Health Care Response to Prices and Reimbursement Policies
Sunday, Jan. 6, 2019 8:00 AM - 10:00 AM
- Chair: Scott Barkowski, Clemson University
Industry Input in Policymaking: Evidence from Medicare
AbstractIn setting prices for physician services, Medicare solicits input from a committee that evaluates proposals from industry. We investigate whether this arrangement leads to prices biased toward the interests of committee members. We find that increasing a measure of affiliation between the committee and proposers by one standard deviation increases prices by 10%, demonstrating a pathway for regulatory capture. We then evaluate the effect of affiliation on the quality of information used in price-setting. More affiliated proposals produce less hard information, measured as lower quality survey data. However, affiliation results in prices that are more closely followed by private insurers, suggesting that affiliation may increase the total information used in price-setting.
Administrative Pricing, Incentive Alignment, and Medical Market Supply and Competition
AbstractA large share of US health care dollars flows through government insurance programs. Medicare, in particular, is a key payer for many firms—making its administratively set prices influential within the sector. We study a large overhaul to its fee schedule for ambulatory surgery centers (ASCs), which directly compete with hospitals and commonly include ownership stakes by physicians. ASCs ultimately experienced negative price shocks due to the Medicare policy change, which we use to investigate changes in physicians’ supply of services to the market and market competition among ambulatory procedure firms. We find output reductions when ASCs and physicians have close incentive alignment; however, our most important findings pertain to strong ASC entry deterrence following the payment reforms. Supplementary analyses demonstrate that shielding hospitals from greater ASC competition can prevent losses of 10-20% of their contested cases and weaken their incentives to shift toward more efficient care delivery.
Impeding Access or Promoting Efficiency? Effects of Rural Hospital Closure on the Cost and Quality of Care
AbstractThis paper studies the effect of hospital closure on the cost and quality of health care
in rural markets. Hospital closure can be welfare improving if it reallocates patients to more effcient facilities but can also lead to treatment delay and worsened health outcomes. I find support for both sides of this debate. Using a difference-in-differences analysis of Medicare claims, I show that rural hospital closure led to both a decrease in Medicare spending and an increase in mortality among enrollees with time-sensitive health conditions. I study implications of forestalling hospital closure in the context of the Critical Access Hospital (CAH) program, a large-scale payment reform that increased Medicare revenues for nearly half of all rural hospitals. I show that the CAH
program led to a reduction in hospital closures and an improvement in mortality, but the program's expenditures were substantial relative to these effects.
- I1 - Health
- H4 - Publicly Provided Goods