By Richard M. Scheffler and Daniel R. Arnold | Published September 2017 in Health Affairs | Link to Full Article
Consolidation of health systems has rapidly increased in the last two decades: from 1998 to 2015, there were 1412 hospital mergers in the United States; 40% of those came after 2009. The paper uses prices of hospital admissions and visits to five types of physicians to analyze how this growing provider and insurer market concentration—as measured by the Herfindahl-Hirschman Index (HHI)—interact and are correlated with prices. The paper finds that insurers have the bargaining power to reduce provider prices in highly concentrated provider markets for cardiologist, radiologist, and hematologist/oncologist visit prices. This leads to a policy dilemma: there are no insurer market mechanisms that will pass a portion of these price reductions on to consumers in the form of lower premiums. The study concludes by discussing how large purchasers of health insurance, such as state and federal governments, as well as the use of regulatory approaches, could provide a solution.
By Richard M. Scheffler, Daniel R. Arnold, Brent D. Fulton, and Sherry A. Glied | Published May 2016 in Health Affairs | Link to Full Article
Recent increases in market concentration among health plans, hospitals, and medical groups raise questions about what impact such mergers are having on costs to consumers. We examined the impact of market concentration on the growth of health insurance premiums between 2014 and 2015 in two Affordable Care Act state-based Marketplaces: Covered California and NY State of Health. We measured health plan, hospital, and medical group market concentration using the well-known Herfindahl-Hirschman Index (HHI) and used a multivariate regression model to relate these measures to premium growth. Both states exhibited a positive association between hospital concentration and premium growth and a positive (but not statistically significant) association between medical group concentration and premium growth. Our results for health plan concentration differed between the two states: it was positively associated with premium growth in New York but negatively associated with premium growth in California. The health plan concentration finding in Covered California may be the result of its selectively contracting with health plans.
Edited by Richard M. Scheffler | Published January 2016 by World Scientific | Link to Full Book
This Handbook covers major topics in global health economics and public policy and provides a timely, systematic review of the field, featuring academics and practitioners from more than a dozen countries. The Handbook spans across three volumes: Volume 1 – The Economics of Health and Health Systems, Volume 2 – Health Determinants and Outcomes, Volume 3 – Health System Characteristics and Performance. Chapters deal with key global issues in health economics, are evidence-based, and offer innovative policy alternatives and solutions, making the Handbook’s approach toward global health economics and public policy a useful resource for health economists, policymakers, private sector companies, NGOs, government decision-makers and those who manage healthcare systems.
By Eric R. Kessell, Richard M. Scheffler, and Stephen M. Shortell | Pubished in November 2015 in the Journal of Palliative Medicine | Link to Full Article
Community-based palliative care can improve outcomes and avoid unnecessary spending, but the effects of its widespread adoption on health care spending in California is unknown. To estimate the spending avoided if, by 2022, more than 100,000 Californians received community-based palliative care (CBPC) per year. We estimated the 6-month per-patient spending avoided through three mature CBPC programs in California and extrapolated data to predict the total avoided spending statewide over 8 years if enrollment in the three programs proceeded according to our model. If Californians participated in CBPC in the numbers envisioned, in 2014 there would have been a $72 million reduction in intensive hospital-based care, while still respecting patients’ wishes, and nearly $1.1 billion in spending could be avoided in 2022. Overall hospital spending would be reduced by more than $5.5 billion through 2022. The paper concludes that existing CBPC programs have the potential to provide care that is both in alignment with patients’ wishes and avoids substantial amounts of unnecessary hospital-based spending.
By Richard M. Scheffler, Eric R. Kessell and Margareta Brandt | Published in October 2015 in the Journal of Health Politics, Policy, and Law | Link to Full Article
We explain the establishment of Covered California, California’s health insurance marketplace. We describe the market shares of health plans in California and in each of the nineteen rating regions. We examine the empirical relationships among measures of provider market concentration, health plans, and the variation in premiums across the rating regions. We found that the concentration of medical groups and hospitals was positively associated with the variation in Covered California premium rates in the rating regions while the concentration of health plans is not statistically significant. We estimate the impact of reducing hospital concentration to levels that would exist in moderately competitive markets. This produces a predicted overall premium reduction of more than 2 percent. However, in three of the nineteen rating regions, the predicted premium reduction was more than 10 percent. These results suggest the importance of provider market concentration on premiums.
By Ann Hollingshead, Jaime King, Brent D. Fulton, Joshua Rushakoff, Richard M. Scheffler | Published May 2015 by the Millbank Memorial Fund | Link to Full Report
Accountable Care Organizations (ACOs), originally developed as part of the Affordable Care Act (ACA), are growing—and serve both public and private sector payers. They have the potential to improve health care quality and patient outcomes while achieving cost savings. However, they may also present risks—including those related to solvency, consumer protection, and anti-competitive pricing—to providers, patients, and payers. This report draws on evidence from the literature and four case studies to outline tools that state governments can use to promote the potential benefits of ACOs while mitigating their potential risks.
By Richard M. Scheffler and Jessica Foster | Published January 31, 2014 by the Petris Center | Link to Full Report
In its first several months of open enrollment, Covered California despite its challenges has been a bright spot among state health insurance Exchanges created under the Affordable Care Act. About 23% of national enrollments in 2013 came from California. More than 1.4 million California residents have completed Covered California applications, more than 625,000 people have enrolled in subsidized or unsubsidized health plans, and more than 1.2 million are expected to be newly enrolled in Medi-Cal. Though it experienced a slow start in October, Covered California by the end of the year had surpassed its enrollment goal for the first half of open enrollment. This report provides a summary of the Covered California rollout, including a breakdown of application and enrollment trends, plan affordability and cost estimations, and questions and concerns for future analysis.
By Richard M. Scheffler, Stephen M. Shortell, and Gail R. Wilensky | Published April 2012 in JAMA | Link to Full Article
On October 20, 2011, The Centers for Medicare & Medicaid Services (CMS) released the final rules for accountable care organizations (ACOs), a highly publicized initiative of the Affordable Care Act. Accountable care organizations are part of the Medicare Shared Savings Program, which is charged with improving quality of care for Medicare patients. The CMS provided incentives for ACOs to deliver high-quality care at reduced rates of spending by providing a more coordinated team approach to health care delivery. On the same day, the Federal Trade Commission and Department of Justice provided guidelines addressing antitrust issues involving the formation of ACOs. The concern is that ACOs can result in a reduced number of competitors in health care markets, which could potentially increase prices and have negative consequences for consumers and purchasers of care. The CMS, the Federal Trade Commission, and the Department of Justice are seeking balance between integration efficiencies and market power in ACOs. This piece examines the 5 major issues physician leaders and policy makers will need to consider in the creation of ACOs. These include the following: market definition and power, efficiency and quality metrics, physician and hospital exclusivity, public-private cost shifting, and monitoring.
by Brent D. Fulton, Richard M. Scheffler | Published April 2012 by the Petris Center and the California Program on Access to Care | Link to Full Report
The objective of this study is to examine health insurance rate review regulation in Minnesota and Massachusetts, to inform California policy-makers regarding evidence on prior approval authority. This evidence is intended to inform California’s proposed change from file-and-use to prior-approval authority, based on AB 52 “Health Care Coverage: Rate Approval.” The methods included reviewing the literature on rate review regulation, interviewing officials from state agencies that approve rates, and interviewing senior actuaries and executives from health insurance carriers. Three interviews were conducted on Minnesota, three interviews were conducted on Massachusetts, and two interviews were conducted on California. Minnesota was selected because it has exercised its prior approval authority for at least 15 years, which provides a long period of time to analyze. Massachusetts was selected because it only began exercising its prior approval authority—technically prior review and disapproval authority—in April 2010, providing an example of a state just starting prior approval rate review.
by Liora Bowers, Benjamin Handel, Emilio Varanini, Richard Scheffler | Published November 2011 by the Petris Center | Link to Full Briefing Document
This briefing paper serves as a background for the discussion that took place during the “Accountable Care Organizations and Antitrust Conference” held on November 11, 2011 at UC Berkeley. With the October 20, 2011 release of the final rule creating the Medicare Shared Savings Program (MSSP), the Center for Medicare & Medicaid Services has paved the way for a national move towards coordinated delivery systems known as Accountable Care Organizations (ACOs). This paper provides background on government policy towards an accountable care delivery system, the balance between integration efficiencies and market power, and the goals and methods of antitrust analysis within healthcare delivery. It provides context for the issues of market definition, anticompetitive effects, antitrust evaluations, and contracting practices among healthcare providers. The paper concludes with a brief discussion of the California ban on the corporate practice of medicine.