• How Medicare Premium Support Could Affect You

    The following originally appeared on The Upshot (copyright 2017, The New York Times Company). It also appeared on page A11 of the print edition on October 30, 2017.

    Last month, as Republican leaders were preoccupied with another unsuccessful attempt to replace Obamacare, a senior Trump administration official issued a warning about a different major medical program, Medicare.

    The official, Seema Verma, administrator of the Centers for Medicare and Medicaid Services, wrote in The Wall Street Journalthat Medicare was facing a fiscal crisis. She announced that she was asking the agency’s innovation center for ideas to address it, and that part of the answer was to give consumers “incentives to be cost-conscious.” This has some Democrats worried that she’s trying to move Medicare toward something called premium support, which would be a huge change for consumers.

    Before we get into the pros and cons, what’s the fiscal crisis? According to projections from this year’s Medicare Trustees’ report, the fund that pays for Medicare-financed hospital care will be depleted in 12 years, and care for other services will consume an ever-larger share of the economy and federal revenue. Citing trends like those, Republicans included the outlines of a Medicare premium support plan in the House of Representatives’ fiscal year 2018 budget resolution, as they did in several prior ones.

    In broad terms, “premium support” means the government pays a contribution toward premiums, and beneficiaries pay the rest. In a sense, today’s Medicare program already has such a structure. For either the traditional program or a private Medicare Advantage plan, the government pays a preset premium stipend (alternatively called a subsidy, credit or voucher) that varies across these two parts of the program. In all cases, stipends grow at the rate of health care costs.

    If Medicare already has a form of a premium support model, what’s all the fuss about?

    The important difference is in how stipend levels are set. Today’s stipends are not driven by the market, but are set according to legislatively established formulas. But the type of premium support Medicare reformers usually advocate — what people generally mean when they use this term — would use market signals to set stipend levels.

    “Premium support could result in increased efficiency in the Medicare program,” said Bryan Dowd, a health economist at the University of Minnesota, and co-author of a book that analyzed various premium support options. That efficiency could push the hospital trust fund depletion date further into the future and reduce “the financial burden on future generations.”

    Premium support models take many forms, but there are two crucial variables. One is how stipend levels are set, which determines how much of beneficiaries’ own money they need to contribute. The other key feature of premium support is how much the stipend grows over time. Both aspects are hotly debated.

    In some versions of premium support, the stipend level would grow more slowly than health care costs, forcing people to pay more out of pocket over time to purchase coverage. In other versions, the stipend level would grow at the same rate as health care costs, so beneficiaries would continue to pay about the same share of their own money for health insurance.

    Most premium support approaches would retain traditional Medicare, though its fate would be uncertain, a source of controversy. “A lot rides on how the government’s support level differentially impacts the cost to beneficiaries of private plans versus traditional Medicare,” said Timothy McBride, a health economist with Washington University in St. Louis. Geography also plays a role. “If traditional Medicare is disadvantaged, that would hit rural beneficiaries harder, because a larger share of rural America relies on the traditional program than do urban Americans.”

    As a report this month from the Congressional Budget Office reveals, how much premium support could save the government varies considerably depending on how stipend levels are established. Across the variations the C.B.O. examined, Medicare spending could fall by as much as 9 percent or as little as about 0.5 percent. But premiums could rise, including the premium for traditional Medicare. Under one projection, the C.B.O. estimates, traditional Medicare’s premium could double.

    In all the scenarios the C.B.O. analyzed, stipend levels would be based on bids from Medicare Advantage plans and traditional Medicare that reflect the cost to cover a person for standard Medicare services. Stipend levels would keep pace with overall health care costs, but they could still be lower than what many Medicare beneficiaries receive today.

    For example, tying the stipend to the second-lowest bid and requiring all Medicare beneficiaries to be subject to that new, lower level would save $419 billion over 2022-2026, the C.B.O. estimated.

    Tying it to the average bid or requiring only new beneficiaries to be subject to the new stipend would save less. In either case, people would have access to plans that don’t cost more than today’s. But those who opted for more expensive plans because they offer more benefits, or the traditional program because it covers any doctor willing to accept Medicare patients, would pay more out of pocket. Consequently, more people would opt for cheaper, private plans — and fewer would choose traditional Medicare.

    This worries some health policy experts. “Traditional Medicare has been the leader in reforming the health care payment and delivery system to improve efficiency,” said Paul Van de Water, senior fellow with the Center on Budget and Policy Priorities. “It has outperformed private insurance in holding down the growth of health costs, but its ability to continue to do that would shrink significantly if premium support caused its enrollment to dwindle.”

    Exactly how much more people would pay depends not only on the plans they select, but also on where they live. In some markets, many plans, including the traditional program, might charge premiums close to the second-lowest bid. In others, plans that many beneficiaries may want might cost a lot more.

    In the premium support debate, there’s a fundamental lesson: It’s conceptually simple to reduce federal spending on health care, but it’s very hard to do so in a way that doesn’t increase costs for at least some consumers. To actually reduce total (not just federal) health care spending for everyone, one has to overhaul how care is delivered, not just how it is paid for. That’s much harder.


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  • Come work with me (job posting 2)

    Colleagues and I are advertising for policy analysts. If that’s you, this is an opportunity to work with us at the Partnered Evidence-based Policy Resource Center (PEPReC).Though PEPReC is a center in the Veterans Health Administration, the position will be filled through Boston University.

    Apply here. (We are also looking for research data analysts.)


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  • The quality of provider-offered Medicare Advantage plans

    Earlier this year, with colleagues Zoe Lyon and Garret Johnson, I published a paper in Health Affairs on the quality of provider-offered (aka, vertically integrated) Medicare Advantage contracts,* comparing them to insurer-offered contracts. I wrote about that paper in an Upshot post:

    [On a scale of 1 (worst) to 5 (best) stars] an average provider-offered plan has quality ratings that are about one-third of a star higher for both, after adjusting for factors that could confound the comparison, like socioeconomic status and the types and number of doctors where plans are offered.

    Our study dug deeper to examine the kinds of quality enhancements available in provider-offered plans. Some aspects of quality are clinically focused. For instance, measures of preventive screening — like that for colorectal cancer — or management of chronic conditions assess the quality of care delivered by doctors and hospitals in a plan’s networks. Provider-offered plans perform somewhat better than insurer-offered plans in such areas.

    Other aspects of quality pertain to customer service. In measures of complaints, responsiveness to customers and the enrollees’ overall experiences, provider-offered plans really shine. In each area of customer service we examined, provider-offered plans are rated one-half star higher than insurer-offered ones. (This is a big difference. For comparison, over half of plans are within one star of each other in overall quality.)

    Today, joined by Yevgeniy Feyman, we have a new paper, published at BMJ Quality & Safety. It’s the same sample and analysis as the Health Affairs paper, but focused on more granular measures of quality.

    You see, Medicare Advantage quality is captured by dozens of clinical and customer service related metrics. These are then rolled up into nine domains covering broad dimensions of quality, like rates of receipt of screenings, tests, and vaccines (for Part C) and drug pricing and patient safety (for Part D). These are further rolled up into an overall Part C and Part D quality score and, finally, to an overall Part C+D score. Everything is in the metric of stars (1-5).

    The Health Affairs paper covered just the overall and domain level scores. The new BMJ Quality & Safety paper covers the finest-level metrics. (Our original submission to Health Affairs included both, but reviewers didn’t want so much detail. So, we yanked the fine level stuff, which is why we sought another venue to publish it. Welcome to academia.)

    Given the nature of the data, it should be no surprise that our findings are broadly consistent with our prior work. Some examples:

    Enrollees in provider-offered contracts are more likely to receive recommended colorectal cancer screening (difference=0.51 SD; p<0.001), recommended breast cancer screenings (difference=0.45 SD; p<0.001), and for patients with diabetes, recommended cholesterol screenings (difference=0.42 SD; p<0.001) and kidney disease monitoring (difference=0.42 SD; p<0.001) [see the figure below].

    In contrast, in two measures related to access and administrative performance, provider-offered contracts performed significantly worse than insurer-offered contracts. Provider-offered contracts tended to have more corrective actions taken due to access and performance problems (difference=0.50 SD; p<0.001) and had a higher rate of problems with beneficiary access to providers (difference=0.57 SD; p<0.001). Nonetheless, fewer members chose to leave the provider-offered contracts (difference=0.42 SD, p<0.001), provider-offered contracts had fewer complaints (difference=0.42 SD, p<0.001), and tended to offer better customer service to patients (difference=0.80 SD; p<0.001).

    The following figure from the paper shows the adjusted** quality differences between provider-offered and insurer-offered Medicare Advantage contracts that were statistically significant (click to enlarge). Results are displayed in units of standard deviations. A positive value indicates that provider-offered contracts performed better than insurer-offered ones.

    Both the Health Affairs and the BMJ Quality & Safety papers follow an earlier HSR publication on vertically integrated MA plans, by me, Roger Feldman, and Steve Pizer, with consistent findings.

    * Under a single contract, an MA insurer can offer multiple plans. Quality reporting is at the contract level. Hence, so is our analysis. However, these details are not essential to convey the stylized facts to an Upshot audience. And stylized facts are all one can ever hope to impart. Nobody outside the wonkosphere knows what an “MA contract” is. Everybody thinks in terms of plans and insurers. So my Upshot piece used “plan” when “contract” would have been, technically, more precise. Don’t @ me. This is totally fine.

    ** Adjusters include the same set of covariates used in prior work: MA Herfindahl-Hirschman Index, county MA enrolment, benchmark payment rate, the proportion of other MA parent organisations that were provider offered, FFS Medicare standardised per capita costs and average beneficiary risk score, percentages of adult residents with at least a high school diploma and with at least 4 years of college, percentages of workers in manufacturing and in construction, poverty rate of those ages 65 and older, per capita income, the proportion of the elderly above 75 years old, urban or rural status, and physicians and hospital beds per 1000 people.


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  • See me at the ECRI conference. It’s free!

    I’ll be joining a session at the ECRI conference, which is being held on November 28-29 at Georgetown University (Location details and free registration at the conference page).

    This conference is intended to enhance the national dialog on practice efficiency and institutional culture and its effects on care. My session will explore the important questions related to veterans health care, such as:

    • How is the military’s historic reliance on standardization as an efficient way to achieve ends, especially in complex situations such as warfare, adapted to care for veterans, especially those with complex conditions resulting from physical and mental trauma?
    • Does standardization lead to inefficient workflow with increased work burden and workarounds if the system is too rigid and how has the Veterans Health Administration taken a lead on this issue as the largest health system in the nation?
    • How are workflows impacted by interfaces in the Veterans Choice program which expands the need for coordination between the VA and civilian healthcare system?

    I’ll be joined by the moderator Carolyn M. Clancy, MD, Deputy Under Secretary for Health for Organizational Excellence, Veterans Health Administration and fellow panelists Stephan D. Fihn, MD, MPH, FACP, FAHA , Director, Clinical System Development and Evaluation, Veterans Health Administration and Neil C. Evans, MD, Chief Officer, Office of Connected Care, Veterans Health Administration.

    Lots of other great speakers at other sessions too.


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  • Come work with me (job posting 1)

    Colleagues and I are advertising for research data analysts. If that’s you, this is an opportunity to work with us at the Partnered Evidence-based Policy Resource Center (PEPReC).Though PEPReC is a center in the Veterans Health Administration, the position will be filled through Boston University.

    Apply here. (We are also looking for policy analysts.)

    PS: Yes, the job posting has a typo: “SA” should be “SAS”.


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  • Cost sharing reduction weeds: “Silver loading” and the “silver switcheroo” explained

    Last week I alluded to ways that consumers could be protected from premium spikes resulting from the Trump Administration’s cessation of cost sharing reduction payments to Marketplace insurers — so called “silver loading” and the “silver switcheroo.” Margot Sanger-Katz wrote about these this week at the Upshot. Some additional details are provided in the following interview with Charles Gaba, who runs the website ACAsignups.net, which is the unofficial and widely cited tracker of Marketplace plan enrollment and related health coverage statistics and policy. Charles tweets at @charles_gaba.

    Austin: A Trump Administration decision last week will cut cost sharing reduction (CSR) payments to Marketplace plans. Because those plans will have to pay CSRs anyway, they’ll need to raise premium revenue. But, you’ve been writing about one way they can do that that minimizes harm to some consumers — silver loading. What is silver loading?

    Charles: That’s when an insurance carrier adds ALL of the CSR losses they expect to be hit with in 2018 onto the premiums of silver plans only (as opposed to spreading the cost out across all 4 metal levels).

    Austin: That makes sense since CSRs are paid out for silver plans only. Let’s talk about how this affects consumers. There are two kinds of Marketplace consumers: subsidized consumers and unsubsidized consumers. Let’s take them separately. Can you explain how subsidized consumers are affected by the cessation of government CSR payments to insurers and how silver loading helps them, if at all?

    Charles: When the CSR cost is loaded onto a Marketplace plan, it causes the premiums to go up substantially. However, since the amount of the subsidies enrollees receive is based on the cost of the 2nd least-expensive silver plan (the “benchmark plan”), that means if the benchmark premium increases, so does the subsidy. If the benchmark plan goes up 30%, the subsidies people receive generally goes up about 30% as well, matching the full-price premium increase.

    If the CSR costs are spread out across ALL metal levels, then premiums might only go up, say, 20% across bronze, silver, gold and platinum. This means that subsidized enrollees won’t really do any worse or better as a result.

    However, if ALL CSR costs are loaded onto silver plans only, they might go up 30% while bronze, gold and platinum plans only go up 10%. That means that a subsidized silver enrollee might suddenly find themselves able to get a gold plan for around the same or even less than the silver plan they’re on now. It should also mean enrollees on bronze, gold or platinum plans will see their rates drop slightly (or at worst only go up slightly).

    Austin: Now, what about unsubsidized consumers? How could they be harmed by the Administration’s move and how does silver loading help them?

    Charles: If a carrier loads any portion of the CSR cost onto the price of any plans, unsubsidized enrollees will have to pay the full cost of that increased premium, whether they’re on or off the Marketplace. Silver loading doesn’t really help them, although if the carrier loads all of the CSR cost onto silver plans, obviously that means bronze, gold & platinum enrollees won’t be hit with the extra CSR load. However, that also means unsubsidized silver enrollees will be hit with even more of the load.

    There is, however, a more complex version of silver loading [about which more below].

    Austin: Can just any insurer implement silver loading, or does it require some state action?

    Charles: That seems to vary by state. Some state insurance commissioners have given very strict rules about how the carriers have to load the CSR cost; others required 2 sets of rate filings (one assuming CSRs are paid, one assuming they aren’t), but didn’t specify which route they had to take; and some didn’t give any guidance whatsoever, leaving it up to the carriers to figure it out.

    Austin: Silver loading would seem to require some coordination. If only some insurers silver load and others don’t then the second cheapest plan might not be a silver loaded one. I wonder what will happen in states where the commissioner doesn’t coordinate how CSRs need to get loaded onto plans. Will insurers separately coordinate? Is it legal for them to do so?

    Charles: I assume you’re talking about  whether the insurers doing so privately would be considered collusion/price fixing, etc? I’m afraid I have no idea what legal authority either insurance commissioners or the carriers themselves have in this regard. I presume that the commissioners authority on this sort of thing is solid or that it varies from state to state. To date at least 35 states have silver loaded or are “silver switcharooing”, the more complex version of it that I referred to earlier.

    Austin: Let’s get back to unsubsidized consumers. If they want to purchase a silver plan for the lowest possible price. What’s the work around you alluded to above?

    Charles: If you’re in a “standard” Silver load state and are unsubsidized, you’re pretty much stuck looking at Gold or Bronze plans, since all Silver plans would have some CSR surcharge tacked on.

    However, if you’re in one of the 13 “Silver Switcharoo” states, there’s a way of keeping a Silver plan without paying the CSR surcharge.

    In those states, all of the CSR cost is loaded not just onto silver plans, but specifically onto silver plans available on the exchange only.

    Under the ACA, some plans are offered both on and off the exchange, while others are only offered off the exchange (there aren’t any plans available on-exchange only). This means that in a Switcharoo state, you could have two different Silver plans: One available both on and off exchange (Silver A), the other available off exchange only (Silver B).

    Let’s say that these plans are very similar and each costs $500/month on average this year, and each has the same number of enrollees at the moment.

    In a normal Silver Load state, both plans might go up by $100/month due to the CSR load, so if you’re unsubsidized, you take the hit either way.

    In a Silver Switcharoo state, Silver A might go up by $200/month but Silver B wouldn’t go up at all. If you’re currently on Silver A (whether you enrolled on or off the exchange), you would switch to Silver B to avoid getting hit with any CSR load.

    In theory, this should result in nearly 100% of exchange enrollees being subsidized (up from around 84% today), while many unsubsidized enrollees move to off-exchange silver plans instead.


    Charles has provided some additional explanation and resources at the following links:


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  • JAMA Forum: What Do Medicare Advantage Networks Look Like?

    Networks, and their narrowness, seems like a significant concern. Yet we know next to nothing about Medicare Advantage networks. That’s not so good. More about that in my latest JAMA Forum post.

    In the absence of more comprehensive analysis, we should not be reassured that regulators are managing Medicare Advantage networks for quality and efficiency. Although the Centers for Medicare & Medicaid Services (CMS) imposes adequacy requirements based on time and distance criteria for Medicare Advantage physician networks, those requirements are routinely applied only when plans enter markets, and it remains unknown whether the criteria are met months and years after market entry. Indeed, in a 2015 report, the Government Accountability Office recommended more periodic reviews and verification of availability of physicians and hospitals within networks. Earlier this year the Department of Justice reached a settlement with 2 Medicare Advantage plans over charges of misrepresentation of their networks to regulators.



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  • How a Healthy Economy Can Shorten Life Spans

    The following originally appeared on The Upshot (copyright 2017, The New York Times Company). It also appeared on page B6 of the October 18, 2017 print edition.

    The health of a nation’s economy and the health of its people are connected, but in some surprising ways. At times like these, when the economy is strong and unemployment is low, research has found that death rates rise.

    At least, in the short term. In the long term, economic growth is good for health. What’s going on?

    One study of European countries just before and during the Great Recession found that a one-percentage-point increase in the unemployment rate is associated with an 0.5 percent decline in the overall mortality rate. Other studies of Europe during different periods, as well as those of the United States, found a similar relationship between joblessness and mortality.

    This is counterintuitive, since economic growth is a major factor inhigher living standards. When the economy is more productive, we have more resources to promote health and well-being.

    But a surging economy does more than generate greater income. An industrial economy also pumps out more air pollution as more goods are produced. Polluted air, it turns out, is a major contributor to the mortality-increasing effect of an economic boom. In their analysis of how economic growth increases mortality, David Cutler and Wei Huang, of Harvard University, and Adriana Lleras-Muney, of U.C.L.A., found that two-thirds of the effect can be attributed to air pollution alone.

    It’s a different story with agricultural economies. The Cutler, Huang and Lleras-Muney study, published as a National Bureau of Economic Research working paper, found that mortality rates fall when such economies are growing. Before 1945, when agriculture was more dominant in the U.S. economy, growth was not associated with rising mortality either.

    Other research published in the journal Health Economics supports the pollution hypothesis. In their analysis of the Great Recession in Europe, José Tapia Granados of Drexel University and Edward Ionides of the University of Michigan found that a one-percentage-point increase in the unemployment rate is associated with a one percent lower mortality rate for respiratory illnesses, as well as reductions in mortality for cardiovascular disease and heart conditions, which are known to be sensitive to air pollution. In countries where the recession was more severe — the Baltic States, Spain, Greece and Slovenia — respiratory disease mortality fell 16 percent during 2007-2010, compared with just a 3.2 percent decline in the four years preceding the recession.

    Other factors contribute to rising mortality during expansions. Occupational hazards and stress can directly harm health through work. Some studies find that alcohol and tobacco consumption increases during booms, too. Both are associated with higher death rates. Also, employed people drive more, increasing mortality from auto accidents.

    During recessions, people without jobs may have more time to sleep and exercise and may eat more healthfully. One study found that higher unemployment is associated with lower rates of obesity, increased physical activity and a better diet. On the other hand, suicides increaseduring economic downturns.

    Some recent work suggests that economic booms may have become less deadly and busts more so in recent years. This could be a result of less polluting production in modern, expanding economies, or of better medical care for those with conditions sensitive to pollution. Safer roads and cars, and less driving under the influence of alcohol and other substances, could also play a role.

    “It’s also possible that opioids and other drugs may have made recessions more harmful to health than they used to be,” Mr. Cutler said.

    Other analysis shows that although smaller economic booms increase mortality, larger ones decrease it. Japan’s economic booms in the 1960s and 1970s are associated with longer life spans there, for example. Serious and lengthy downturns — like the Great Depression — are associated with shorter lives, even as smaller ones lengthen them.

    Wealthier nations are healthier nations, an effect seen across generations. People in their formative years — children and teenagers — are particularly sensitive to the economic environment. Conditions in utero can have lasting health and economic effects. Graduating from college during a recession can depress one’s earnings for a decade. People growing up during a strong economy are more likely to have access to resources and to develop skills and opportunities that promote health. These benefits can last a lifetime, increasing longevity.

    In total, there’s little question that long-term economic growth broadly improves the human condition. But not everyone enjoys the gains equally. In the short run, economic expansions can cut short the lives of some.


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  • Ateev Mehrotra on a controversial Texas emergency medicine study

    In February, Annals of Emergency Medicine published a paper by Vivian Ho, Leanne Metcalfe, Cedric Dark, Lan Vu, Ellerie Weber, George Shelton Jr., and Howard Underwood. The main finding was that in a sample of Texas patients, it cost more for patients to be treated at emergency departments compared to comparable patients treated at urgent care centers. According to Health Data Buzz, the paper “caused an uproar among emergency department physicians.”

    Subsequent to publication, errors were found in an appendix, which the authors corrected and with no implications for the study’s main findings.

    Nevertheless, “the journal [conducted] another investigation, triggered by emergency physicians with reimbursement expertise in Texas, who raised additional concerns about the accuracy of the data.” During this investigation, the paper was temporarily removed from the journal’s website.

    After further review, Annals of Emergency Medicine republished the paper in September. It is available here, along with numerous commentaries, critiques, and rebuttals in the right-hand sidebar. One critique is by Paul Kivela, president-elect of the American College of Emergency Physicians, the publisher of Annals of Emergency Medicine. Asserting discrepancies between the paper’s findings and that of his own analysis, he requested the paper be retracted. The authors responded to Dr. Kivella’s critiques here.

    About this incident, I corresponded with Ateev Mehrotra, an associate professor of health care policy and medicine at Harvard Medical School and a hospitalist at Beth Israel Deaconess Medical Center who has worked extensively with health plan claims data and is conducting research on free-standing emergency departments.

    Austin: What is a freestanding emergency department? What is an urgent care center? How are they different?

    Ateev: As implied by the name, FSEDs are emergency departments that are not within the confines of a hospital. Though they are free-standing FSEDs should still be able to address the full spectrum of illnesses treated at a hospital-based ED and when necessary transfer patients to a hospital when a hospital admission is required.

    In contrast an urgent care center does not offer care for the full spectrum of illness. Urgent care centers typically focus on low-acuity illnesses (e.g., sinusitis, strep throat) as well as sprains, strains, and simple fractures. Problems that are more complicated than this are referred to an emergency department.

    While both FSEDs and urgent care centers have extended and weekend hours, hospital-based EDs are typically open 24 hours a day and some free-standing EDs are also open around the clock. Urgent care centers are typically not open all the time.

    I’ve used the word “typically” a number of times in these descriptions. It is important to highlight that word as there is notable variation within FSEDs and urgent-care centers in their capacity. For example, some urgent care centers are simply after-hours clinics at a primary care practice with no laboratory or radiology services. At the other extreme, some urgent care centers have both x-ray and CT scans and can provide many IV medications.

    Austin: The study found that prices for patients with the same diagnosis were 10 times higher at freestanding EDs than at urgent care centers. For example, the study found that a routine urinalysis at a freestanding ED cost $51 versus only $3 at an urgent care center. How much of this could be due to differences in patient severity? What other factors that could explain it?

    Ateev: None of these results are surprising. It is widely recognized that hospital-based EDs are much more expensive than UCC. Because FSEDs are paid at similar rates as hospital-based EDs than we should also expect them to be more expensive.

    In the current payment system in the US, the relative price or reimbursement of a test such as a urinalysis or CT scan does not depend on patient severity. Rather, the level of reimbursement is primarily driven by where the care was provided.

    Austin: The study used data from one insurer (Blue Cross Blue Shield) in one state (Texas). How far would you generalize the findings beyond this one insurer and state?

    Ateev: As with any scientific study, we must be cautious when generalizing the results. However, I would not expect the results to be different in other states or with a different insurer, because the underlying reason for the price differences are similar in those contexts. FSEDs have been successful financially because they have been paid similar rates as hospital-based EDs.

    Austin: In his critique, Dr. Kivela used reported charges (not allowed amounts) from a freestanding facility in a Dallas suburb, finding significant differences with the paper’s results. How do reported charges differ from allowed amounts? To what extent could this explain the differences between Dr. Kivela’s analysis and the paper’s? How far would you generalize results based on one freestanding facility?

    Ateev: Charges are fiction. They have little relationship to what is the actual reimbursement. The best analogy is to the “rack rate” at a hotel. The rack rate is the rate for a night in the hotel you see posted in the room. But no one pays that rate for a night in the hotel.

    I have argued that we should simply eliminate the publication and dissemination of charge data. They are a relic of the past and all they do is cause confusion.

    Austin: This paper was controversial, particularly among some emergency physicians who didn’t want it to be published. Why?

    Ateev: The easy answer is money. Outside the controversy about FSEDs, the emergency medicine community is frustrated by the rhetoric around “overuse” of the emergency department for low-acuity conditions such as sinusitis or ear infections. Though they might have a straightforward diagnosis such as sinusitis, many in the emergency medicine community have argued that these patients had more severe symptoms and are not directly comparable to the care provided in a primary care office or urgent care. Concerns about emergency department spending among insurers has increased over the last decade as they have observed a dramatic increase in the reimbursement for the average emergency department visit. The severity of this conflict is illustrated in Anthem’s recent decision to deny emergency department claims for what it deems unnecessary visits.

    In that context come FSEDs. They are likely big profit generators for their investors and they also employ many emergency medicine physicians. Dr. Kivela is both an investor in FSEDs as well as a head of an organization of emergency medicine physicians. Feeling threatened by this research, ACEP is naturally going to attack the article.

    ACEP’s response was similar with when the New England Journal of Medicine published an article on balance billing in emergency departments. The findings of this balance billing article were also viewed as threatening by the emergency medicine community and again, ACEP attacked the methodology as flawed and accused the researchers of being biased.


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  • Today’s interview, basically: CSR edition

    Hypothetical discussion with a journalist:

    Q: If the federal government doesn’t pay the cost sharing reductions, consumers that rely on them are screwed, right?

    A: No, insurers have to pay them anyway.

    Q: <surprise> Oh! Well, then insurers are screwed, right?

    A: Not necessarily. They could raise premiums to cover the costs.

    Q: <insight> Ah ha! But, then consumers are screwed, yes?

    A: Some could be, yes, those that aren’t protected by premium tax credits. But those who get those credits are protected from premium increases.

    Q: <scratches head> Umm, so almost nobody is worse off?

    A: Well, like I said, those who aren’t protected by premium tax credits could pay higher premiums. But there is actually a scenario under which they aren’t worse off, and could be better off. It’s tricky, so I won’t go into it here. Go talk to Charles Gaba. But also keep in mind, since premiums go up, so do the tax credits, which the government pays.

    Q: But the government saves money in the end because of not paying cost sharing reductions, right?!

    A: No, the premium tax credit increases are larger than the cost sharing reductions savings. The government pays more, so taxpayers are worse off.

    Q: <OMG face> So this doesn’t even save money?! Ooookaaaayy, but it does cause some turmoil in the markets, right?

    A: Yes, it could. But there will be lawsuits. A very likely consequence is that the government ends up paying for the cost sharing reductions anyway. And, in the meantime, an immediate injunction could be granted to keep the cost sharing reduction payments flowing.

    Q: <faceplam face> So all of this could end up leading to … literally no change for anybody?

    A: Yeah, that sounds about right.

    Q: <gobsmacked silence>


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