• Reading list

    The American Prospect Special Report: Fulfilling the Promise of Health Care Reform (September 2010). All I can say is, boy is there a lot in this world to read and not nearly enough time to do it.

    Death by Market Power: Reform, Competition and Patient Outcomes in the National Health Service, by Martin Gaynor, Rodrigo Moreno-Serra, and Carol Propper

    The effect of competition on the quality of health care remains a contested issue. Most empirical estimates rely on inference from non experimental data. In contrast, this paper exploits a pro-competitive policy reform to provide estimates of the impact of competition on hospital outcomes. The English government introduced a policy in 2006 to promote competition between hospitals. Patients were given choice of location for hospital care and provided information on the quality and timeliness of care. Prices, previously negotiated between buyer and seller, were set centrally under a DRG type system. Using this policy to implement a difference-in-differences research design we estimate the impact of the introduction of competition on not only clinical outcomes but also productivity and expenditure. Our data set is large, containing information on approximately 68,000 discharges per year per hospital from 162 hospitals. We find that the effect of competition is to save lives without raising costs. Patients discharged from hospitals located in markets where competition was more feasible were less likely to die, had shorter length of stay and were treated at the same cost.

    What Does Health Reform Mean for the Healthcare Industry? Evidence from the Massachusetts Special Senate Election, by Mohamad Al-Ississ, Nolan H. Miller

    President Obama’s health insurance reform efforts, as embodied in the bills passed by the House and Senate in late 2009 and signed into law in March of 2010, have been described both as a boon and a death blow for private insurance industries. Using stock-price data on health care firms in the S&P health index, we exploit Republican Scott Brown’s surprise victory in the Massachusetts Special Senate election to fill the seat of the late Ted Kennedy, which stripped Democrats of the 60-vote majority needed to pass the bill in the Senate, to evaluate the market’s assessment of health reform on the health care industry. We find that the reduced likelihood of Health Reform’s passage after the Brown election led to a significant increase in health industry stocks and average cumulative abnormal returns of 1.2 percent, corresponding to an increase in total market value of approximately $14.5 billion. Focusing on managed care (insurance) firms, we find an average cumulative abnormal return of 6.5 percent (a $6.7 billion increase in market value), with individual firms’ cumulative abnormal returns ranging from around 5 to 9 percent.

    The Walmart $4 Challenge, by Jan E. Berger

    Programs offering $4 generics lower costs for both payers and healthcare consumers, but these medications should go through the claims system to enable tracking.

    Impact of Medicare Part D on Utilization and Expenditures, by Kavita V. Nair, et al.

    Objective: To compare pharmacy use and expenditures under a capped benefit in a Medicare+Choice (M+C) plan in 2005 and under a Part D benefi t in 2006.

    Study Design: Longitudinal comparison of benefi ciaries’ behaviors before and after implementation of Part D.

    Methods: Sample members, including a subset with hypertension, diabetes, dyslipidemia, or congestive heart failure, were M+C benefi ciaries in 2005 who switched to a Medicare Advantage plan in 2006. Differences in prescription use and adherence were estimated using generalized estimating equations and logistic regression models. Expenditure data were estimated using bootstrap methods.

    Results: In 2005, 36.73% of members met the $600 brand-name cap; 29.5% reached the gap in 2006. There was a 17.5% increase in all prescriptions in 2006, which translated into 20.8% and 13.63% increases in the use of generic and brand-name medications, respectively. Also, 6% more members purchased prescriptions in 2006. For all diseases, the number of persistent members increased in 2006. After removal of members who reached the gap, members still experienced a 12.76% increase in out-of-pocket expenditures for all prescriptions.

    Conclusions: Findings suggest that despite a restrictive gap in 2006, use of prescription medications increased for members who faced a cap on brand-name medications. Restrictions in pharmacy benefi ts may not deter utilization for Part D as previously thought. Possible reasons could include perception of richer prescription benefi ts by members under Part D compared with previous coverage or an increased motivation to better manage their health due to availability of richer benefits.

    Findings Related to Assessing Value for Private US Health Plans, by Brian W. Bresnahan, et al.

    Objective: To assess US private payers’ perceptions of medical product value and needs for evidence evaluation, as well as whether formulary drug placement decisions of several US health plans reflect value according to published cost-effectiveness evidence.

    Study Design: A qualitative survey focused on evidence evaluation for medical products with 15 US payer–related organizations. A quantitative, pharmaceutical-focused costeffectiveness database analysis evaluated 9 US payers.

    Methods: Qualitative telephone interviews were used to collect data from payers. A cost-utility analysis (CUA) evaluated formulary policies.

    Results: The qualitative findings suggest that health plan officials are most interested in clinical safety, efficacy, and effectiveness evidence. Payers’ demands are increasing for more clinical utility and clinical performance studies providing comparative information for medical products. For pharmaceuticals, payers rely on phase 3 randomized controlled trials as their primary evidence source for establishing coverage and reimbursement policies. For devices, diagnostic tests, and other products, payers must rely on more limited clinical and economic evidence. The CUA evaluation revealed numerous instances of drugs with favorable published CUAs and nonfavorable formulary positioning, as well as unfavorable published CUAs that received favorable formulary placement.

    Conclusions: US payers are not clearly and consistently defining the concept of medical product value. Policies aimed at improving evidence-based decisions and aligning incentives include comparative effectiveness studies, consumer-directed initiatives, and physician pay-for-performance programs. Discrepancies between published pharmaceutical cost-effectiveness value estimates and product positioning suggest that health plans do not sufficiently incorporate value evidence into their formulary policies.

    Hospitals’ Negotiating Leverage with Health Plans: How and Why Has It Changed? by Kelly J. Devers et al.

    Objective. To describe how hospitals’ negotiating leverage with managed care plans changed from 1996 to 2001 and to identify factors that explain any changes.

    Data Sources. Primary semistructured interviews, and secondary qualitative (e.g., newspaper articles) and quantitative (i.e., InterStudy, American Hospital Association) data.

    Study Design. The Community Tracking Study site visits to a nationally representative sample of 12 communities with more than 200,000 people. These 12 markets have been studied since 1996 using a variety of primary and secondary data sources.

    Data Collection Methods. Semistructured interviews were conducted with a purposive sample of individuals from hospitals, health plans, and knowledgeable market observers. Secondary quantitative data on the 12 markets was also obtained.

    Principal Findings. Our findings suggest that many hospitals’ negotiating leverage significantly increased after years of decline. Today, many hospitals are viewed as having the greatest leverage in local markets. Changes in three areas——the policy and purchasing context,managed care planmarket, and hospitalmarket——appear to explain why hospitals’ leverage increased, particularly over the last two years (2000–2001).

    Conclusions. Hospitals’ increased negotiating leverage contributed to higher payment rates, which in turn are likely to increase managed care plan premiums. This trend raises challenging issues for policymakers, purchasers, plans, and consumers.

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