Insuring
Monitoring for Waste: Evidence from Medicare Audits
Maggie Shi
NBER Working Paper, August 2023
Abstract:
This paper examines the tradeoffs of monitoring for wasteful public spending. By penalizing unnecessary spending, monitoring improves the quality of public expenditure and incentivizes firms to invest in compliance technology. I study a large Medicare program that monitored for unnecessary healthcare spending and consider its effect on government savings, provider behavior, and patient health. Every dollar Medicare spent on monitoring generated $24–29 in government savings. The majority of savings stem from the deterrence of future care, rather than reclaimed payments from prior care. I do not find evidence that the health of the marginal patient is harmed, indicating that monitoring primarily deters low-value care. Monitoring does increase provider administrative costs, but these costs are mostly incurred upfront and include investments in technology to assess the medical necessity of care.
Automating hybrid collective intelligence in open-ended medical diagnostics
Ralf Kurvers et al.
Proceedings of the National Academy of Sciences, 22 August 2023
Abstract:
Collective intelligence has emerged as a powerful mechanism to boost decision accuracy across many domains, such as geopolitical forecasting, investment, and medical diagnostics. However, collective intelligence has been mostly applied to relatively simple decision tasks (e.g., binary classifications). Applications in more open-ended tasks with a much larger problem space, such as emergency management or general medical diagnostics, are largely lacking, due to the challenge of integrating unstandardized inputs from different crowd members. Here, we present a fully automated approach for harnessing collective intelligence in the domain of general medical diagnostics. Our approach leverages semantic knowledge graphs, natural language processing, and the SNOMED CT medical ontology to overcome a major hurdle to collective intelligence in open-ended medical diagnostics, namely to identify the intended diagnosis from unstructured text. We tested our method on 1,333 medical cases diagnosed on a medical crowdsourcing platform: The Human Diagnosis Project. Each case was independently rated by ten diagnosticians. Comparing the diagnostic accuracy of single diagnosticians with the collective diagnosis of differently sized groups, we find that our method substantially increases diagnostic accuracy: While single diagnosticians achieved 46% accuracy, pooling the decisions of ten diagnosticians increased this to 76%. Improvements occurred across medical specialties, chief complaints, and diagnosticians’ tenure levels. Our results show the life-saving potential of tapping into the collective intelligence of the global medical community to reduce diagnostic errors and increase patient safety.
Identifying the Bottleneck Unit: Impact of Congestion Spillover in Hospital Inpatient Unit Network
Song-Hee Kim, Fanyin Zheng & Joan Brown
Management Science, forthcoming
Abstract:
Because a hospital is an interconnected, interdependent network of care units, allocating resources -- beds, nurses, and improvement initiatives -- to one unit to reduce its congestion may have spillover effects on other units. If such congestion spillover is substantial, ignoring it may lead to unintended consequences and missed opportunities. We use data collected over five years from a hospital with 16 inpatient units to empirically examine whether and how much congestion propagates through the network of inpatient units. Our estimation result suggests that the magnitude of the congestion spillover is indeed substantial in our study hospital. For example, increasing one inpatient unit’s utilization by 10 percentage points today can increase its neighboring inpatient unit’s utilization by up to 4.33 percentage points tomorrow. Using counterfactual analyses, we estimate the effect of adding a bed to each unit. We find that due to congestion spillover, adding one bed to the bottleneck unit can free up 4.14 beds in the hospital, which translates to 383.53 more hospital visits per year or a 3% increase in hospital throughput. This effect is about three times bigger in magnitude compared with what one can achieve by naively choosing which unit to add a bed to. Hospitals and other manufacturing and service systems with complex interdependence across resources can use our empirical framework to examine the spillover effect of resources on performance metrics and leverage such understanding to effectively improve their operations.
Broadband Internet Access and Health Outcomes: Patient and Provider Responses in Medicare
Jessica Van Parys & Zach Brown
NBER Working Paper, August 2023
Abstract:
High-speed internet has increased the amount of information available in health care markets. Online information may improve health outcomes if it reduces information frictions and helps patients choose higher quality providers or causes providers to improve quality. We examine how health outcomes for common procedures in Medicare changed after broadband internet rolled out across ZIP Codes from 1999 to 2008. Estimates imply that broadband expansion improved health outcomes by 5%. Broadband access primarily helped patients choose higher-quality providers; we find less evidence that broadband improved provider quality. We use a simple structural model to decompose the improvements in patient outcomes over time. Counterfactual simulations imply that broadband roll-out was responsible for about 12% of the improvement in outcomes by the end of the period.
Financial Conflicts of Interest in Public Comments on Medicare National Coverage Determinations of Medical Devices
Angela Lu et al.
Journal of the American Medical Association, forthcoming
Methods: We conducted a cross-sectional study of all public comments for all therapeutic medical device NCDs finalized between June 2019 and June 2022: pulmonary embolectomy; transcatheter mitral valve repair; artificial hearts and related devices, including ventricular assist devices; and transcatheter aortic valve replacement. We manually reviewed all comments and classified commenters by affiliation. We determined whether commenters supported or opposed expanding coverage, except for the transcatheter aortic valve replacement NCD, which focused on hospital volume requirements. For physicians, teaching hospitals, and organizations, we determined whether financial COIs, defined as payments from manufacturers potentially affected by the NCD because of their Food and Drug Administration–authorized device(s) or devices(s) at a late stage of development during public comment periods, were disclosed within the public comment; disclosure is not required. For physicians and teaching hospitals, we identified all payments from these manufacturers using the Open Payments database. We distinguished general (eg, consultant fees, travel and meal expenses) from research payments, counting those between 2015 and the public comment year. For other organizations, excluding device manufacturers and their trade organizations, we determined potential financial COIs by sequentially examining the organization’s website sponsor section, annual disclosures, and an online search. Data were summarized with descriptive statistics using Microsoft Excel and R. In accordance with 45 CFR §46, this study of publicly available information involving no patient records did not require institutional review board approval or informed consent.
Results: Overall, 681 public comments were submitted to the 4 NCDs, including 421 (62%) from individual physicians, 6 (1%) from groups of multiple physicians, 49 (7%) from patients or family members, and 50 (7%) from teaching hospitals or health systems. Among the 3 NCDs in which CMS was considering expanding coverage, 424 of 428 comments (99%) supported coverage expansion. Of the 444 physician commenters (including individual physicians and those from groups of multiple physicians) identified on Open Payments, 338 (76%) had received at least 1 financial payment (337 [76%] general and 138 [31%] research related) from device manufacturer(s) potentially affected by the NCD, 1 (0.3%) of whom disclosed the financial COI. Physicians’ median total value of general payments was $5041 (IQR, $1824-$22 743). Of the 53 unique teaching hospitals (including teaching hospitals under health systems), 44 (83%) received at least 1 general payment (median, $28 567; IQR, $5830-$120 717) from device manufacturer(s), but none disclosed the financial COI. Of the 66 organizations (excluding device manufacturers and trade organizations) that submitted public comments, 52 (79%) had financial COIs, 1 (2%) of which disclosed.
Searching for the Best Yardstick: Cost of Quality Improvements in the U.S. Hospital Industry
Jong Myeong Lim, Ken Moon & Sergei Savin
Management Science, forthcoming
Abstract:
The Hospital Value-Based Purchasing (VBP) Program is Medicare’s implementation of yardstick incentives applied to hospitals in the United States. Under the VBP Program, 2% of all Medicare payments to hospitals, estimated to be U.S. $1.9 billion in fiscal year 2021, are withheld and redistributed based on their relative performance in the quality of delivered care. We develop a dynamic mean-field equilibrium model in which hospitals are engaged in repeated competition under yardstick incentives. Using structural estimation methods, we recover key parameters that govern hospitals’ decisions to invest in quality improvement, including the financial and nonfinancial costs and uncertain outcomes of investment. By dynamically solving for hospitals’ individually optimal investment policies, we estimate the trajectory of quality improvements for each hospital, including its investment decisions and quality levels throughout the implementation of the VBP Program. Our counterfactual analyses explore the benefits, on the one hand, of modifying the overall size of the yardstick incentives and on the other hand, of implementing a more focused program tailored to hospital type. We find that increasing the size of the incentives from 2% to 4% would have resulted in an additional quality investment of U.S. $1.2 billion from 2011 to 2018, leading to a 3.3% reduction in the average rate of central line-associated bloodstream infections (CLABSIs). Applying yardstick incentives to the tailored hospital peer groups, even without changing the size of the incentives, can lead to an average reduction of 1.4% in the rate of CLABSI among groups of hospitals associated with the highest costs of quality investment.
Impact of New York state nurse practitioners modernization act on quality of care
Agnitra Roy Choudhury & Kameliia Petrova
Economics Letters, September 2023
Abstract:
In 2015, NY State introduced a bill allowing nurse practitioners full scope of practice to address the shortages in primary care services. We use a difference-in-differences model to estimate the effect of the policy on mortality due to heart disease and diabetes from 1999 to 2019. We control for age, race, and sex, and use nearby reduced practice authority states as a control. Our results indicate that average mortality rate decreases or remains statistically comparable following NY’s implementation of the policy, suggesting that NY’s policy does not statistically lower quality of care.
Surgeons' response to reimbursement changes for alternative procedures: Evidence from spine fusion in the U.S.
Nicholas Benson & Jose Joaquin Lopez
Contemporary Economic Policy, forthcoming
Abstract:
Spinal fusion is the highest operating room expense in the U.S. and the performed procedure depends largely on surgeon preference. We use national claims data for 2010–2014 to study changes in the relative frequency of substitutable spinal fusion procedures, following a one-time cut in Medicare reimbursement fees that switched the ranking of the two procedures with the highest surgical fees. Relative to lower-fee alternatives with better clinical outcomes, patients were 6.3% more likely to receive the highest-fee procedure after the policy change. We find no evidence of cost savings following the reimbursement change.
Private equity and healthcare firm behavior: Evidence from ambulatory surgery centers
Haizhen Lin et al.
Journal of Health Economics, September 2023
Abstract:
Healthcare firms regularly seek outside capital; yet, we have an incomplete understanding of external investor influence on provider behavior. We investigate the effects of private equity investment, divestment, and an initial public offering (IPO) on ambulatory surgery centers (ASCs). Throughput is unchanged while charges grow by up to 50% for the same service mix. Affected ASCs witness declines in privately insured cases and rely more on Medicare business. Private equity increases physician ASC ownership stakes, and both simultaneously divest when the ASC is sold. Our findings appear more consistent with private equity influencing the financing of ASCs, rather treatment approaches.