Managed competition and spill-over effects

I want to know if an awesome paper has been written and I just have not seen it.

What is the integrated spill-over effects of all managed competition health systems on the general practice and cost of medicine?

We have a rich literature that shows more Medicare Advantage marketshare leads to lower risk adjusted spending for traditional Medicare.

There is a decent literature that Medicaid managed care saves money compared to fee for service Medicaid.

The Affordable Care Act has encouraged the formation of Accountable Care Organizations. The early data suggests small but real savings for ACO participants compared to fee for service Medicare.

And then we have the private sphere with employer and individual plans offering a wide variety of managed products ranging from the traditional gatekeeper HMO model to centers of excellence and reference pricing.

All of these systems are designed to either nudge or hip check providers and patients to select more efficient care. The Medicare Advantage literature suggests that once a threshold of patients under an MA contract is achieved, regions will redesign the care flow to accomodate the demands of Medicare Advantage payers. And once the care flow is redesigned, providers are not checking to see if Mrs. Jones is a Medicare Advantage or just a traditional Medicare patient when they build their discharge plan or the congestive heart failure monitoring plan. This is where the spill-over occurs that leads to lower costs for traditional Medicare in high Medicare Advantage regions.

So my question is if we were to quantify how much of a region’s total healthcare spending was routed through some type of managed competition vehicle, would there be regional spillover effects?

I want to read that paper. I know I don’t have the data nor the technical chops to write that paper, but I so want to read it.

8 replies
  1. 1
    Argiope says:

    Anecdata: When I’ve practiced in a system that was primarily reimbursed by Medicaid, we used that medication formulary for everyone—at least as a starting point. You get used to a certain toolkit being available, and quickly figure out that cheaper drugs do, in fact, work for almost everyone most of the time. Maybe that’s a place to start looking for the data.

  2. 2
    WereBear says:

    The most efficient care is prevention, when possible.

  3. 3

    @WereBear: not really… prevention can be the best value care but it might not actually save money… and I am okay with that.

    See: from Aaron Carroll on a recent review of the relevant literature

  4. 4
    sj says:

    I’m convinced this is a huge issue in health policy evaluation. The benefits of ACOs, MCOs, performance measures, etc, could be wildly under-counted if they do nudge people, but the nudge is spread among all practitioners. Diff-in-diff, etc, would recognize small effects but a systematic decline would be explained away.

    In the 1990s, capitated MCOs invented & clearly drove the change towards super-quick hospitalizations, but all hospitals followed quickly. When the MCOs failed, changes like that stopped. At any given time the MCOs were the same small amount cheaper, but their waxing and waning influence was the real story.

  5. 5
    WereBear says:

    @David Anderson: Ah, good info. As always, I give massive points for humanitarian value :)

  6. 6
    Steve LaBonne says:

    Forcing down utilization as a way to reduce costs will backfire (see WereBear’s comment about prevention). US costs are not high because our utilization rate is higher than that in other countries; it isn’t. It’s because all medical services are hellaciously expensive compared to every other country.

  7. 7

    @sj: There should be enough variation between either introduction or uptake within/between regions to allow a strong enough signal for a Diff-Diff to pick-up. The Medicare Advantage literature suggests that there is a threshold for a region to see significant diffusion effects. If Medicare Advantage penetration is under ~17% IIRC, the diffusion is local and limited but as it nudges above the threshold, cost savings are significant as the hurdle to change operational procedures in order to keep the Medicare Advantage insurers happy/quiet generates systemic changes and savings.

  8. 8
    Cam says:

    I wonder if you have any thoughts on this press release from Amazon/JPMChase/Berkshire Hathaway?

    Amazon, Berkshire Hathaway and JPMorgan Chase & Co. to Partner on U.S. Employee Healthcare

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