How can PPOs control prices without violating antitrust laws?

Preferred provider organizations (PPOs) have caused concern because they raise the question whether providers can establish mechanisms to control the price of medical care without violating antitrust laws. The U.S. Supreme Court recently decided in Arizona v. Maricopa County Medical Society that the practices of a physicians' organization which set fee schedules by majority vote constituted price fixing because "independent competing entrepreneurs" made the agreements. The decision implies that PPOs must carefully structure collective efforts to set prices in order to avoid unlawful agreement among competitors. To avoid antitrust exposure, hospitals may independently determine prices and contract individually with providers, or they may act as brokers for individual physicians, establishing fees and claims-processing procedures and then contracting with physicians who agree to these requirements. Setting fees independently may be difficult, however, since hospitals need to know what payment physicians will accept. Thus some physician involvement is probably inevitable. No antitrust liability results, however, if individual physicians are sampled in an information-gathering process but do not collectively set fees. In addition, a PPO that is structured as a partnership or other joint arrangement involving true risk sharing should withstand antitrust challenge. In recent business review letters, the Department of Justice approved two different PPO structures: A Hospital Corporation of America subsidiary would contract (nonexclusively) with providers, hospitals, and third party payers to treat the third party payers' beneficiaries at discounted rates. The charges would be negotiated individually with each physician and hospital. A management consultant firm would act as an intermediary between providers and third party payers, negotiating patient discounts but not participating in fee setting. A PPO need not be structured in every respect like these programs. Individual situations vary, and with sound antitrust advice, PPOs can avoid legal pitfalls.     

Is the impact of managed care on hospital prices decreasing?

Prior studies find that the growth of managed care through the early 1990s introduced a strong positive relationship between price and concentration in hospital markets. We hypothesize that the relaxation of constraints on consumer choice in response to a "managed care backlash" has diminished the price sensitivity of demand facing hospitals, reducing or possibly reversing the price-concentration relationship. We test this hypothesis by studying the price/concentration relationship for hospitals in California and Florida for selected years between 1990 and 2003, while addressing the potential endogeneity of concentration. We find an increasingly positive price/concentration in the 1990s with a peak occurring by 2001. Between 2001 and 2003, the growth in this relationship halts and possibly reverses.     

Germany’s decision rule for setting ceiling prices of drugs

In Germany, the Institute for Quality and Efficiency in Health Care (IQWiG) makes recommendations for ceiling prices of drugs based on an evaluation of the relationship between costs and effectiveness. To set ceiling prices, IQWiG uses the following decision rule: the incremental cost-effectiveness ratio (ICER) of a new drug compared with the next effective intervention should not be higher than that of the next effective intervention compared with its comparator. The purpose of this article is to analyse ethical implications of IQWiG's rule and compare them with those of two alternative decision rules, one that is based on an absolute cost-effectiveness threshold and one that falls in between. To this end, constrained optimization problems are defined that yield each decision rule. This article shows that IQWiG's rule accounts for severity of disease and past resource consumption. Potential problems and pitfalls are discussed.     

Do hospitals respond to decreasing prices by supplying more services?

Regulated prices are common in markets for medical care. We estimate the effect of changes in regulated reimbursement prices on volume of hospital care based on a reform of hospital financing in Germany. Uniquely, this reform changed the overall level of reimbursement—with increasing prices for some hospitals and decreasing prices for others—without directly affecting the relative prices for different groups of patients or types of treatment. Based on administrative data, we find that hospitals react to increasing prices by decreasing the service supply and to decreasing prices by increasing the service supply. Moreover, we find some evidence that volume changes for hospitals with different price changes are nonlinear. We interpret our findings as evidence for a negative income effect of prices on volume of care.     

Testing Gateway Theory: do cigarette prices affect illicit drug use?

We test the causal Gateway Theory of drug use dynamics by way of a natural experiment. We randomize cigarette smoking by birth cohort and cigarette prices. We use data for Israel to show that while cigarette smoking causes cannabis use, the evidence that cannabis use causes hard drug use is much weaker. These results are based on various econometric methodologies including two-stage logit (2SL), bivariate probit, and frailty analysis for survival data.     

Pricing hospital care: Global budgets and marginal pricing strategies

ObjectiveThe Canadian province of British Columbia (BC) is adding financial incentives to increase the volume of surgeries provided by hospitals using a marginal pricing approach. The objective of this study is to calculate marginal costs of surgeries based on assumptions regarding hospitals’ availability of labor and equipment.DataThis study is based on observational clinical, administrative and financial data generated by hospitals. Hospital inpatient and outpatient discharge summaries from the province are linked with detailed activity-based costing information, stratified by assigned case mix categorizations.Study designTo reflect a range of operating constraints governing hospitals’ ability to increase their volume of surgeries, a number of scenarios are proposed. Under these scenarios, estimated marginal costs are calculated and compared to prices being offered as incentives to hospitals.Principal findingsExisting data can be used to support alternative strategies for pricing hospital care. Prices for inpatient surgeries do not generate positive margins under a range of operating scenarios. Hip and knee surgeries generate surpluses for hospitals even under the most costly labor conditions and are expected to generate additional volume.ConclusionsIn health systems that wish to fine-tune financial incentives, setting prices that create incentives for additional volume should reflect knowledge of hospitals’ underlying cost structures. Possible implications of mis-pricing include no response to the incentives or uneven increases in supply.     

Estimation and comparison of ostomy appliance costs with tariffs in Belgium

This study estimated costs of production and distribution of ostomy appliances, and compared cost estimates with tariffs in Belgium. The cost model took into account manufacturing costs, overhead, R&D, warehousing, profits, and distribution margins. Data were derived from manufacturers, a decomposition of finished products, and interviews with stakeholders. The cost model generated estimated retail prices of €2.96 for one-piece appliances, €1.62 for two-piece pouches, and €2.06 for two-piece flanges. Production and distribution costs accounted for 40 and 60% of retail prices, respectively. Estimated retail prices corresponded well with tariffs for one-piece appliances and for two-piece pouches. For two-piece regular flanges, a substantial difference was observed between the calculated price of €2.06 and the tariff of €6.05. In the absence of publicly disclosed information on the cost structure of appliances, estimating ostomy appliance costs is valuable to reimbursement agencies when setting tariffs.     

Methods to determine reimbursement rates for diagnosis related groups (DRG): A comparison of nine European countries

Over the past 20 years, most European countries have introduced DRGs or similar grouping systems as instruments for hospital reimbursement. This paper compares and analyzes the methods used to determine prices for inpatient care within DRGs or similar grouping systems employed in nine EU member states (i.e. Denmark, France, Germany, Hungary, Italy, the Netherlands, Poland, Spain and England). It categorizes the systems of patient classification used in these nine countries and compares them according to the three steps necessary in order to set prices: 1.) definition of a data sample, 2.) use of trimming methods and plausibility checks and 3.) definition of prices. It concludes with a discussion on the typical development path of DRG systems and the role of additional reimbursement components in this context.     

Resource use and costs associated with patients treated for depression in primary care

We investigated medical resource consumption, productivity loss and costs associated with patients treated with antidepressants for depression in primary care in Sweden. Patients on treatment for depression were followed naturalistically for six months, and data on patients’ characteristics, daily activity and resource-use were collected. The total cost per patient was estimated at € 5,500 (95%CI € 5,000—6,100) over six months in 2005 prices. Direct costs were estimated at € 1,900 (€ 1,700–2,200), 35% of total costs, and indirect costs at € 3,600 (€ 3,100–4,100), 65% of total costs. The cost for antidepressants represented only 4% of the total costs. We conclude that the burden of depression is high, both to the individual as well as to wider society, and there seems to be a particular need for therapies that have the potential to improve productivity in depressed patients.      

基于信息化技术指导构建指标体系评估医院运营状况

目的在信息化技术的指导下构建指标体系对医院的运营状况进行评估。方法通过开展问卷调查、现场访谈以及文献分析法等方式,通过关键指标法针对医院医疗业务、运行绩效、风险管理、成本控制、医疗保险结余和发展能力等维度选择评估指标并设置权重,通过信息技术以该院信息化建设水平为基本条件,对医院运营状况评估体系进行构建。结果按照有效性、客观性、公益性和前瞻性原则,对医院信息化技术背景下相关数据进行整理分析后,确定6个大指标,其中包括15个一级指标和86个二级指标,构建了医院运营状况评估体系。结论基于信息化技术背景下构建的医院运营状况评估指标体系有良好的可行性。     

A longitudinal comparison of charge-based weights with cost-based weights

The diagnosis-related group weights that determine prices for Medicare hospital stays are recalibrated annually using charge data. Using data from fiscal years 1985 through 1987, the authors show that differences between these charge-based weights and cost-based weights are increasing only slightly. Charge-based weights are available in a more timely manner and, based on temporal changes in the weights, we show that this is an important consideration. Charge-based weights provide higher payments than cost-based weights to hospitals with higher case-mix indexes, but have little effect on hospitals with low cost-to-charge ratios, high capital costs, or high teaching costs.     

Does one national prospective payment system market basket make sense?

For the first 4 years of Medicare's prospective payment system (PPS), one national market basket of cost weights and price proxies has been used to update payment rates. Previous evidence for a single rate is reviewed, and more recent data are presented that show definite regional differences in input price inflation, resulting in systematic gains or losses for some regions. However, as long as the Health Care Financing Administration continues to periodically update its hospital wage index, the net impact on hospitals is minor. Nevertheless, large differences in PPS-excluded hospital cost shares indicate the need for two sets of cost weights.     

Evidence of cost shifting in California hospitals

We used 1993-2001 data from private hospitals in California to investigate whether decreases in Medicare and Medicaid prices were associated with increases in prices paid for privately insured patients. We found that a 1 percent relative decrease in the average Medicare price is associated with a 0.17 percent increase in the corresponding price paid by privately insured patients; similarly, a 1 percent relative reduction in the average Medicaid price is associated with a 0.04 percent increase. These relationships imply that cost shifting from Medicare and Medicaid to private payers accounted for 12.3 percent of the total increase in private payers' prices from 1997 to 2001.     

数据挖掘在医疗临床路径中的应用

医院信息系统在我国医院得到了广泛的应用,但是医院信息系统中的数据还未被充分利用。数据挖掘优势就在于对数据的利用,其在金融、电信、制造等行业得到广泛应用。而临床路径的制定,从临床医学的角度来看,是一个非常复杂、困难和充满争议的问题,因此结合数据挖掘的方式进行分析,有利于病种质量、诊疗行为规范以及费用控制,可以制定出符合诊疗规范的临床路径。