Payment Policy and Benefit Design

Premiums for employer-sponsored health insurance have been growing at a rate well above growth in wages or overall inflation. Excess premium growth, in turn, suppresses wage growth and creates financial hardship for the middle class while, at the same time, reducing government tax revenues and employment. Spending on hospital care…

This brief summarizes the use of prior authorization policies for coverage of health care goods and services and reviews the evidence on cost and quality impacts of these policies. Click here to download this report.

    DISCUSSION The ACA’s cuts to MA payments were expected to reduce the attractiveness of MA to both plans and beneficiaries, primarily through reductions in rebates, thereby decreasing enrollment in the MA plan program.7-9 Instead, MA enrollment steadily increased as the ACA was implemented. Prior research indicates that MA plans…

Medicare Advantage (MA), also known as Medicare Part C, gives Medicare beneficiaries an option to receive their Parts A and B benefits through private health insurance plans as an alternative to traditional Medicare. MA has been attractive to many Medicare beneficiaries in part because of several enhancements plans typically make…

In contrast to commercial markets, narrow networks in Medicare Advantage (MA) markets are not motivated by unit-price discounts for insurers in exchange for higher patient volume for health systems. Through 15 interviews with MA experts, MA insurers, and health systems, we confirmed that the Medicare fee schedule is the basis…

Michigan regulates the supply of medical facilities and services through the Certificate of Need (CON) process. Among the activities subject to CON review are construction of new medical facilities, starting certain new services, acquisition of major pieces of equipment, and transfers of ownership. Michigan’s original CON law was enacted in…

The Affordable Care Act expanded health insurance coverage in three significant ways: by increasing eligibility for Medicaid, mandating that individuals have insurance coverage, and providing subsidies to make insurance more affordable. In Michigan, data from the most recent Current Population Survey shows that the percentage of the population without insurance…

Michigan accepted the opportunity to expand Medicaid eligibility under the Affordable Care Act, and the Healthy Michigan program began enrolling recipients in April 2014. Enrollment quickly grew to 600,000 persons with household incomes up to 138% of the Federal Poverty Level. The expansion population generally comprised single adults without children.…

A key element of the Affordable Care Act has been promoting changes in the way Medicare, Medicaid, and private insurers pay hospitals, physicians, and others for the health care services they provide. When the era of managed care began more than 30 years ago, health insurers moved away from the…

NIHCR Research Brief No. 20

Among the most expensive "but nearly invisible" federal expenditures is the roughly $250 billion1 annual tax break for employer-sponsored health insurance. Under current law, the value of both employer and most employee contributions for health insurance are excluded from employee federal income tax and employer and employee payroll taxes. While…

NIHCR Research Brief No. 19

State leaders interested in reforming their health care systems face a dilemma. Every state’s health care system is utterly dependent on funding flows from federal health programs and subsidies in the federal tax system, but federal programs, in some cases, run counter to state political cultures and priorities. Section 1332…

NIHCR Research Brief No. 18

As purchasers seek strategies to reduce high health care provider prices, interest in reference pricing—or capping payment for a particular medical service—has grown significantly. However, potential savings to health plans and purchasers from reference pricing for medical services are modest, according to a new analysis by researchers at the former…

NIHCR Research Brief No. 16

Average hospital outpatient department prices for common imaging, colonoscopy and laboratory services can be double the price for identical services provided in a physician’s office or other community-based setting, according to a study by researchers at the former Center for Studying Health System Change (HSC). Using private insurance claims data…

Health Services Research

Objective. To measure spillover effects of Medicare inpatient hospital prices on the nonelderly (under age 65). Primary Data Sources. Healthcare Cost and Utilization Project State Inpatient Databases (10 states, 1995-2009) and Medicare Hospital Cost Reports. Study Design. Outcomes include nonelderly discharges, length of stay and case mix, staffed hospital bed-days,…

NIHCR Research Brief No. 15

Historically, collective bargaining has led to comprehensive health benefits with a broad choice of providers, modest enrollee premium contributions and limited patient cost sharing at the point of service. With rising health care costs crowding out wage increases, some labor unions are pursuing measures to slow health care spending growth…

JAMA Internal Medicine

There is broad consensus among physicians, hospital and health insurance leaders, and policy makers to reform payment to health care providers so as to reduce the role of fee for service, which encourages high volume, and instead to use systems that reward better patient outcomes, such as bundled payments for…

NIHCR Research Brief No. 14

When including all care related to a hospitalization—for example, a knee or hip replacement—the price of the initial inpatient stay explains almost all of the wide variation from hospital to hospital in spending on so-called episodes of care, according to a study by researchers at the former Center for Studying…

HSC Research Brief No. 30

In the context of high health care costs and wide variation in hospital prices, purchasers are seeking ways to encourage consumers to make more price-conscious choices of providers. The California Public Employees’ Retirement System (CalPERS) in 2011 adopted a strategy—known as reference pricing—to guide enrollees to hospitals that provide hip…

Health Services Research, Early View

Objective. To estimate the effects of changes in Medicare inpatient hospital prices on hospitals’ overall revenues, operating expenses, profits, assets, and staffing. Primary Data Source. Medicare hospital cost reports (1996–2009). Study Design. For each hospital, we quantify the year-to-year price impacts from changes in the Medicare payment formula.We use cumulative simulated price impacts as…

HSC Research Brief No. 26

As the U.S. health care system grapples with strained hospital emergency department (ED) capacity in some areas, primary care clinician shortages and rising health care costs, urgent care centers have emerged as an alternative care setting that may help improve access and contain costs. Growing to 9,000 locations in recent…

Health Affairs, Vol. 32, No. 5

The best opportunity to pursue cost containment in the next five to ten years is through reforming provider payment to gradually diminish the role of fee-for-service reimbursement. Public and private payers have launched many promising payment reform pilots aimed at blending fee-for-service with payment approaches based on broader units of…

Health Affairs, Vol. 32, No. 5

Many policy makers believe that when Medicare constrains its payment rates for hospital inpatient care, private insurers end up paying higher rates as a result. I tested this “cost-shifting” theory using a unique new data set that combines MarketScan private claims data with Medicare hospital cost reports. Contrary to the…

NIHCR Policy Analysis No. 11

Gaps in hospital safety and quality have prompted public and private payers to push for greater accountability through clinical quality measurement and reporting initiatives, which have grown rapidly in the past two decades. With U.S. health care costs high and rising, purchasers increasingly are seeking to identify high-value hospitals that…

NIHCR Research Brief No. 9

To prevent costly emergency department visits and hospitalizations, a handful of care-delivery models offer high-intensity primary care to a subset of patients with complex or multiple chronic conditions, such as diabetes, congestive heart failure, obesity and depression. Early assessments of high-intensity primary care programs show promise, but these programs’ success…

HSC Issue Brief No. 138

Over the past decade, large employers increasingly have bypassed traditional health insurance for their workers, opting instead to assume the financial risk of enrollees’ medical care through self-insurance. Because self-insurance arrangements may offer advantages—such as lower costs, exemption from most state insurance regulation and greater flexibility in benefit design—they are…

HSC Research Brief No. 22

Spending on specialty drugs typically high-cost biologic medications to treat complex medical conditions is growing at a high rate and represents an increasing share of U.S. pharmaceutical spending and overall health spending. Absence of generic substitutes, or even brand-name therapeutic equivalents in many cases, gives drug manufacturers near-monopoly pricing power…

Health Affairs, Vol. 31, No. 4

The emphasis that hospitals place on cutting-edge technology and niche specialty services to attract physicians and patients has set the stage for health care’s most recent competitive trend: an increased level of targeted, geographic service expansion to “capture” well-insured patients. Researchers conducted interviews in twelve U.S. communities in 2010 and…

NIHCR Policy Analysis No. 8

From requirements that insurers cover prescription drugs to services of chiropractors, state health benefit mandates have a long and controversial history. Critics contend mandates drive up health insurance costs, while advocates assert they ensure access to important care. The 2010 national health reform law requires states to pay for mandated…

NIHCR Research Brief No. 7

Differences in health status explain much of the regional variation in spending for privately insured people, but differences in provider prices—especially for hospital care—also play a key role, according to a study by the Center for Studying Health System Change (HSC) based on claims data for active and retired nonelderly…

Community Report No. 12

Indianapolis’ major hospital systems continue to encroach on each other’s traditional territories, engaging in a battle of bricks and mortar in suburban areas to compete for well-insured patients, according to a new Community Report released today by the Center for Studying Health System Change (HSC). The study was funded jointly…

New England Journal of Medicine, Vol. 365, No. 14

It's pretty basic economics: spending equals price times quantity. For some time, public health care payers, such as Medicare and Medicaid, have focused much of their cost-containment effort on constraining the prices they pay for health care services, which they set administratively. The Affordable Care Act includes additional constraints on…

HSC Issue Brief No. 136

In a quest to gain market share, hospital employment of physicians has accelerated in recent years to shore up referral bases and capture admissions, according to the Center for Studying Health System Change’s (HSC) 2010 site visits to 12 nationally representative metropolitan communities. Stagnant reimbursement rates, coupled with the rising…

Community Report No. 10

In June 2010, a team of researchers from the Center for Studying Health System Change (HSC), as part of the Community Tracking Study (CTS), visited Orange County, Calif., to study how health care is organized, financed and delivered in that community. Researchers interviewed more than 45 health care leaders, including…

New England Journal of Medicine, Vol. 364, No. 22

While criticism that the government set the bar too high for accountable care organizations (ACOs) has been fast and furious, the proposed rule for the Shared Savings Program is a wake-up call that Medicare is serious about achieving better care for individuals, better health for populations and lower growth in…

NIHCR Policy Analysis No. 4

Dating back more than 40 years, a large body of research has identified wide geographic variation in fee-for-service Medicare spending and service utilization. A major early conclusion of geographic variation research was that care is provided much more efficiently in some areas of the United States than in others, with…

Community Report No. 1

In March 2010, a team of researchers from the Center for Studying Health System Change (HSC), as part of the Community Tracking Study, visited the Boston metropolitan area to study how health care is organized, financed and delivered in that community. Researchers interviewed more than 50 health care leaders, including…

Detroit Community Report

In February 2010, a team of researchers from the Center for Studying Health System Change (HSC) visited the Detroit metropolitan area on behalf of the National Institute for Health Care Reform to study how health care is organized, financed and delivered in that community. Researchers interviewed more than 55 health…

NIHCR Research Brief No. 1

While employer wellness programs have spread rapidly in recent years, few employers implement programs likely to make a meaningful difference in employees’ health—customized, integrated, comprehensive, diversified programs strongly linked to a firm’s business strategy and strongly championed by senior leadership and managers throughout the company. Employers that lack the ability…

Testimony

Paul B. Ginsburg, Ph.D., HSC President and research director of the National Institute for Health Care Reform, testified before a joint hearing of the Maryland Senate Finance Committee and House Health and Government Operations Committee on hospital rate setting. Access Ginsburg's testimony

Testimony

Paul B. Ginsburg, Ph.D., HSC president and research director of the National Institute for Health Care Reform, testified before the Massachusetts Office of Health and Human Services, Division of Health Care Finance and Policy, on health care spending trends.

NIHCR Policy Analysis No. 1

As consensus grows that true reform of the U.S. health care system requires a move away from fee-for-service payments, designing alternative payment methods, including episode-based payments, has emerged as a high priority for policy makers. An episode-based payment approach would essentially bundle payment for some or all services delivered to…

HSC Policy Analysis No. 2

Adequate and affordable insurance coverage is a particular concern for near-elderly Americans—those aged 55 to 64—because this group is at greater risk for serious health problems and high health care costs than younger adults. Moreover, because of their age and increased likelihood of health problems, the near elderly without access…