Research Roundup - September 2017


Delaware Works to Reduce Healthcare Spending

By Megan Pauly | Delaware Public Media | Sept. 7, 2017

A new law in Delaware authorizes the state’s health secretary to work with stakeholders to develop a statewide healthcare spending benchmark, according to Delaware Public Media. The goal of the benchmark is to better control Delaware’s rising cost of healthcare, currently ranked the third highest in the nation. As part of the initiative, the state will host a series of summits to address various aspects of the benchmark’s design.


Insurers Cutting Back on Drug Coupons amid Concerns over Consumer Costs

By Lisa Schencker | Chicago Tribune | Sept. 15, 2017

Some Illinois insurers are limiting how drug coupons may be used amid concerns they’re driving up healthcare costs for everyone, according to an article in the Chicago Tribune. Curbing the coupons could mean more money out of consumers’ pockets in the short term, but in the long run could also help hold down drug prices and healthcare costs, say critics of the coupons. The coupons are often used to drive patients to higher-cost brand drugs instead of generics, and that cost gets embedded in the premiums consumers pay.


Hospital Prices in Indiana: Findings from an Employer-Led Transparency Initiative

By Chapin White | RAND Corporation | Sept. 7, 2017

Large employers sponsor health plans that enroll roughly half of the U.S. population, and they are in a strong position to demand increased value from the healthcare system. But large employers generally lack useful information about the prices they are paying for healthcare services. This report reveals the prices paid to hospitals in Indiana from 2013 through 2016 by large, self-funded employer-sponsored health plans and compares them to Medicare as a benchmark. The study found wide variations in hospital prices (with larger hospitals charging more) and that hospital prices have been increasing relative to Medicare.


Don’t Let Pharma Take Down a New Maryland Price Gouging Law

By Jeremy A. Greene | Washington Post | Sept. 8, 2017

In May, Maryland became the first state to take action against the alarming trend of price gouging of off-patent brand-name and generic drugs. Opponents argue that the law targets the “wrong drugs” and Maryland should focus instead on reining in price gouging among brand-name drugs. The author of this op-ed believes this to be a cynical suggestion, as price hikes among older drugs are a real problem for patients who rely on them. 

New York

Nonprofit Launches a Price Transparency Website for New Yorkers to Compare Costs

By Christine Lewis | Crain’s New York Business | Sept. 12, 2017

Fair Health is unveiling a healthcare cost-transparency website for New Yorkers called, according to Crain’s New York Business. The site is launching ahead of the state’s all-payer claims database, a potentially similar resource that has been in development for six years. Perhaps the most useful feature is the ability to compare costs by provider for some common procedures, including those associated with obstetrical care and orthopedics. However, users will have to go elsewhere for quality ratings. Fair Health’s database includes access to more than 24 billion billed claims for medical and dental procedures.

What New York’s Health System Transformation Means for Medicare and Medicaid Consumers and Consumer Advocates

By Jake McDonald | Medicare Rights Center | August 2017

Medicare Rights enlisted the expertise of a panel of individuals and asked them to analyze the current state of health system transformation in New York, focusing specifically on three challenges a changing health system creates for advocacy organizations: (1) the need to understand new risks; (2) the need to educate consumers and others about new realities; and (3) the need to engage consumers in designing, implementing, and monitoring new models. This report outlines the nine policy principles identified to aid in the development, implementation, and evaluation of new health system transformation models—specifically, models that affect older adults and people with disabilities—and to inform stakeholders of how to develop new health system transformation models while also keeping consumers and consumer advocacy organizations meaningfully engaged at all stages of implementation.


Providers Reduce Waste to Work Around Ballooning Drug Prices

By Alex Kacik | Modern Healthcare | Sept. 11, 2017

Cleveland Clinic is one of the most prolific users of the heart drugs nitroprusside and isoproterenol, so when their respective prices surged 30-fold and 70-fold over a 3-year span, the clinic sought ways to control spending. According to a report in Modern Healthcare the clinic found areas where the drugs were overused. The clinic ended the routine ordering of nitroprusside for the treatment of hypertension following cardiac surgery, removed the high-concentration option for nitroprusside in the electronic medication order, and reduced the typical dispensing quantity of isoproterenol. The clinic also started using three different therapeutic alternatives saving the organization nearly $8.1 million over two years on nitroprusside costs as well as about $582,000 on isoproterenol.


After Single Payer Failed, Vermont Embarks on a Big Healthcare Experiment

By Carolyn Johnson | Washington Post | Sept. 17, 2017

Vermont is setting an ambitious goal of taking its alternative payment model—which reimburses doctors and hospitals lump sums and financially rewards them for keeping people healthy—statewide, reports The Washington Post. By 2022, the state plans to apply the reimbursement strategy to 70 percent of insured residents in an effort to limit the growth in overall annual healthcare spending to 3.5 percent. The current initiative is Vermont’s second attempt to revolutionize healthcare; it was the first state in the country to embrace a government-financed universal healthcare system, but abandoned the plan in late 2014 because of concerns over costs.

Recent Reports

Insurer Market Power Lowers Prices in Numerous Concentrated Provider Markets

By Richard Scheffler and Daniel Arnold | Health Affairs | September 2017

A study published in Health Affairs found that increased provider market power is associated with increases in prices in the hospital market and many physician specialty markets. Insurers have the bargaining power to reduce provider prices in highly concentrated provider markets, however, there are no insurer market mechanisms that pass a portion of these savings on to consumers in the form of lower premiums. Large purchasers of health insurance, such as state and federal governments, as well as the use of regulatory approaches, could provide a solution.

Narrow Networks on the Health Insurance Marketplaces: Prevalence, Pricing and the Cost of Network Breadth

By Leemore Dafny, et al. | Health Affairs | September 2017

Narrow insurance networks are a promising source of potential savings for segments of the commercial insurance market, according to a study in Health Affairs. Health plans with narrow physician and hospital networks were 16 percent (or $527 per year) cheaper in 2014 than plans with broad networks for both. Additionally, researchers found that narrowing the breadth of just one type of network was associated with a 6-9 percent decrease in premiums. The popularity of low-premium plans associated with narrow networks could incentivize providers within all networks to offer greater value, and is therefore worthy of further examination.

High Levels of Capitation Payments Needed to Shift Primary Care Toward Proactive Team and Non-Visit Care

By Sanjay Basu, et al. | Health Affairs | September 2017

Team- and non-visit-based primary care services (such as nurse/educator visits and electronic or telephone communications) are not currently reimbursed under traditional fee-for-service (FFS) payment, despite the belief that they increase access and convenience for patients, and allow practices to invest in population health management activities to improve health outcomes. An examination of 969 U.S. practices revealed that providers reimbursed under the FFS model lost revenue on team- and non-visit-based services compared to in-person physician visits, while the majority of providers reimbursed under capitated payments gained revenue. Researchers concluded that shifting to capitated payment might create an incentive for primary care practices to increase their delivery of team- and non-visit-based primary care, if capitated payment levels were sufficiently high.

Achieving Transparency in Healthcare

By Maria Castellucci and Shelby Livingston | Modern Healthcare | September 2017

special report in Modern Healthcare examines the hurdles healthcare organizations face with transparency rules. Healthcare organizations, from providers to insurers, are working to increase price transparency for services, to varying degrees of success. The push to bring transparency to healthcare pricing and quality has been going on for years, but still the healthcare industry remains one of the nation’s most opaque. The scarcity of price and quality information is often blamed for the high cost of care.

Strategies that Delay Market Entry of Generic Drugs

By Aaron Kesselheim | The Commonwealth Fund | Sept. 18, 2017

A Commonwealth Fund report examines how brand-name drug manufacturers often seek to delay generic competitors from entering the market. Strategies used include obtaining and listing additional patents on their drugs with the Food and Drug Administration, engaging in strategic settlements of patent litigation, and restricting generic manufacturers’ access to drug samples. The report listed numerous reforms that could ensure the timely availability of generic drugs while reducing overall spending on prescription drugs.

5 Key Thoughts on Lessons Learned from Early Orthopedic Bundled Payments

By Laura Dyrda | Becker’s ASC Review | Sept. 6, 2017

new study published in the Journal of the American Academy of Orthopaedic Surgeons examines New York City-based NYU Langone Medical Center's initial attempts to achieve cost savings with orthopedic bundled payments under the CMS Bundled Payments for Care Improvement initiative. The study authors examined patients who underwent lower extremity joint replacements, cardiac valve procedures or spine surgery from April 2011 to June 2012 and October 2013 to December 2014. A Becker’s ASC Review article describes study findings, which include that lower extremity joint replacement bundled payments achieved the greatest cost savings, lowering costs $3,017 during the intervention period; the average cost for cardiac procedures decreased $2,999 when the bundled payments were implemented; and NYU Langone created the most savings by discharging patients home instead of to inpatient rehabilitation facilities.

Strengthening Multipayer Collaboration: Lessons from the Comprehensive Primary Care Initiative

By Grace Anglin, et al. | Milbank Quarterly | September 2017

Researchers conducted semi-structured interviews with participating payers and payer conveners in the Comprehensive Primary Care (CPC) initiative to examine the factors that influence the effectiveness of multipayer collaboration. They found that contracting with effective, neutral payer conveners, leveraging the support of payer champions, and seeking input on decisions from practice representatives positively affected collaboration. Researchers also found that leadership from the Centers for Medicare & Medicaid Services (CMS) was key to achieving broad payer engagement in CPC, but CMS’s dual role as initiative convener and participating payer at times made collaboration challenging.

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Public Health Bundles

By Joshua M. Sharfstein | Milbank Quarterly | September 2017

Extending the potential rewards of payment reform to partners outside the healthcare system—by implementing public health bundles—might open the door to new approaches and even better results, according to this commentary in Milbank Quarterly. An example of a public health bundle for preventing heart attacks among smokers would involve the health department establishing a fund that receives expected costs for the acute care of heart attacks in smokers. The fund would then reimburse payers for actual costs while investing in efforts to promote smoking cessation and strong tobacco control policies across the community. According to the article, public health bundles will work best when a specific population and outcome can be identified, and where there is evidence that programmatic interventions or policy changes can save costs.

It's Time to Reform Accessibility to Prescription Drugs

By B. Douglas Hoey | The Hill | Sept. 11, 2017

Too many Americans can’t readily access or afford their prescription drugs, and pharmacy benefit managers (PBMs) play a central role in creating this dynamic. According to an op-ed piece in The Hill, Congress should pass legislation to increase price transparency and patient access—bills like the Improving Transparency and Accuracy in Medicare Part D Drug Spending Act; the Prescription Drug Price Transparency Act; and the Ensuring Seniors Access to Local Pharmacies Act. At the same time, alternatives to the traditional PBM business model do exist. If companies and organizations want to upend the status quo in their benefit plan design they need to be more progressive.

Rural Hospitals Struggle to Stock Expensive Drugs That Could Save Lives

By Sarah Jane Tribble | National Public Radio | Sept. 15, 2017

An unintended bias against rural hospitals built into the U.S. health law makes it difficult for many rural hospitals to afford life-saving medications, reports NPR. 340B, a federal drug discount program that Congress approved in the 1990s, offers significant price breaks on thousands of drugs to hospitals that primarily serve low-income patients. The Affordable Care Act expanded eligibility to allow rural hospitals to participate, but a last-minute exclusion prohibits them from getting discounts on rare-disease drugs (also known as “orphan drugs”). Life-saving medications that rural hospitals rely on to treat common conditions like stroke may be classified as orphan drugs if they are being studied for possible use in treating a rare condition, making them difficult for rural hospitals to afford. The ability to have these drugs on hand is vital for rural hospitals, given that many are the only source of immediate care for patients in crisis.

Missing: A Robust, Honest Discussion about Healthcare Costs, Financing

By Trudy Liberman | USC Center for Health Journalism | Sept. 20, 2017

The recent congressional bills to eliminate the ACA and Sen. Sanders’ Medicare for All legislation have one thing in common—they neglect to seriously tackle healthcare costs, according to this commentary at USC’s Center for Health Journalism. The author stresses that plans originating from both the political left and right “need a robust and honest discussion of how such a pan would be financed in the short and long run and how costs going forward will be managed and kept in check.”

Value-based Care's Success Hinges on Attention to Social Determinants

By Mike Leavitt and Dr. Karen DeSalvo | Modern Healthcare | Sept. 23, 2017

Addressing the social determinants of health will continue to transform the delivery of healthcare and improve health, according to an article in Modern Healthcare. Public and private health sector leaders are actively piloting new payment and care-delivery models, digital and data platforms, and community improvement strategies that address the social determinants of health. However, without a uniting force, these disparate and underfunded community efforts will never gain the momentum needed to help support the transformation to higher-quality, more-affordable care. Communities need a unifying alliance to clarify the local-level social determinants to target; identify opportunities for shared learning and action at all levels; develop a strategic agenda of priorities for action; and, where appropriate, inform and establish a more supportive policy environment.

How Below-the-Radar Mergers Fuel Health Care Monopolies

By Jay Hancock | Kaiser Health News | Sept. 5, 2017

New research shows that large doctor practices, many owned by hospitals, exceed federal guidelines for market concentration in more than a fifth of the areas studied, according to this Kaiser Health News article. Per a recent study in Health Affairs, doctor deals are typically far too small to trigger official notice to federal antitrust authorities or even attract public attention. While this particular research didn’t sort physician groups by ownership, other studies show that large, predominant practices are increasingly owned by hospitals, which see control of doctors as a way to both coordinate care and ensure patient referrals and revenue. Other research shows that bigger and fewer doctor practices, fueled largely by hospital acquisitions, drive up prices for patients, employers and taxpayers.