Research Roundup - August 2016


How Healthcare Costs are Bleeding Alaska Dry

By Charles Wohlforth | Alaska Dispatch News | Aug. 2, 2016

Healthcare costs are sucking the life out of Alaska's businesses and state government, according to this opinion piece in the Alaska Dispatch News. High healthcare cost is a problem nationally, but Alaska's costs are rising faster than any other state and per person spending is higher than any state but Massachusetts, despite below-average utilization rates. Since 2001, the cost of premiums for a family has risen from 10 percent of the average Alaskan's salary to 33 percent.


California Regional Health Care Atlas Pinpoints Cost and Quality Variation

By Alwyn Cassil | Integrated Healthcare Association| July 27, 2016

The Integrated Healthcare Association reported the launch of a new online tool that for the first time brings together data on clinical quality, costs and hospital utilization for commercial insurance, Medicare and Medi-Cal. The California Regional Health Care Cost & Quality Atlas will provide data to assess geographic and insurance product type performance variation. Highlighting variation in healthcare quality and cost across California may provide opportunities to provide better care and lower costs.

California Lawmaker Pulls Plug on Drug Price Transparency Bill

By Ana B. Ibarra | Kaiser Health News | Aug. 17, 2016

After being approved by a key committee, a bill that would have required drug companies to justify treatment costs and price hikes was pulled by its author, according to Kaiser Health News. California state Sen. Ed Hernandez (D-West Covina) said that he introduced the bill “with the intention of shedding light on the reasons precipitating skyrocketing drug prices.” But subsequent amendments by an Assembly committee made it difficult to accomplish this goal, he said in a statement.


Colorado Health Institute Releases Independent Financial Analysis of ColoradoCare

By Colorado Health Institute | Aug. 8, 2016

According to a recent report by the Colorado Health Institute, a single-payer healthcare proposal on Colorado’s ballot this fall would not raise enough money to cover the program’s costs. ColoradoCare would see a $253 million deficit in the first year, and the deficit would grow as costs outpaced revenue. A ten percent payroll tax is expected to bring in $25 million annually, but this added funding would fall short without additional tax increases. However, the plan would make Colorado the first state to achieve universal coverage.


FTC Seeks to Revive Case Against Advocate, NorthShore Merger

By Maria Castellucci | Modern Healthcare | Aug. 19, 2016

The merger between two Chicago-area health systems is being challenged by the Federal Trade Commission, citing concerns over higher prices for insured customers, according to Modern Healthcare.


CareFirst’s Rate Request  Unjustified

By Leni Preston | Baltimore Sun | Aug. 11, 2016

Maryland’s largest insurance provider, CareFirst, is unjustly doubling the rate increases originally proposed in May, according to this op-ed in the Baltimore Sun. The new rate filing requests a 28 percent jump for its HMO and 37 percent for its PPO business. State advocates question the legality, fairness and validity of the filing that will impact Marylanders who are paying more than the average American, for health insurance already.


Primary Care Accessibility Correlates with Sociodemographic Characteristics in Philadelphia

By Elizabeth Brown, et al. | Health Affairs | August 2016

The odds of being in an area with low access to primary care providers was twenty-eight times greater in neighborhoods that had a high proportion of African Americans, according to a study published in Health Affairs that looked at access to primary care providers across neighborhoods in Philadelphia..  The study highlights the fact that primary care provider supply can vary greatly, even in densely populated cities.


Washington Sets Ambitious New Goals for Value-Based Care

By Zack Hale | State of Reform | Aug. 5, 2016

State of Reform reports that the Washington Health Care Authority’s (HCA) new 1115 Medicaid waiver application is seeking to tie 30 percent of its healthcare purchases to value-based arrangements by next year, and 90 percent by 2019. HCA will implement seven performance measures that complement the waiver process. HCA will withhold one percent of a managed care plan’s premiums based on their performance against these measures which can be earned back by producing favorable scores for quality, patient experience, and cost of care.

For more state news, please visit

Recent Reports

Health Spending Expected to Outpace Growth in GDP by 1.3 Percent between 2015-2025

By Sean Keehan, et al. | Health Affairs | August 2016

According to a study in the August edition of Health Affairs, growth in national healthcare expenditures is expected to average 5.8 percent, outpacing growth in GDP, and representing 20.1 percent of the total U.S. economy by 2025.  An aging population, quickly growing medical prices, and increases in economic growth are expected to be the primary drivers of these increasing trends in health spending.  

The High Cost of Prescription Drugs in the U.S., Origins and Prospects for Reform

By Aaron Kesselheim, Jerry Avorn and Ameet Sarpatwari | JAMA | Aug. 23, 2016

Per capita spending on prescription drugs is more than double the average of 19 other industrialized nations, according to this study in JAMA. Market exclusivity is a key factor in how high drug prices are set by manufacturers. The authors cite payer market power as the primary counterweight in the U.S. against excessive pricing.

Changes in Utilization and Health Among Low-Income Adults After Medicaid Expansion or Expanded Private Insurance

By Benjamin Sommers, et al. | The Commonwealth Fund | Aug. 8, 2016

According to a Commonwealth Fund study, low-income adults in Kentucky and Arkansas - states that expanded Medicaid - received more primary and preventive care, visited emergency departments less often and reported being in better health compared to those in Texas - a state that did not expand Medicaid. There appears to be few differences in outcomes for these low-income beneficiaries, whether insured through public (Kentucky) or private insurance (Arkansas).

Sources of Geographic Variation in Healthcare: Evidence from Patient Migration

By Amy Finkelstein, et al. | The Quarterly Journal of Economics | July 19, 2016

Supply features such as physician preference for aggressive care and the proportion of for-profit hospitals in a region accounted for more than 50 percent of the variation in utilization by Medicare beneficiaries, according to a report in The Quarterly Journal of Economics. The remaining variation is likely a result of differences in health status and patient preferences, supporting the need to develop policies aimed at changing provider behavior. 

Report Card on State Price Transparency Laws

By Francois de Brantes and Suzanne Delbanco | HCI3 and Catalyst for Payment Reform | July 2016

Little progress has been made to improve consumer access to cost information, according to the 2016 Report Card on State Price Transparency Laws. Just six states score an A, B or C, 1 scored a D, and the remaining states received an F. The report supports the findings of a report by Public Citizen that, of the 19 states with a healthcare payments database, only six allow consumers to shop cost data. However, these six state websites vary significantly in how they present cost information. Public Citizen finds few websites have cost information for many of the most common outpatient procedures and many of the websites include old data.

Study Argues CMS Should Issue Stronger Guidance for Population Health Initiatives

By Amy Paul | Journal of Healthcare Finance | Spring 2016

According to a study released in the Journal of Healthcare Finance, stronger regulations should be issued under the Medicaid program to support population health initiatives.  These initiatives could result in both reduction of health disparities and reduction of health costs.  

Analysis of 2017 Premium Changes and Insurer Participation in the Affordable Care Act’s Health Insurance Exchange

By Cynthia Cox, et al. | Kaiser Family Foundation | July 28, 2016

Across 17 cities, health plan premiums are anticipated to rise, on average, 9 percent in 2017, according to a report by the Kaiser Family Foundation. The average number of providers participating in the marketplace has shifted between 2014 and 2017, with a new record low of 5.8 per state in 2017.

Value-Based Reimbursement on Track to Eclipse Fee-for-Service by 2020

By  Mary Caffrey | AJMC | July 21, 2016

Nearly all payers (97 percent) and most hospitals (91 percent) are using some mix of value-based payment with fee-for-service, according a McKesson report featured in AJMC. However, only half of payers and 40 percent of providers say they are ready to adapt to the new payment models. Many payers cite consumer confusion and patient engagement represent major challenges to adapting to new payment models.

High Cost Sharing for Low-Value Services May Increase Overall Healthcare Spending

By Jonathan Gruber, et al. | Physicians for a National Health Program | June 13, 2016

Increasing cost sharing for low-value services reduces utilization of some targeted services and may lead to modest increases in overall healthcare spending, according to Physicians for a National Health Program. The group says that more work is needed to evaluate value-based insurance design (VBID), especially related to programs raising patient cost sharing for low value care.

Interventions Aimed at Reducing Use of Low-Value Services: A Systematic Review

By Colla, Carrie, et al. | Medical Care Research and Review | July 8, 2016

Interventions addressing both patient and clinician roles in overuse of healthcare services have the greatest potential to reduce low-value care, but significant research gaps persist, according to this study in Medical Care Research and Review. Clinical decision support and performance feedback are promising strategies with a solid evidence base, and provider education yields changes by itself and when paired with other strategies. The authors recommend continued rigorous evaluation and publication, especially on the effectiveness of pay-for-performance, insurer restrictions and risk-sharing contracts to reduce use of low-value care.

The Impact of Provider Consolidation on Outpatient Prescription Drug-Based Cancer Care Spending

Health Care Cost Institute | March 2016

Verticle provider consolidation resulted in increased spending on outpatient prescription drug-based cancer treatment, according to research by the Health Care Cost Institute. The spending appears to be driven in part by increases in the prices charged to patients. Researchers suggest future work to evaluate whether these increased prices are also associated with improved measures of quality and access.

CMS Says $42 Billion Saved With Fraud Prevention, Provider Screening Efforts

By Shannon Muchmore | Modern Healthcare | July 20, 2016

A new CMS report reports $42 billion was saved in fiscal years 2013 and 2014, according to Modern Healthcare. The savings amounted to $12.40 for every dollar spent on increased prevention efforts..

For more background on drug spending, VBID, population health measures and more, please visit


EpiPen’s 400 Percent Price Hike Tells Us a Lot about What’s Wrong with American Healthcare

By Sarah Kliff | Vox | Aug. 23, 2016

EpiPen’s price hike of 400 percent since 2007 demonstrates the U.S. government’s lack of ability to regulate drug prices, according to this commentary in Vox. This is just one of many stories of pharmaceutical price gouging, the first being Martin Shkreli’s 10,000 percent price increase for Daraprim. While other countries treat drug markets similarly to U.S. utility markets and negotiate more reasonable prices than the pharmaceutical companies request, the U.S. allows manufacturers to set their own price, many times consistent with expensive competitor prices.

A Path Forward on Medicare Payment Reform for Physician-Administered Drugs

By Peter Bach and Mark McClellan | Morning Consult | Aug. 23, 2016

CMS has recently proposed a large-scale test of payment reforms for Medicare Part B “physician administered” drugs in an effort to remove incentives for providers to favor more expensive medications, according to Morning Consult. Advocates are divided on the whether to support the proposal. The authors suggest considering the inclusion of separate specialty flat fees and utilizing results-based pricing or other approaches being pursued by private health insurers.

Many Well-Known Hospitals Fail To Score 5 Stars in Medicare’s New Ratings

By Jordan Rau | Kaiser Health News | July 27, 2016

In July the federal government released the first ever overall hospital quality rating, finally providing consumers a simple way to compare the quality of services offered at competing hospitals, according to Kaiser Health News. Of the 3,617 hospitals rated, just 102 received the top rating, and few are considered as leading hospitals when using traditional rating sources. Many hospitals argued that the one-to-five-star scale unfairly penalizes hospitals that treat some of the most difficult cases.

Medicare Proposes Fixed Payments for Treating Heart Attacks

By Louise Radnofsky and Melanie Evans | The Wall Street Journal | July 25, 2016

A CMS proposed rule expands alternative payments in Medicare to include bundled payments for the treatment of heart attacks, according to The Wall Street Journal. The program would be phased in over five years, beginning July 1, 2017, and is estimated to save Medicare $170 million through December 2021. This effort follows Medicare’s switch to bundled payments for hip and knee surgery announced in April 2016.

IT Needs are Driving the Upswing in Medical Practice Mergers

By Dave Barkholz | Modern Healthcare | July 23, 2016

Provider groups are increasingly looking for large firm partners to cover the investments to acquire electronic health records and revenue-cycle systems, according to Modern Healthcare. The systems provide quality data required for reimbursement in alternative payment models, and the larger firms can provide support for navigating the quickly changing reimbursement environment.   

Data for Change: How States Have Used APCDs to Drive Innovation

By Tamara Kramer | State Health Policy Blog | July 18, 2016

All-payer claims databases (APCDs) in Colorado, Maine, Maryland, New Hampshire and Vermont are helping to shape future policies and identify successful care delivery models, according to the State Health Policy Blog. The Gobeille v. Liberty Mutual decision represents a potentially temporary setback for leaders and consumers who have come to rely on these data.

Extra Hospital ‘Facility Fees’ Irk Patients

By Barrett Newkirk | The Desert Sun | July 15, 2016

Facility fees, extra charges to patients when the receive care at hospital-affiliated outpatient sites, are driving patients to seek new providers, according to The Desert Sun. The practice is becoming more common across the United States, meaning patients are being charged more to receive the same care provided by non-affiliated providers. The federal government has released proposed rules eliminating Medicare coverage of facility fees.

Three ACOs Bail on Medicare’s Next Generation Program

By Bob Herman | Modern Healthcare | July 15, 2016

Two out of the 21 organizations participating in Medicare’s newest program testing accountable care organizations have dropped out and one additional organization has delayed participation until 2017, according to Modern Healthcare. The two organizations dropped out citing burdensome financial and operational metrics included in the program.

Obamacare’s Sinking Safety Net

By David Bonazzi | Politico | July 13, 2016

A Politico review of nearly 100 health plans across 12 states found that 40 percent of insurers had medical costs in 2015 that exceeded the premiums they brought in, and less than one quarter of the insurers maintained payouts to 85 percent of the premiums, as required by the ACA. Insurers will likely to turn to significant premium increases to make up the difference or exit some markets--as Aetna and others have announced--leaving consumers with fewer choices and insurers with fewer competitors.