Unbiased Analysis of Today's Healthcare Issues
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…
Is it a bargain? Or do low prices represent low quality? Or is cost independent of quality? To try to answer this question Phillips, Schleifer, and Hagelskamp (2016) conducted a nationally representative survey to investigate whether consumers believe that price and quality are associated. They found that: Most Americans (58–71 percent, depending on question framing) did not think that…
There have been many pay-for-performance (P4P) programs that have been implemented to attempt to improve quality and reduce cost. The vast majority of these programs have not been able to demonstrate large or even any improvement in quality or cost. Some researchers claim that these programs have not worked due to the size of the…
Medicare aims to move away from fee-for-service reimbursement and towards value-based payment mechanisms based on quality of care. Although the goal is laudable, there are a number of practical challenges. First, most care is still provided via fee for service. In 2013, 95% of all physician office visits were reimbursed using fee-for-service. Second, collecting quality of…
One challenge providers have faced in the past is that quality measure reporting has been complex. Medicare may ask for quality measures with one definition, commercial payers may define quality a second way, and Medicaid may ask for a third definition of quality. Keeping track of these definitions and recording quality measures distracts providers from actually providing quality…
Does Medicaid use pay-for-performance (P4P) for providers? If so, how does it work? And does it affect quality and cost? These are the questions of interest to Rosenthal et al. (2015) in their study of P4P programs in Alabama, Minnesota, and Pennsylvania. Although all three focus on physicians, the Alabama program is a “medical home ”…
Clearly, there is no single answer to this question and the answer depends on a number of factors including the market structure, provider responsiveness to intrinsic vs. extrinsic motivation, provider sample size, and the ability to accurately measure quality of care. Douglas Conrad (2015) uses agency theory to provide an overview of existing value-based payment systems. The…
A common method for measuring the effect of policy interventions is the difference in difference (DiD) approach. In essence, one examines the change in outcomes among observations subject to the policy intervention and compare them agains observations that were not eligible for the policy intervention. A key assumption for this approach to be valid is…
MACRA is the Medicare Access & CHIP Reauthorization Act, also know colloquially as the ‘permanent doc fix’. Although MACRA is know for repealing the Sustainable Growth Rate (SGR) provisions that would have significantly cut physicians salaries (but was reversed every December), there are other provisions. Although physicians may take comfort in avoiding the year end doc…
A Health Affairs post by Dana Goldman and Darius Lakdawalla argues that dose-based pricing for pharmaceuticals is suboptimal. They make a clear distinction between typical goods, where cost and benefits are roughly proportional to quantity consumed, and pharmaceuticals. Buying two bunches of bananas naturally costs twice as much as one bunch. Twice as many bananas can…