Reading list

The Impact of Medicare Part D on Hospitalization Rates, by Christopher C. Afendulis, Yulei He, Alan M. Zaslavsky, and Michael E. Chernew (HSR)

Objective. To determine whether the change in prescription drug insurance coverage associated with Medicare Part D reduced hospitalization rates for conditions sensitive to drug adherence.

Data Sources/Study Setting. Hospital discharge data from 2005 to 2007 for 23 states, linked with state-level data on drug coverage.

Study Design. We use a difference-in-difference-in-differences approach, comparing changes in the probability of hospitalization before and after the introduction of the Part D benefit in 2006, for individuals aged 65 and older (versus individuals aged 60–64) in states with low drug coverage in 2005 (versus those in states with high pre-Part D drug coverage).

Data Collection/Extraction Methods. Hospitalization rates for selected ambulatory care sensitive conditions in 23 states were computed using data from the Census and Health Care Utilization Project. Drug coverage rates were computed using data from several sources.

Principal Findings. For the conditions studied, our point estimates suggest that Part D reduced the overall rate of hospitalization by 20.5 per 10,000 (4.1 percent), representing approximately 42,000 admissions, about half of the reduction in admissions over our study period.

Conclusions. The increase in drug coverage associated with Medicare Part D had positive effects on the health of elderly Americans, which reduced use of nondrug health care resources.

Accountable Care Organization Prototypes: Winners And Losers?, by Harris Meyer (HA)

Medicare rolls out three accountable care organization models, and promises revisions to make the Shared Savings Program more palatable.

Differences In The Volume Of Services And In Prices Drive Big Variations In Medicaid Spending Among US States And Regions, by Todd P. Gilmer and Richard G. Kronick (HA)

It is well known that Medicaid spending per beneficiary varies widely across states. However, less is known about the cause of this variation, or about whether increased spending is associated with better outcomes. In this article we describe and analyze sources of interstate variation in Medicaid spending over several years. We find substantial variations both in the volume of services and in prices. Overall, per capita spending in the ten highest-spending states was $1,650 above the average national per capita spending, of which $1,186, or 72 percent, was due to the volume of services delivered. Spending in the ten lowest-spending states was $1,161 below the national average, of which $672, or 58 percent, was due to volume. In the mid-Atlantic region, increased price and volume resulted in the most expensive care among regions, whereas reduced price and volume in the South Central region resulted in the least expensive care among regions. Understanding these variations in greater detail should help improve the quality and efficiency of care—a task that will become more important as Medicaid is greatly expanded under the Affordable Care Act of 2010.

Hospitals Respond To Medicare Payment Shortfalls By Both Shifting Costs And Cutting Them, Based On Market Concentration, by James Robinson (HA)

The coverage expansions planned under the Affordable Care Act are to be financed in part by slowing Medicare payment updates to hospitals, thereby reigniting the debate over whether low prices paid by public payers cause hospitals to increase prices to private insurers—a practice known as cost shifting. Recently, the Medicare Payment Advisory Commission (MedPAC) proposed an alternative explanation of hospital pricing and profitability that could be used to support policies that pressure hospitals to reduce overall costs rather than to only raise prices. This study evaluated the cost-shift and MedPAC perspectives using 2008 data on hospital margins for 30,514 Medicare and privately insured patients undergoing any of seven major procedures in markets where robust hospital competition exists and in markets where hospital care is concentrated in the hands of a few providers. The study presents empirical evidence that, faced with shortfalls between Medicare payments and projected costs, hospitals in concentrated markets focus on raising prices to private insurers, while hospitals in competitive markets focus on cutting costs. Policy makers need to examine whether efforts to promote clinical coordination through provider integration may interfere with efforts to restrain overall health care cost growth by restraining Medicare payment rates.

Medicaid Patients Seen At Federally Qualified Health Centers Use Hospital Services Less Than Those Seen By Private Providers, by Jennifer Rothkopf, Katie Brookler, Sandeep Wadhwa and Michael Sajovetz (HA)

Federally qualified health centers, also known as community health centers, play an essential role in providing health care to millions of Americans. In return for providing primary care to underserved, homeless, and migrant populations, these centers are reimbursed at a higher rate than other providers by public programs such as Medicaid. Under the Affordable Care Act of 2010, the role of the centers is expected to grow. To examine the quality of care that the centers provide, the Colorado Department of Health Care Policy and Financing compared the use of costly hospital-related services by Medicaid clients whose usual source of care was a community health center with the use by clients whose usual source of care was a private, fee-for-service provider. The study found that community health center users were about one-third less likely than the other group to have emergency department visits, inpatient hospitalizations, or preventable hospital admissions. Public funders such as states should work with community health centers to improve the quality and reduce the cost of care even further.

Reinventing Medicaid: State Innovations To Qualify And Pay For Patient-Centered Medical Homes Show Promising Results, by Mary Takach (HA)

This article describes patient-centered medical home initiatives that seventeen states have launched. These initiatives use national recognition or state-based qualification standards along with incentive payments to address soaring costs and lagging health outcomes in state Medicaid programs. Even though these initiatives are in their infancy, early results are encouraging. Modest increases in payment to physicians, aligned with quality improvement standards, have not only resulted in promising trends for costs and quality, but have also greatly improved access to care. Several state programs have already demonstrated declines in per capita costs for patients enrolled in Medicaid; increased participation of physicians in caring for Medicaid patients; and high patient and provider satisfaction. These early results give states good reason to continue developing patient-centered medical homes as part of their Medicaid programs. This article provides a closer look at these innovative models, to inform public and private reform efforts.

The Accountable Care Organization: Whatever Its Growing Pains, The Concept Is Too Vitally Important To Fail, by Francis J. Crosson (HA)

The success of health reform efforts will depend, in part, on creating new and better ways to organize, deliver, and pay for health care. Increasingly central to this idea is the accountable care organization model proposed for Medicare and a slightly different model for commercial health care. But these new health care delivery and payment models face considerable skepticism. Can Medicare succeed with accountable care organizations if physicians can’t determine whether patients are in the organization or not? Will commercial hospitals use their clout to create accountable care organizations, leaving physician practices in a weaker position? This article answers those and other criticisms of the developing accountable care organization movement. If the concept fails, the nation may face indiscriminate cuts to health care payments, with resulting reductions in access, service, and quality.

The Use Of Generic Drugs In Prevention Of Chronic Disease Is Far More Cost-Effective Than Thought, And May Save Money, by William H. Shrank, Niteesh K. Choudhry, Joshua N. Liberman and Troyen A. Brennan (HA)

In this article we highlight the important role that medication therapy can play in preventing disease and controlling costs. Focusing on coronary artery disease, we demonstrate that prevention, with the appropriate use of generic medications, appears far more cost-effective than previously documented, and it may even save on costs. For example, an earlier study estimated that reducing blood pressure to widely established clinical guidelines in nondiabetic patients cost an estimated $52,983 per quality-adjusted life-year if a brand-name drug was used. However, we estimate that the cost is just $7,753 per quality-adjusted life-year at generic medication prices. As the nation attempts to find strategies to improve population health without adding to the unsustainably high cost of care, policy makers should focus on ensuring that patients have access to essential generic medications.

What Other States Can Learn From Vermont’s Bold Experiment: Embracing A Single-Payer Health Care Financing System, by William C. Hsiao, Anna Gosline Knight, Steven Kappel and Nicolae Done (HA)

Single-payer health care systems consist of publicly financed insurance that provides basic benefits for all citizens. The design is intended to achieve universal coverage and allow greater cost control. Many states have attempted to reform their systems around single-payer principles, but none succeeded untilVermontenacted a law in May 2011. In this article we describe how our team developed a viable single-payer proposal that served as the foundation ofVermont’s law. According to our estimates, after the first full year of operation in 2015, our proposed single-payer system is expected to produce an annual savings of 25.3 percent when compared to current state health spending levels; cut employer and household health care spending by $200 million; create 3,800 jobs; and boost the state’s overall economic output by $100 million. We describe how this plan was designed, and we discuss lessons for other states considering health system reform.

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