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    Enrollment in Medicare Advantage Plans in Miami-Dade County: Evidence of Status Quo Bias? by Anna D. Sinaiko, Christopher C. Afendulis and Richard G. Frank (National Bureau of Economic Research)

    Evidence from behavioral economics reveals that decision-making in health care settings can be affected by circumstances and choice architecture. This paper conducts an analysis of choice of private Medicare plans (Medicare Advantage plans) in Miami-Dade County. We provide a detailed description of the choice of MA plans available in Miami over much of the program’s history and the composition of Medicare beneficiaries in Miami over the 2000s. Our analysis suggests that first becoming eligible for Medicare is the key transition point for MA, and that there is significant status quo bias in the MA market. This consumer behavior has important implications for policy that regulates the MA market.

    Making Nutritional Information Digestible: Effects of a Receipt-Based Intervention on Restaurant Purchases by Kelly Bedard and Peter J. Kuhn

    We study the effects of receipts that include personalized ordering suggestions designed to reduce fat and calorie consumption on purchasing behavior at a restaurant chain. We find that customers, in the aggregate, made most of the item substitutions that were encouraged by the messages, such as substituting ham for sausage in a breakfast sandwich, or substituting frozen yogurt for ice cream, though effects on overall calories and fat consumed were small. The results illustrate the potential of emerging information technologies, which allow retailers to tailor product marketing to individual consumers, to contribute in meaningful new ways to the battle against obesity.

    Reducing Moral Hazard in Employment Relationships: Experimental Evidence on Managerial Control and Performance Pay by C. Kirabo Jackson and Henry S. Schneider (National Bureau of Economic Research)

    Moral hazard is endemic to employment relationships and firms often use performance pay and managerial control to address this problem. While performance pay has received much empirical attention, managerial control has not. We analyze data from a managerial-control field experiment in which an auto-repair firm provided detailed checklists to mechanics and monitored their use. Revenue was 20 percent higher under the experiment. We compare this effect to that of quasi-experimental increases in mechanic commission rates. The managerial-control effect is equivalent to that of a 10 percent commission increase. We find evidence of complementarities between the two, suggesting benefits from an all-of-the-above approach. We also find evidence of incentive gaming under performance pay.

    Coronary Artery Bypass Graft Surgery vs Percutaneous Interventions in Coronary Revascularization: A Systematic Review by Saswata Deb and others (JAMA)

    Ischemic heart disease is the leading cause of death globally. Coronary artery bypass graft (CABG) surgery and percutaneous coronary intervention (PCI) are the revascularization options for ischemic heart disease. However, the choice of the most appropriate revascularization modality is controversial in some patient subgroups. […] Thirteen RCTs and 5 meta-analyses were included. […] Both CABG surgery and PCI are reasonable options for patients with advanced CAD. Patients with diabetes generally have better outcomes with CABG surgery than PCI. In cases of ULMD, multivessel CAD, or LVD, CABG surgery should be favored in patients with complex coronary lesions and anatomy and PCI in less complicated coronary disease or deemed a high surgical risk. A heart-team approach should evaluate coronary disease complexity, patient comorbidities, patient preferences, and local expertise.

    Subgroup Analyses in Trial Reports Comparing Percutaneous Coronary Intervention With Coronary Artery Bypass Surgery by Stuart J. Head and others (JAMA)

    Subgroup analyses within randomized clinical trials (RCTs) may not be valid, although they may identify important treatment heterogeneity. Reviews of subgroup analyses in primary reports of RCTs have found low credibility due to methodological or reporting issues.2 Subgroup analyses may also be presented in separate reports of extended follow-up beyond the primary end point or specific subgroups of patients.

    Adrianna (@onceuponA)

     
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    Effects of Physician-Directed Pharmaceutical Promotion on Prescription Behaviors: Longitudinal Evidence by Anusua Datta and Dhaval M. Dave (National Bureau of Economic Research)

    Spending on prescription drugs (Rx) represents one of the fastest growing components of U.S. healthcare spending, and has coincided with an expansion of pharmaceutical promotional spending. Most (83%) of Rx promotion is directed at physicians in the form of visits by pharmaceutical representatives (known as detailing) and drug samples provided to physicians’ offices. Such promotion has come under increased public scrutiny, with critics contending that physician-directed promotion may play a role in raising healthcare costs and may unduly affect physicians’ prescribing habits towards more expensive, and possibly less cost-effective, drugs. In this study, we bring longitudinal evidence to bear upon the question of how detailing impacts physicians’ prescribing behaviors. Specifically, we examine prescriptions and promotion for a particular drug class based on a nationally-representative sample of 150,000 physicians spanning 24 months. The use of longitudinal physician-level data allows us to tackle some of the empirical concerns in the extant literature, virtually all of which has relied on aggregate national data. […] The estimates suggest that detailing has a significant and positive effect on the number of new scripts written for the detailed drug, with an elasticity magnitude of 0.06. This effect is substantially smaller than those in the literature based on aggregate information, suggesting that most of the observed relationship between physician-directed promotion and drug sales is driven by selection bias.

    Why ask Why? Forward Causal Inference and Reverse Causal Questions by Andrew Gelman, Guido Imbens (National Bureau of Economic Research)

    The statistical and econometrics literature on causality is more focused on “effects of causes” than on “causes of effects.” That is, in the standard approach it is natural to study the effect of a treatment, but it is not in general possible to define the causes of any particular outcome. This has led some researchers to dismiss the search for causes as “cocktail party chatter” that is outside the realm of science. We argue here that the search for causes can be understood within traditional statistical frameworks as a part of model checking and hypothesis generation. We argue that it can make sense to ask questions about the causes of effects, but the answers to these questions will be in terms of effects of causes.

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    Accelerating Physician Workforce Transformation Through Competitive Graduate Medical Education Funding by David C. Goodman and Russell G. Robertson (Health Affairs)

    Graduate medical education (GME) has fallen short in training physicians to meet changes in the US population and health care delivery systems. The shortfall in training has happened despite a consensus on the need for accelerated change. This article discusses the varied causes of GME inertia and proposes a new funding mechanism coupled to a competitive peer-review process. The result would be to reward GME programs that are aligned with publicly set priorities for specialty numbers and training content. New teaching organizations and residency programs would compete on an equal footing with existing ones. Over a decade, all current programs would undergo peer review, with low review scores leading to partial, but meaningful, decreases in funding. This process would incentivize incremental and continual change in GME and would provide a mechanism for funding innovative training through special requests for proposals.

    Scope-Of-Practice Laws For Nurse Practitioners Limit Cost Savings That Can Be Achieved In Retail Clinics by Joanne Spetz, Stephen T. Parente, Robert J. Town, and Dawn Bazarko (Health Affairs)

    Retail clinics have the potential to reduce health spending by offering convenient, low-cost access to basic health care services. Retail clinics are often staffed by nurse practitioners (NPs), whose services are regulated by state scope-of-practice regulations. By limiting NPs’ work scope, restrictive regulations could affect possible cost savings. Using multistate insurance claims data from 2004–07, a period in which many retail clinics opened, we analyzed whether the cost per episode associated with the use of retail clinics was lower in states where NPs are allowed to practice independently and to prescribe independently. We also examined whether retail clinic use and scope of practice were associated with emergency department visits and hospitalizations. We found that visits to retail clinics were associated with lower costs per episode, compared to episodes of care that did not begin with a retail clinic visit, and the costs were even lower when NPs practiced independently. Eliminating restrictions on NPs’ scope of practice could have a large impact on the cost savings that can be achieved by retail clinics.

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    How Does Provider Supply and Regulation Influence Health Care Markets? Evidence from Nurse Practitioners and Physician Assistants by Kevin Stange (Journal of Health Economics)

    Nurse practitioners (NPs) and physician assistants (PAs) now outnumber family practice doctors in the United States and are the principal providers of primary care to many communities. Recent growth of these professions has occurred amidst considerable cross-state variation in their regulation, with some states permitting autonomous practice and others mandating extensive physician oversight. I find that expanded NP and PA supply has had minimal impact on the office-based healthcare market overall, but utilization has been modestly more responsive to supply increases in states permitting greater autonomy. Results suggest the importance of laws impacting the division of labor, not just its quantity.

    Practice budgets and the patient mix of physicians – The effect of a remuneration system reform on health care utilization by Hendrik Schmitz (Journal of Health Economics)

    This study analyses the effect of a change in the remuneration system for physicians on the treatment lengths as measured by the number of doctor visits using data from the German Socio-Economic Panel over the period 1995-2002. Specifically, I analyse the introduction of a remuneration cap (so called practice budgets) for physicians who treat publicly insured patients in 1997. I find evidence that the reform of 1997 did not change the extensive margin of doctor visits but strongly affected the intensive margin. The conditional number of doctor visits among publicly insured decreased while it increased among privately insured. This can be seen as evidence that physicians respond to the change in incentives induced by the reform by altering their patient mix.

    Reference Pricing: Stimulating Cost-Conscious Purchasing and Countering Provider Market Power by James C. Robinson (National Institute for Health Care Management)

    The dramatic price variations for common procedures like knee surgeries and colonoscopies have been well documented, as has the fact that these variations generally reflect market power rather than quality. While selection of high-value providers is critical to affordability, consumers often have little incentive to shop around, particularly for costlier services that quickly surpass deductibles. Reference pricing injects new price awareness by setting a maximum payer contribution for a given procedure and leaving the patient responsible for any overage. In this essay, James Robinson lays out evidence that reference pricing has both guided patients to select high-value providers and compelled costlier hospitals to lower their prices to remain competitive.

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    The Elusive Path to Health Care Sustainability by John C. Lewin, G. Lawrence Atkins, and Larry McNeely (JAMA)

    Despite the recent slowdown in health care inflation, particularly in Medicare and Medicaid, increases in health care costs threaten to exceed the nation’s capacity to pay. Medicare’s accountable care, medical home, and bundled payment initiatives, along with parallel private marketplace innovations, could help curb costs over time. However, it is uncertain which models will prove effective, and their effect will be limited until the most successful efforts are identified and scaled nationally. Even if per-capita health spending slows to the same rate as overall economic growth, increasing numbers of aging beneficiaries will alone double Medicare spending in 10 years while increasing private sector prices increase the burden on businesses and families.

    Physician Trainees’ Decision Making and Information Processing: Choice Size and Medicare Part D by Andrew J. Barnes and others (PLOS One)

    Many patients expect their doctor to help them choose a Medicare prescription drug plan. Whether the size of the choice set affects clinicians’ decision processes and strategy selection, and the quality of their choice, as it does their older patients, is an important question with serious financial consequences. Seventy medical students and internal medicine residents completed a within-subject design using Mouselab, a computer program that allows the information-acquisition process to be examined. We examined highly numerate physician trainees’ decision processes, strategy, and their ability to pick the cheapest drug plan—as price was deemed the most important factor in Medicare beneficiaries’ plan choice—from either 3 or 9 drug plans. Before adjustment, participants were significantly more likely to identify the lowest cost plan when facing three versus nine choices (67.3% vs. 32.8%, p<0.01) and paid significantly less in excess premiums ($60.00 vs. $128.51, p<0.01). Compared to the three-plan condition, in the nine-plan condition participants spent significantly less time acquiring information on each attribute (p<0.05) and were more likely to employ decision strategies focusing on comparing alternate plans across a single attribute (search pattern, p<0.05). After adjusting for decision process and strategy, numeracy, and amount of medical training, the odds were 10.75 times higher that trainees would choose the lowest cost Medicare Part D drug plan when facing 3 versus 9 drug plans (p<0.05). Although employing more efficient search strategies in the complex choice environment, physician trainees experienced similar difficulty in choosing the lowest cost prescription drug plans as older patients do. Our results add further evidence that simplifications to the Medicare Part D decision environment are needed and suggest physicians’ role in their patients’ Part D choices may be most productive when assisting seniors with forecasting their expected medication needs and then referring them to the Medicare website or helpline.

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    How Product Standardization Affects Choice: Evidence from the Massachusetts Health Insurance Exchange by Keith Marzilli Ericson and Amanda Starc (National Bureau of Economic Research)

    Standardization of complex products is touted as improving consumer decisions and intensifying price competition, but evidence on standardization is limited. We examine a natural experiment: the standardization of health insurance plans on the Massachusetts Health Insurance Exchange. Pre-standardization, firms had wide latitude to design plans. A regulatory change then required firms to standardize the cost-sharing parameters of plans and offer seven defined options; plans remained differentiated on network, brand, and price. Standardization led consumers on the HIX to choose more generous health insurance plans and led to substantial shifts in brands’ market shares. We decompose the sources of this shift into three effects: price, product availability, and valuation. A discrete choice model shows that standardization changed the weights consumers attach to plan attributes (a valuation effect), increasing the salience of tier. The availability effect explains the bulk of the brand shifts. Standardization increased consumer welfare in our models, but firms captured some of the surplus by reoptimizing premiums. We use hypothetical choice experiments to replicate the effect of standardization and conduct alternative counterfactuals.

    Should Health Care Systems Become Insurers? By Nirav R. Shah and Dave A. Chokshi (JAMA)

    Incentives under the Affordable Care Act (ACA) are spurring increasing numbers of health care systems to assume the risk of paying for patient care, blurring the boundaries between care delivery organizations and insurers. New arrangements such as bundled payments, value-based purchasing, and accountable care organizations (ACOs) transfer financial risk from payers to health care systems. The union of payer and care delivery functions may engender opportunities for health systems to invest in prevention and more comprehensive, coordinated, patient-centered care.

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    Substantial Health And Economic Returns From Delayed Aging May Warrant A New Focus For Medical Research by Dana Goldman and others (Health Affairs)

     Recent scientific advances suggest that slowing the aging process (senescence) is now a realistic goal. Yet most medical research remains focused on combating individual diseases. Using the Future Elderly Model—a microsimulation of the future health and spending of older Americans—we compared optimistic “disease specific” scenarios with a hypothetical “delayed aging” scenario in terms of the scenarios’ impact on longevity, disability, and major entitlement program costs. Delayed aging could increase life expectancy by an additional 2.2 years, most of which would be spent in good health. The economic value of delayed aging is estimated to be $7.1 trillion over fifty years. In contrast, addressing heart disease and cancer separately would yield diminishing improvements in health and longevity by 2060—mainly due to competing risks. Delayed aging would greatly increase entitlement outlays, especially for Social Security. However, these changes could be offset by increasing the Medicare eligibility age and the normal retirement age for Social Security. Overall, greater investment in research to delay aging appears to be a highly efficient way to forestall disease, extend healthy life, and improve public health.

    Trends Underlying Employer Sponsored Health Insurance Growth For Americans Younger Than Age Sixty-Five by Carolina-Nicole Herrera and others (Health Affairs)

    Little is known about the trends in health care spending for the 156 million Americans who are younger than age sixty-five and enrolled in employer-sponsored health insurance. Using a new source of health insurance claims data, we estimated per capita spending, utilization, and prices for this population between 2007 and 2011. During this period per capita spending on employer-sponsored insurance grew at historically slow rates, but still faster than per capita national health expenditures. Total per capita spending for employer-sponsored insurance grew at an average annual rate of 4.9 percent, with prescription spending growing at 3.3 percent and medical spending growing at 5.3 percent. Out-of-pocket medical spending increased at an average annual rate of 8.0 percent, whereas out-of-pocket prescription drug spending growth was flat. Growth in the use of medical services and prescription drugs slowed. Medical price growth accelerated, and prescription price growth decelerated. As a result, changes in utilization contributed less than changes in price did to overall spending growth for those with employer-sponsored insurance.

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    Geographic Variation in Commercial Medical-Care Expenditures: A Framework for Decomposing Price and Utilization by Abe Dunn, Adam Shapiro, and Eli Liebman (Journal of Health Economics)

    This study introduces a new framework for measuring and analyzing medical-care expenditures. The framework focuses on expenditures at the disease level that are decomposed between price and utilization. We find that both price and utilization differences are important contributors to expenditure differences across commercial markets. Further examination shows that for some diseases utilization drives variation while for others price is more important. Finally, when disease-specific measures are aggregated across diseases, much of the important disease-specific variation is masked, leading to much smaller measures of aggregate variation.

    Productivity and the Health Care Workforce by Shannon Brownlee, Joe Colucci, and Thom Walsh (New America Foundation)

    Despite a steady stream of medical innovations, productivity growth in the health care sector has been slow. There are several reasons for this poor productivity. Many tests and treatments (both new and old) are routinely put to use with little or no regard for whether they improve patient outcomes. […] There is also evidence that between one-tenth and one-third of tests and treatments are unnecessary or unwanted by patients. […] There is one additional reason for health care’s poor productivity: medical institutions are poorly organized. They waste time, money, labor, and other resources by operating inefficiently. […] Making better use of health care labor force is the key to improving productivity in the sector. This paper looks first at sources of low productivity in health care, and then examines the implications for future health care workforce needs.

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    The Changing Role of Government in Financing Health Care: An International Perspective by Mark Stabile and Sarah Thomson (National Bureau of Economic Research)

    This paper explores the changing role of government involvement in health care financing policy outside the United States. It provides a review of the economics literature in this area to understand the implications of recent policy changes on efficiency, costs and quality. Our review reveals that there has been some convergence in policies adopted across countries to improve financing incentives and encourage efficient use of health services. In the case of risk pooling, all countries with competing pools experience similar difficulties with selection and are adopting more sophisticated forms of risk adjustment. In the case of hospital competition, the key drivers of success appear to be what is competed on and measurable rather than whether the system is public or private. In the case of both the success of performance-related pay for providers and issues resulting from wait times, evidence differs both within and across jurisdictions. However, the evidence does suggest that some governments have effectively reduced wait times when they have chosen explicitly to focus on achieving this goal. Many countries are exploring new ways of generating revenues for health care to enable them to cope with significant cost growth. However, there is little evidence to suggest that collection mechanisms alone are effective in managing the cost or quality of care.

    Impact of Mortality-Based Performance Measures on Hospital Pricing: the Case of Colon Cancer Surgeries by Avi Dor, Partha Deb, Michael Grossman, Gregory Cooper, Siran Koroukian and Fang Xu (National Bureau of Economic Research)

    We estimate price regressions for surgical procedures used to treat colon cancer, a leading cause of cancer mortality. Using a claims database for self-insured employers, we focus on transaction prices, rather than more commonly available billing data that do not reflect actual payments made. Although the responsiveness of prices to hospital performance depends on the impact of quality on the slope of the quantity-demand of the payers, which are not known a priory, it is often assumed that higher performing hospitals are able to command higher prices. To test this hypothesis we construct performance rankings, based on hospital excess-mortality and incorporate them into our price models. We are interested in the type information available to large payers who negotiate prices on behalf of their members. To get a cancer-specific index we emulate the widely-reported risk-adjustment methodology used in the federal Hospital Compare reporting system for ranking cardiac performance. The effects were consistently negative in all models (adverse quality reduces price), though not significant. However, we observe a rational pricing structure whereby higher treatment complexity is reflected in higher price differentials, controlling for patient characteristics and market structure.

    Worsening Trends in the Management and Treatment of Back Pain by John Mafi, Ellen McCarthy, Roger Davis, and Bruce Landon (JAMA)

    Back pain treatment is costly and frequently includes overuse of treatments that are unsupported by clinical guidelines. Few studies have evaluated recent national trends in guideline adherence of spine-related care […] We assessed imaging, narcotics, and referrals to physicians (guideline discordant indicators). In addition, we evaluated use of nonsteroidal anti-inflammatory drugs or acetaminophen and referrals to physical therapy (guideline concordant indicators). […] Nonsteroidal anti-inflammatory drug or acetaminophen use per visit decreased from 36.9% in 1999-2000 to 24.5% in 2009-2010 (unadjusted P < .001). In contrast, narcotic use increased from 19.3% to 29.1% (P < .001). Although physical therapy referrals remained unchanged at approximately 20%, physician referrals increased from 6.8% to 14.0% (P < .001). The number of radiographs remained stable at approximately 17%, whereas the number of computed tomograms or magnetic resonance images increased from 7.2% to 11.3% during the study period (P < .001). These trends were similar after stratifying by short-term vs long-term presentations, visits to PCPs vs non-PCPs, and adjustment for age, sex, race/ethnicity, PCP status, symptom duration, region, and metropolitan location. […] Despite numerous published clinical guidelines, management of back pain has relied increasingly on guideline discordant care. Improvements in the management of spine-related disease represent an area of potential cost savings for the health care system with the potential for improving the quality of care.

    Going After the Money: Curbing the Rapid Growth in Medicare Expenditures for Medical Services More Than 30 Days After Hospital Admission by Ashish Jha (JAMA)

    Only the Beginning — What’s Next at the Health Insurance Exchanges? by Henry Aaron and Kevin Lucia (New England Journal of Medicine)

    Michigan’s Approach to Medicaid Expansion and Reform by John Ayanian (New England Journal of Medicine)

    Adrianna (@onceuponA)

     
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    Recession Depression: Mental Health Effects of the 2008 Stock Market Crash by Melissa McInerney, Jennifer Mellor, and Lauren Hersch Nicholas (Journal of Health Economics)

    Do sudden, large wealth losses affect mental health? We use exogenous variation in the interview dates of the 2008 Health and Retirement Study to assess the impact of large wealth losses on mental health among older U.S. adults. We compare cross-wave changes in wealth and mental health for respondents interviewed before and after the October 2008 stock market crash. We find that the crash reduced wealth and increased feelings of depression and use of antidepressant drugs, and that these effects were largest among respondents with high levels of stock holdings prior to the crash. These results suggest that sudden wealth losses cause immediate declines in subjective measures of mental health. However, we find no evidence that wealth losses lead to increases in clinically-validated measures of depressive symptoms or indicators of depression.

    Profit or Patients’ Health Benefit? Exploring the Heterogeneity in Physician Altruism by Geir Godager (Journal of Health Economics)

    This paper investigates physician altruism toward patients’ health benefit using behavioral data from Hennig-Schmidt et al.’s (2011) laboratory experiment. In the experiment, medical students in the role of physicians decide on the provision of medical services. The experimental setup allows us to identify the influence of profits and patients’ health benefit on the choice of medical treatment. We estimate physician altruism, the weight individuals attach to patients’ health benefit, by fitting mixed logit and multinomial logit regression models to the experimental data. Estimation results provide evidence for physician altruism. We find, however, substantial variation in the degree of physician altruism. We also discuss some implications of our results for the design of physician payment schemes in the light of the theoretical literature.

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