Hospital Costs And Quality

Source: Alan R. Weil , Health Affairs, Vol. 34 No. 8, August 2015
(subscription required)

Based on the Centers for Medicare and Medicaid Services Office of the Actuary projections we published late last year, spending on hospital care will surpass $1 trillion in 2015. This is about what the United Kingdom, Germany, and France will spend on their entire health care systems for a combined population of more than 200 million people. With their dominant role in the health care system, hospitals are at the center of myriad quality improvement and cost containment efforts, some of which are discussed in this month’s Health Affairs variety issue. …

Articles include:
Assessing Medicare’s Hospital Pay-For-Performance Programs And Whether They Are Achieving Their Goals
by Charles N. Kahn III, Thomas Ault, Lisa Potetz, Thomas Walke, Jayne Hart Chambers and Samantha Burch

From the abstract:
Three separate pay-for-performance programs affect the amount of Medicare payment for inpatient services to about 3,400 US hospitals. These payments are based on hospital performance on specified measures of quality of care. A growing share of Medicare hospital payments (6 percent by 2017) are dependent upon how hospitals perform under the Hospital Readmissions Reduction Program, the Value-Based Purchasing Program, and the Hospital-Acquired Condition Reduction Program. In 2015 four of five hospitals subject to these programs will be penalized under one or more of them, and more than one in three major teaching hospitals will be penalized under all three. Interactions among these programs should be considered going forward, including overlap among measures and differences in scoring performance.

States With Stronger Health Insurance Rate Review Authority Experienced Lower Premiums In The Individual Market In 2010–13
by Pinar Karaca-Mandic1, Brent D. Fulton, Ann Hollingshead and Richard M. Scheffler

From the abstract:
States have varying degrees of review authority over health insurance carriers’ rates, including prior approval authority over proposed rates and requirements for loss ratios, the proportion of premium revenues spent on medical claims. The Affordable Care Act (ACA) requires carriers in certain categories of health insurance to provide public justification for rate increases of 10 percent or more. We collected data on how states changed their rate review authority and requirements during 2010–13, the years immediately after enactment of the ACA, and we combined these data with carrier filings. We found that adjusted premiums in the individual market in states that had prior-approval authority combined with loss ratio requirements were lower in 2010–13 ($3,489) than premiums in states with no rate review authority or that had only file-and-use regulations, which gave the states no authority to block rate increases ($3,617). Adjusted premiums declined modestly in prior-approval states with loss ratio requirements, from $3,526 in 2010 to $3,452 in 2013, while premiums increased from $3,422 to $3,683 in states with no rate review authority or file-and-use regulations only. Our findings suggest that states with prior approval authority and loss ratio requirements constrained health insurance premium increases.

National Health Expenditure Projections, 2014–24: Spending Growth Faster Than Recent Trends
by Sean P. Keehan, Gigi A. Cuckler, Andrea M. Sisko, Andrew J. Madison, Sheila D. Smith, Devin A. Stone, John A. Poisal, Christian J. Wolfe and Joseph M. Lizonitz

From the abstract:
Health spending growth in the United States is projected to average 5.8 percent for 2014–24, reflecting the Affordable Care Act’s coverage expansions, faster economic growth, and population aging. Recent historically low growth rates in the use of medical goods and services, as well as medical prices, are expected to gradually increase. However, in part because of the impact of continued cost-sharing increases that are anticipated among health plans, the acceleration of these growth rates is expected to be modest. The health share of US gross domestic product is projected to rise from 17.4 percent in 2013 to 19.6 percent in 2024.