Congressional Budget Office June 26, 2017 An Analysis of - - PowerPoint PPT Presentation

Congressional Budget Office

Academy Health Annual Research Mee3ng New Orleans, Louisiana

June 26, 2017

Daria Pelech Health, Re3rement, and Long-Term Analysis Division

An Analysis of Private-Sector Prices for Physician Services

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Agenda ■ Describe prices for physicians’ services in Medicare Advantage plans ■ Compare Medicare Advantage and commercial prices to what Medicare fee-for-service (FFS) would have paid for that service ■ Compare varia3on in Medicare Advantage prices to varia3on in commercial prices

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Mo>va>on

■ Why do physician prices maVer?

– Higher physician prices à higher premiums, less coverage

■ Why do physician prices in Medicare Advantage maVer?

– Medicare costs the government $595 billion a year; Medicare Advantage plans are a quarter of that spending – Physician prices affect Medicare Advantage plans’ par3cipa3on à hence federal spending – Prices could affect plan bids and federal savings in a premium support system

■ Key implica3ons

– Medicare Advantage prices are informa3ve about how commercial prices are determined

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Summary

■ Levels of and varia3on in prices

– Medicare Advantage prices are close to Medicare FFS and don’t vary much, rela3ve to FFS – Commercial prices are much higher than Medicare FFS and vary substan3ally across and within areas

■ In- and out-of-network prices

– Medicare Advantage out-of-network prices are very close to in- network prices – Commercial out-of-network prices are much higher than in-network prices

■ Implica3on: Medicare Advantage prices are constrained by statute and Medicare FFS prices

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Prior Literature on Physician Prices

■ Commercial prices

– Higher than Medicare FFS, other countries (Baker et al., 2013, Laugesen and Glied, 2011, Ginsburg 2010) – Vary a lot (Newman et al., 2016, Baker et al., 2013) – Seem to vary based on physician compe33on, physician-hospital ver3cal integra3on (Neprash et al., 2015, Dunn and Shapiro, 2014, Baker et al., 2014)

■ Medicare Advantage prices

– Older literature finds Medicare Advantage prices fall somewhere between commercial and FFS prices (MedPac 2003) – Medicare Advantage prices very similar to Medicare FFS (Trish et al., 2016)

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Data

■ Health Care Cost Ins3tute claims data (2014)

– Three major insurers (Aetna, Humana, United) – 39 million beneficiaries in 50 states + DC – 25% of all Americans with employer-sponsored insurance – 50% of all Medicare Advantage enrollees

■ Data contain:

– Final prices insurer paid to physician – Cost-sharing and deduc3bles paid by the pa3ent – Detailed claim-line level informa3on (CPT codes, modifiers)

■ Data exclude:

– Capitated claims

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Data: Sample of Claims and Services

■ Sample of claims

– Excluded non-physician professionals and certain special3es (e.g., pediatricians) – Limited sejngs of services to offices, hospital inpa3ent and outpa3ent departments, ambulatory surgery centers – Excluded private fee-for-service, individual market, and indemnity plans – Limited to metropolitan sta3s3cal areas (MSAs) only

■ Selected 21 frequent and costly services

– Commercial: Occurred more than 50,000 3mes and cost an average of $450 or more – Medicare Advantage: Occurred more than 20,000 3mes and cost more an average of $300 or more – OR: Service was among the ten most common in both popula3ons

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Methods

■ Calculated private prices

– Aggregated adjustments/reimbursements – Added pa3ent copays/deduc3bles and insurer payments – Excluded payments ≤ $0

■ Constructed Medicare FFS prices for each observa3on

– Calculated base Medicare value (RVU) – Adjusted for geographic area (GPCI) – Adjusted for sejng of service, select characteris3cs (bilateral claims, assistant at surgery, mul3ple services) – Converted to 2014 dollars

■ Cleaned and trimmed sample:

– Excluded outliers, obvious errors, claims where we can’t calculate Medicare FFS price

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Why Compare Private Prices to Medicare FFS Prices?

■ Compared private prices to what Medicare would have paid for the same service ■ Medicare FFS prices are adjusted for:

– Service intensity (e.g., visit vs. procedure, mul3ple procedure payment reduc3ons) – Geographic area – Sejng of service (e.g., hospital vs. doctor’s office)

■ Comparing private prices to Medicare FFS minimizes varia3on from those sources

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Selected Services

Procedure Code Service Number of Commercial Observa>ons Number of Medicare Advantage Observa>ons Most Common Provider Specialty 17311 Mohs Micrographic Surgery 50,177 64,868 Dermatology 19083 Breast Biopsy 23,694 6,998 Radiology 27130 Hip Replacement 37,948 37,629 Orthopedics 27447 Knee Replacement 25,560 19,311 Orthopedics 29881 Knee Arthroscopy 55,209 5,838 Orthopedics 45385 Colonoscopy 186,232 92,385 Gastroenterology 47562 Gall Bladder Surgery 53,142 11,553 General surgery 50590 Lithotripsy 21,852 5,872 Urology 58558 Hysteroscopy 48,751 3,906 Obstetrics and gynecology 66984 Cataract Surgery 76,640 215,429 Ophthalmology 70553 Brain MRI 208,856 79,796 Radiology 74183 Abdominal MRI 49,814 18,728 Radiology 77418 PET/CT scan 127,343 173,335 Therapeu3c radiology 78815 IMRT 31,794 31,853 Radiology 92928 Stent Placement with Angioplasty 19,534 24,981 Cardiology 93000 EKG 2,452,997 1,137,342 Internal medicine (commercial), cardiology (MA) 93458 Cardiac Catheteriza3on 59,733 57,222 Cardiology 99203 New Pa3ent Visit, Intermediate Complexity 4,212,462 972,554 Family prac3ce (commercial),

• rthopedics (MA)

99213 Established Pa3ent Visit, Intermediate Complexity 23,144,834 8,082,554 Family prac3ce 99214 Established Pa3ent Visit, High Complexity 17,427,878 8,434,108 Family prac3ce 99232 Subsequent Hospital Care 1,940,314 3,319,705 Internal medicine

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Na>onal Price Comparisons—Commercial

0% 50% 100% 150% 200% 250% 300% 350% 400% 450%

Prices, Rela>ve to Medicare FFS

Median Average 10th percen3le 90th percen3le

**Professional component only

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Na>onal Price Comparisons—Medicare Advantage

0% 50% 100% 150% 200% 250% 300% 350% 400% 450%

Prices, Rela>ve to Medicare FFS

Median Average 10th percen3le 90th percen3le

**Professional component only

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Private Prices Rela>ve to Medicare FFS Commercial Medicare Advantage

Ra3o of commercial to FFS prices Ra3o of commercial to FFS prices Ra3o of Medicare Advantage to FFS prices Ra3o of Medicare Advantage to FFS prices Percent of Observa3ons Percent of Observa3ons Percent of Observa3ons Percent of Observa3ons

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Private Prices Rela>ve to Medicare FFS Medicare Advantage Commercial

Ra3o of commercial to FFS prices Ra3o of commercial to FFS prices Ra3o of Medicare Advantage to FFS prices Ra3o of Medicare Advantage to FFS prices Percent of Observa3ons Percent of Observa3ons Percent of Observa3ons Percent of Observa3ons

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Varia>on in Average Prices Across MSAs, Rela>ve to Medicare FFS

Procedure codes

17311=Mohs Micrographic Surgery 19081=Breast Biopsy 27130=Hip Replacement 27447=Knee Replacement 29881=Knee Arthroscopy 45385=Colonoscopy 47562=Gall Bladder Surgery 50590=Lithotripsy 58558=Hysteroscopy 66984=Cataract Surgery 70553=Brain MRI 74183=Abdominal MRI 77418=IMRT 78815=PET/CT scan 92928=Stent Placement 93000=EKG 93458=Cardiac Catheteriza3on 99203=New Pa3ent Office Visit 99213=Established Pa3ent Office Visit 99214=Established Pa3ent Office Visit (High Complexity) 99232=Subsequent Hospital Care

Commercial Medicare Advantage

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Varia>on in Median Price Ra>os Across Providers Within MSAs Commercial Medicare Advantage

Median, provider-level price ra3os Median, provider-level price ra3os Median, provider-level price ra3os

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Varia>on in Median Price Ra>os Across Providers Within MSAs Commercial Medicare Advantage

Median, provider-level price ra3os Median, provider-level price ra3os

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Summary of Price Varia>on Across Providers Within MSAs for 21 Services

Commercial Medicare Advantage How much more expensive is 90th percen>le provider than the 10th percen>le provider? 1.6 to 2.7 3mes more 1.1 to 1.8 3mes more How many services have more than twofold varia>on between the 10th and 90th percen>le providers, on average? 6 How many services have more than 1.5 X varia>on between the 10th and 90th percen>le providers, on average? 21 1

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In- and Out-of-Network Prices: Commercial

0% 25% 50% 75% 100% 0% 100% 200% 300% 400% 500% 600%

Percent of Observa>ons Provided In-Network Private Prices, Rela>ve to Medicare FFS Percent of observa3ons in-network In-network Out-of-network

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In- and Out-of-Network Prices: Medicare Advantage

0% 25% 50% 75% 100% 0% 100% 200% 300% 400% 500% 600%

Percent of Observa>ons Provided In-Network Private Prices, Rela>ve to Medicare FFS

Percent of observa3ons in-network In-network Out-of-network

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Conclusion

■ Commercial prices are (some3mes substan3ally) higher than Medicare FFS ■ Medicare Advantage prices are very close to Medicare FFS ■ Commercial prices vary substan3ally across areas and within areas; Medicare Advantage prices co-vary with Medicare FFS ■ Out-of-network prices are substan3ally higher for commercial services; Medicare Advantage prices aren’t

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Limita>ons

■ Data contain three insurers ■ Analysis focused on a limited set of services ■ Comparing to Medicare FFS reduces price varia3on only if FFS adjustments correctly capture that varia3on ■ Capitated payments are excluded but extra payments to providers (e.g., quality bonuses) can’t be observed

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Implica>ons

■ The Social Security Act constrains the price a physician can charge when a Medicare beneficiary goes out of network ■ Limits on out-of-network pricing may limit in-network prices ■ Implica3ons for premium support

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Acknowledgments

■ HCCI as data provider ■ CBO: Lyle Nelson, Ru Ding, Phil Ellis, Jeff Kling, Lori Housman, Tom Bradley, Paul Masi, Jared Maeda, Tami Hayford, Kate Kelly, Beth Schwinn ■ Helpful comments from: Amanda Frost, Zack Cooper, Kate Bundorf, Ariel Winter

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Thank you!

daria.pelech@cbo.gov

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Addi>onal Analysis

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Prices Rela>ve to Medicare FFS

Commercial Medicare Advantage Service and Procedural Code Median Mean Median Mean 17311 – Mohs Micrographic Surgery 106% 119% 100% 96% 19081 – Breast Biopsy 148% 195% 100% 105% 27130 – Hip Replacement 148% 182% 100% 100% 27447 – Knee Replacement 152% 177% 100% 101% 29881 – Knee Arthroscopy 169% 209% 100% 108% 45385 – Colonoscopy 148% 177% 100% 101% 47562 – Gall Bladder Surgery 141% 181% 100% 98% 50590 – Lithotripsy 135% 175% 100% 97% 58558 – Hysteroscopy 129% 168% 100% 101% 66984 – Cataract Surgery 109% 125% 100% 98% 70553 – Brain MRI 196% 239% 100% 102% 74183 – Abdominal MRI 186% 212% 100% 101% 78815 – PET/CT scan** 190% 218% 100% 100% 77418 – IMRT 170% 202% 100% 93% 92928 – Stent Placement with Angioplasty 130% 147% 100% 92% 93000 – EKG 149% 167% 100% 99% 93458 – Cardiac Catheteriza>on 135% 154% 100% 104% 99203 – New Pa>ent Visit, Intermediate Complexity 107% 114% 100% 96% 99213 – Established Pa>ent Visit, Intermediate Complexity 103% 111% 100% 96% 99214 – Established Pa>ent Visit, High Complexity 105% 112% 100% 96% 99232 – Subsequent Hospital Care 111% 122% 100% 97%

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What is varia>on related to?

■ Across geographic areas:

– Medicare Advantage prices co-vary strongly with Medicare FFS – Commercial prices co-vary with Medicare FFS; rela3onships are less strong

■ Across providers:

– High-priced commercial providers are also higher priced Medicare Advantage providers; rela3onships are not strong

■ For most services, prices are uncorrelated with:

– Medicare Advantage penetra3on – Medicare Advantage benchmarks – Insurers’ market shares

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Correla>ons

Number of services with significant* correla>on coefficients (out of 21) Range for significant coefficients Number of services with moderately strong** correla>ons Across areas Commercial and Medicare FFS prices 13 .130 to .728 7 Medicare Advantage and Medicare FFS prices 21 .608 to .972 21 Across providers Commercial and Medicare Advantage price ra>os 15 .131 to .448 6 With key variables across areas Medicare Advantage price ra>os and penetra>on 5

• .281 to -.111

Medicare Advantage price ra>os and HCCI insurers’ Medicare Advantage market share 3

• .138 to -.106

Medicare Advantage price ra>os and benchmarks 8 .106 to .227 Commercial prices and HCCI insurers’ commercial market share 2

• .127 to -.237

*significant at p<.05 ** coefficient > .3 or < -.3

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Percent of Price Paid by Pa>ent: Commercial

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Out-of-Network In-Network

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Percent of Price Paid by Pa>ent: Medicare Advantage

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Out-of-Network In-Network