge of $46,845. The primary cost savings were attributed to the outpatient surgical facility fee, which averaged $3800 per patient, while the inpatient facility charge was 350% more expensive at $13,200 per patient (approximately $9500 savings). On the inpatient side, the average reimbursement was 55% of charges, or $25,550. For outpatient procedures, the average reimbursement was 47%, or $12,370. There was no difference between the inpatient and outpatient groups in terms of complications or readmissions.

Conclusion:

This work demonstrated that significant cost savings of roughly 50% can be achieved with an outpatient UKA protocol done at an outpatient surgical facility. Not only is it feasible and economically attractive to perform outpatient UKA, but it can reduce inpatient bed occupancy and resource allocation for a busy hospital.

Reference Pricing Changes The 'Choice Architecture' Of Health Care For Consumers

Reference pricing in health insurance creates incentives for patients to select for nonemergency services providers that charge relatively low prices and still offer high quality of care. It changes the "choice architecture" by offering standard coverage if the patient chooses cost-effective providers but requires considerable consumer cost sharing if more expensive alternatives are selected. The short-term impact of reference pricing has been to shift patient volumes from hospital-based to freestanding surgical, diagnostic, imaging, and laboratory facilities. This article summarizes reference pricing's impacts to date on patient choice, provider prices, surgical complications, and employer spending and estimates its potential impacts if expanded to more services and a broader population. Reference pricing induces consumers to select lower-price alternatives for all of the forms of care studied, leading to significant reductions in prices paid and spending incurred by insurers and employers. The impact on consumer cost sharing is mixed, with some studies finding higher copayments and some lower. We conclude with a discussion of the incentives created for providers to redesign their clinical processes and for efficient providers to expand into price-sensitive markets. Over time, reference pricing may increase pressures for price competition and lead to further cost-reducing innovations in health care products and processes.

Using the deductible for patient channeling: did preferred providers gain patient volume?

In market-based health care systems, channeling patients to designated preferred providers can increase payer's bargaining clout, other things being equal. In the unique setting of the new Dutch health care system with regulated competition, this paper evaluates the impact of a 1-year natural experiment with patient channeling on providers' market shares. In 2009 a large regional Dutch health insurer designated preferred providers for two different procedures (cataract surgery and varicose veins treatment) and gave its enrollees a positive financial incentive for choosing them. That is, patients were exempted from paying their deductible when they went to a preferred provider. Using claims data over the period 2007-2009, we apply a difference-in-difference approach to study the impact of this channeling strategy on the allocation of patients across individual providers. Our estimation results show that, in the year of the experiment, preferred providers of varicose veins treatment on average experienced a significant increase in patient volume relative to non-preferred providers. However, for cataract surgery no significant effect is found. Possible explanations for the observed difference between both procedures may be the insurer's selection of preferred providers and the design of the channeling incentive resulting in different expected financial benefits for both patient groups.

Reference Pricing with Endogenous or Exogenous Payment Limits: Impacts on Insurer and Consumer Spending

Reference pricing (RP) theories predict different outcomes when reference prices are fixed (exogenous) versus being a function of market prices (MPs) (endogenous). Exogenous RP results in MPs at both high-price and low-price firms converging towards the reference price from above and below, respectively. Endogenous RP results in MPs at both high-price and low-price firms decreasing, with low-price firms acting strategically to decrease the reference price in order to gain market share. We extend these models to a hospital context focusing on insurer and consumer payments. Under exogenous RP, insurer and consumer payments to low-price hospitals increase, and insurer payments to high-price hospitals decrease, but predictions regarding consumer payments are ambiguous for high-price hospitals. Under endogenous RP, insurer payments to high-price and low-price hospitals decrease, and consumer payments to low-price hospitals decrease, but predictions regarding consumer payments are ambiguous for high-price hospitals. We test these predictions with difference-in-differences specifications using 2008-2013 data on patients undergoing joint replacement. For 2 years following RP implementation, insurer payments to high-price and low-price hospitals moved downward, consistent with endogenous RP. However, when the reference price was not reset to account for changes in MPs, insurer payments to low-price hospitals reverted to pre-implementation levels, consistent with exogenous RP. Copyright © 2015 John Wiley & Sons, Ltd.

The Regionalization of Lumbar Spine Procedures in New York State: A 10-Year Analysis

STUDY DESIGN

A retrospective review of an administrative database.

OBJECTIVE

The purpose of this study is to determine the current extent of regionalization by mapping lumbar spine procedures according to hospital and patient zip code, as well as examine the rate of growth of lumbar spine procedures performed at high-, medium-, and low-volume institutions in New York State.

SUMMARY OF BACKGROUND DATA

The association between hospital and spine surgeon volume and improved patient outcomes is well established. There is no study investigating the actual process of patient migration to high-volume hospitals.

METHODS

New York Statewide Planning and Research Cooperative System (SPARCS) administrative data were used to identify 228,695 lumbar spine surgery patients from 2005 to 2014. The data included the patients' zip code, hospital of operation, and year of discharge. The volume of lumbar spine surgery in New York State was mapped according to patient and hospital 3-digit zip code. New York State hospitals were categorized as low, medium, and high volume and descriptive statistics were used to determine trends in changes in hospital volume.

RESULTS

Lumbar spine surgery recipients are widely distributed throughout the state. Procedures are regionalized on a select few metropolitan centers. The total number of procedures grew 2.5% over the entire 10-year-period. High-volume hospital caseload increased 50%, from 7253 procedures in 2005 to 10,915 procedures in 2014. The number of procedures at medium and low-volume hospitals decreased 30% and 13%, respectively.

CONCLUSIONS

Despite any concerted effort aimed at moving orthopedic patients to high-volume hospitals, migration to high-volume centers occurred. Public interest in quality outcomes and cost, as well as financial incentives among medical centers to increase market share, potentially influence the migration of patients to high-volume centers. Further regionalization has the potential to exacerbate the current level of disparities among patient populations at low and high-volume hospitals.

LEVEL OF EVIDENCE

3.

Consumer Choice Between Hospital-Based and Freestanding Facilities for Arthroscopy: Impact on Prices, Spending, and Surgical Complications

BACKGROUND

Hospital-based outpatient departments traditionally charge higher prices for ambulatory procedures, compared with freestanding surgery centers. Under emerging reference-based benefit designs, insurers establish a contribution limit that they will pay, requiring the patient to pay the difference between that contribution limit and the actual price charged by the facility. The purpose of this study was to evaluate the impact of reference-based benefits on consumer choices, facility prices, employer spending, and surgical outcomes for orthopaedic procedures performed at ambulatory surgery centers.

METHODS

We obtained data on 3962 patients covered by the California Public Employees' Retirement System (CalPERS) who underwent arthroscopy of the knee or shoulder in the three years prior to the implementation of reference-based benefits in January 2012 and on 2505 patients covered by CalPERS who underwent arthroscopy in the two years after implementation. Control group data were obtained on 57,791 patients who underwent arthroscopy and were not subject to reference-based benefits. The impact of reference-based benefits on consumer choices between hospital-based and freestanding facilities, facility prices, employer spending, and surgical complications was assessed with use of difference-in-differences multivariable regressions to adjust for patient demographic characteristics, comorbidities, and geographic location.

RESULTS

By the second year of the program, the shift to reference-based benefits was associated with an increase in the utilization of freestanding ambulatory surgery centers by 14.3 percentage points (95% confidence interval, 8.1 to 20.5 percentage points) for knee arthroscopy and by 9.9 percentage points (95% confidence interval, 3.2 to 16.7 percentage points) for shoulder arthroscopy and a corresponding decrease in the use of hospital-based facilities. The mean price paid by CalPERS fell by 17.6% (95% confidence interval, -24.9% to -9.6%) for knee procedures and by 17.0% (95% confidence interval, -29.3% to -2.5%) for shoulder procedures. The shift to reference-based benefits was not associated with a change in the rate of surgical complications. In the first two years after the implementation of reference-based benefits, CalPERS saved $2.3 million (13%) on these two orthopaedic procedures.

CONCLUSIONS

Reference-based benefits increase consumer sensitivity to price differences between freestanding and hospital-based surgical facilities.

CLINICAL RELEVANCE

This study shows that the implementation of reference-based benefits does not result in a significant increase in measured complication rates for those subject to reference-based benefits.