Unbiased Analysis of Today's Healthcare Issues

Does comparison shopping work in health care?

Written By: Jason Shafrin - May• 24•16

According to a recent study in JAMA, the answer may be no.  High-deductible health plans aim to not only reduce the use of unnecessary services, but to make consumers more price sensitive and search for high quality, low priced care.  The latter goal, however, depends crucially on whether patients have access to information on accurate price information and whether they will actually use that information in selecting their health care providers.

A study by Desai et al. (2016) examines what happens when two employers offer their employees a price transparency tools indicating both the total cost of the service and the patient’s expected out of pocket cost.  They use a difference-in-difference approach and find:

Mean outpatient out-of-pocket spending among those offered the tool was $507 in the year before introduction of the tool and $555 in the year after. Among the comparison group, mean outpatient out-of-pocket spending changed from $490 to $520. Being offered the price transparency tool was associated with a mean $18 (95% CI, $12-$25) increase in out-of-pocket spending after adjusting for relevant factors. In the first 12 months, 10% of employees who were offered the tool used it at least once.

Patients may be more interested in using price transparency tools if culture changes and this becomes the norm. In the short-run, however, patients do not appear to access or use information on the price of healthcare very often.

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Can behavioral health interventions really reduce cancer rates by half?

Written By: Jason Shafrin - May• 23•16

This is the claim of a new article by Song and Giovannucci (2016) in JAMA, but I am skeptical.  Here is why.  The authors compare cancer incidence and mortality between a low and high risk group.  They defined a patient as low risk based on not smoking, no or moderate alcohol use, BMI between 18.5 and 27.5, and regular exercise.  When comparing this low risk group against a high risk group, they find that the a population attributable risk (PAR) of 25%-33% within their data set.  However, their sample is made up of health professionals from the Nurses’ Health Study (NHS) and Health Professionals Follow-up Study (HPFS).  They also compare the low-risk rates to the overall US population and find that the PAR is 41%-63% for cancer incidence, and 59%-67% for mortality.

Based on these figures, the author claim:

In the 2 cohort studies of US white individuals, we found that overall, 20% to 40% of carcinoma cases and about half of carcinoma deaths can be potentially prevented through lifestyle modification. Not surprisingly, these figures increased to 40% to 70% when assessed with regard to the broader US population of whites, which has a much worse lifestyle pattern than our cohorts.

If we just got people to exercise, stop drinking and smoking, could we really reduce cancer incidence and mortality to such a degree?

Almost certainly not.  First, this is a correlation study.  Consider the case of individuals who have some ailments.  They may be more likely to exercise less, have higher BMI and also develop cancer.  Increasing the exercise levels of patients who are already ill is unlikely to happen and even if it does is unlikely to decrease cancer rates by half.  Even for relatively healthier people, if other factors (e.g., genetics) independently cause both negative health behaviors and cancer incidence, then the correlation between health behaviors is spurious.

Second, the out-of-sample extrapolation is not appropriate.  Basically, it compares low risk nurses against the general population. If the results were causal–which it is likely not–then the causal interpretation would be that improving health behaviors and becoming a nurse or health professional decreases cancer.  Clearly, becoming a nurse likely has little impact on cancer incidence but being a person who chooses to become a health professional is likely correlated with cancer incidence.

That being said, it is likely that better diet and exercise and less smoking and drinking will reduce cancer rates somewhat. Claiming that the reduction in cancer rates is 50% or more, however, appears to be a gross overestimate.

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Is balance billing a good thing?

Written By: Jason Shafrin - May• 22•16

Are health care prices set on an open market? Almost certainly not. In many cases, physician fees are set by insurers. Currently, for instance, Medicare sets fees for physicians administratively. At Medicare’s inception, however, Medicare did allow physicians to charge whatever fees they wanted; Medicare would pay a base rate and patients would be responsible for any differences. This practice is known as balance billing.

How are physician prices set in the rest of the world? Is balance billing allowed? France provides one test case as outlined in a paper by Dormont and Péron (2016):

In France, a large proportion of specialists is allowed to balance bill their patients. The population is covered by mandatory NHI, and for each service provided, a reference fee is set by agreement between physicians and the health insurance administration. NHI covers 70% of the reference fee for ambulatory care. Individuals can take out supplementary private insurance: either voluntarily on an individual basis, or through occupational group contracts. Currently, 95% of the French population is covered by SHI. Supplementary insurance contracts cover the 30% of ambulatory care expenses not covered by NHI. In addition, they can offer coverage for balance billing…

In France, ambulatory care is mostly provided by self-employed physicians paid on a fee-for-service basis. Since 1980, physicians can choose between two contractual arrangement … If they join ‘Sector 1’, physicians are not permitted to balance bill…If they join ‘Sector 2’, they are allowed to set their own fees. Access to Sector 2 has been closed to most GPs since 1990, so most of them are in Sector 1: 87% in 2012. Hence, balance billing concerns mostly specialists. On average, balance billing adds 35% to the annual earnings of Sector 2 specialists. In 2012, 42% of specialists were in Sector 2. However, this proportion varies greatly across regions and specialties: for instance, the proportion of specialists in Sector 2 is 19% for cardiologists, 73% for surgeons, and 53% for ophthalmologists.

Balance billing (dépassements d’honoraires in French) clearly increase incomes for physicians. But is it good for patients? The authors use administrative data provided by the Mutuelle Générale de l’Education Nationale (MGEN) to answer this question. The authors compare individuals who left the MGEN supplemental insurance for more generous supplemental insurance coverage to those who remained with MEGN, and use an individual fixed effect to examine how insurance coverage affects use of specialists that balance bill. Clearly, changing insurance may be endogenous so the authors examine individuals who moved to a new département.   This change likely was due to other factors (e.g., job change) and is less likely to be related directly to health insurance coverage.

The authors find that:

…better coverage increases demand for specialists who charge high fees, thereby contributing to the rise in medical prices. People whose coverage improves increased their average amount of balance billing per consultation by 32%. However, the impact of the coverage shock depends on the supply of physicians. For people residing in areas where few specialists charge the regulated fee, better coverage increases not only prices but also the number of consultations, a finding that suggests that balance billing might limit access to care. Conversely, in areas where patients have a genuine choice between specialists who balance bill and those who do not, we find no evidence of a response to better coverage.

At first glance, this finding would seem to indicate that balance billing could be banned in areas with limited supply. However, allowing balance billing is the best way to attract new physicians to areas with limited supply. Thus, although in the short run balance billing may harm patient access in regions with few physicians, in the long-run, balance billing may increase the supply of physicians, potentially drive down price and increase patient access. Clearly, balance billing rates need to be clearly posted—unlike in the US—to ensure transparency.

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Friday Links

Written By: Jason Shafrin - May• 19•16

HWR is up

Written By: Jason Shafrin - May• 19•16

Tinker Ready has posted Health Wonk Review: HIT, LGBT and ACA at Boston Health News.  Check it out!

Tell me what you really think

Written By: Jason Shafrin - May• 18•16

I wrote last week about whether pay-for-performance (P4P) are doomed to fail.  One group of providers–physicians–certainly does not appreciate the current P4P programs instituted by the Centers for Medicare and Medicaid Services.  In a press release, the American Medical Association stated:

…it appears that CMS has made significant improvements  by recasting the EHR Meaningful Use program and by reducing quality reporting burdens….The existing Medicare pay-for-performance programs are burdensome, meaningless and punitive.  The new incentive system needs to be relevant to the real-world practice of medicine and establish meaningful links between payments and the quality of patient care, while reducing red tape.

Does P4P improve the quality of care patients receive by making physicians accountable for key quality metrics?  Or does quality only appear to improve due to better record keeping?  Could P4P reduce quality if physicians start spending more time on quality reporting paperwork and less time on patient care (see Code Black documentary).

The answers are unclear, but balancing quality measurement with reporting burden is clearly important to take into account.

Healthcare Economist in JAMA

Written By: Jason Shafrin - May• 17•16

Along with co-authors Amitabh Chandra and Ravinder Dhawan, please check out my most recent publication “Utility of Cancer Value Frameworks for Patients, Payers, and Physicians” in the latest issue of JAMA.

Top 100 Economics Blogs of 2016

Written By: Jason Shafrin - May• 16•16

Healthcare Economist made the cut at #82.

Is value-based purchasing working for hospitals?

Written By: Jason Shafrin - May• 15•16

The Incidental Economist is one of my favorite blogs to read.  This week’s post on a recent BMJ article on the failure of P4P did not disappoint.  The article (Figueroa et al. 2016) looks at 4267 acute care hospitals in the United States that participated in Medicare’s Hospital Value Based Purchasing (HVBP) system.  During my time at Acumen, I even helped to implement HVBP’s Medicare Spending per Beneficiary (MSPB) measure. Aaron Carroll of the Incidental Economist summarizes the findings below and his thoughts on P4P in general.

In the pay-for-performance hospitals, the mortality rates of the incentivized conditions dropped 0.13% in each quarter in the pre-intervention period in the study hospitals, compared to a drop of 0.14% in the control hospitals.In the post-intervention period, study hospitals dropped 0.03% each quarter compared to 0.01% in the control hospitals. This was not a statistically significant difference. In fact, there was no difference in any subgroup of hospitals.

I gave a talk last week to a bunch of hospital executives on how policy often fails to be evidence based. My last example was pay for performance. They seemed least likely to accept that example as correct.

It’s not that I think we can’t incentivize physicians to practive better. I’m sure we can. My problem is that we assume that we can pick an easy to measure metric (30-day mortality), tell everyone that this is the one to measure, that it translates into improved quality, and then expect results.

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Friday Links

Written By: Jason Shafrin - May• 13•16