Importance Administrative costs in the US health care system are an important component of total health care spending, and a substantial proportion of these costs are attributable to billing and insurance-related activities.
Objective To examine and estimate the administrative costs associated with physician billing activities in a large academic health care system with a certified electronic health record system.
Design, Setting, and Participants This study used time-driven activity-based costing. Interviews were conducted with 27 health system administrators and 34 physicians in 2016 and 2017 to construct a process map charting the path of an insurance claim through the revenue cycle management process. These data were used to calculate the cost for each major billing and insurance-related activity and were aggregated to estimate the health system’s total cost of processing an insurance claim.
Exposures Estimated time required to perform billing and insurance-related activities, based on interviews with management personnel and physicians.
Main Outcomes and Measures Estimated billing and insurance-related costs for 5 types of patient encounters: primary care visits, discharged emergency department visits, general medicine inpatient stays, ambulatory surgical procedures, and inpatient surgical procedures.
Results Estimated processing time and total costs for billing and insurance-related activities were 13 minutes and $20.49 for a primary care visit, 32 minutes and $61.54 for a discharged emergency department visit, 73 minutes and $124.26 for a general inpatient stay, 75 minutes and $170.40 for an ambulatory surgical procedure, and 100 minutes and $215.10 for an inpatient surgical procedure. Of these totals, time and costs for activities carried out by physicians were estimated at a median of 3 minutes or $6.36 for a primary care visit, 3 minutes or $10.97 for an emergency department visit, 5 minutes or $13.29 for a general inpatient stay, 15 minutes or $51.20 for an ambulatory surgical procedure, and 15 minutes or $51.20 for an inpatient surgical procedure. Of professional revenue, professional billing costs were estimated to represent 14.5% for primary care visits, 25.2% for emergency department visits, 8.0% for general medicine inpatient stays, 13.4% for ambulatory surgical procedures, and 3.1% for inpatient surgical procedures.
Conclusions and Relevance In a time-driven activity-based costing study in a large academic health care system with a certified electronic health record system, the estimated costs of billing and insurance-related activities ranged from $20 for a primary care visit to $215 for an inpatient surgical procedure. Knowledge of how specific billing and insurance-related activities contribute to administrative costs may help inform policy solutions to reduce these expenses.
Administrative Costs Associated With Physician Billing and Insurance-Related Activities at an Academic Health Care SystemFebruary 26, 2018
Resetting the Scoreboard: Why CBO Should Abandon Its Flawed Analysis of the Center for Medicare and Medicaid InnovationFebruary 15, 2018
Congress created the Center for Medicare and Medicaid Innovation (CMMI) in the Affordable Care Act and vested it with extraordinary powers. CMMI can conduct demonstration projects in the Medicare, Medicaid and Children’s Health Insurance Program and expand those projects nationwide without congressional approval.
The Congressional Budget Office (CBO) believes that CMMI will achieve substantial federal savings. It bases this conclusion not on analyses of projects that CMMI has undertaken, but on faith in the CMMI process. CBO assumes that process will produce money-saving ideas and that the center will scrap failed projects and expand
“The savings that CBO expects to result from the center’s activities,” a senior CBO official said in congressional testimony, “stem largely from the judgment that successful demonstrations will be expanded and achieve savings.”
The statement’s circularity – CBO “expects” CMMI to achieve savings because CMMI will “achieve savings” – is but one way which the agency’s analysis of CMMI departs from its long-established methods of preparing estimates. In addition to assuming that CMMI will sometime in the future conceive, launch and nationalize successful projects, CBO conjured a numerical factor to convert its assumptions into dollar estimates. It then embedded these numbers in its Medicare baseline, the yardstick against which it measures legislation.
CBO’s unique approach to CMMI thus colors its analysis of legislation designed to achieve Medicare savings. CBO believes that any bill that would overlap with any ongoing or possible future CMMI demonstration would increase Medicare spending above baseline levels. Even if Congress offers up a proposal that would reduce spending relative to the statute, CBO will score it as a spending hike if it believes that CMMI might someday test a similar policy.
CBO thus ascribes unobserved and unobservable savings to projects that CMMI has not yet undertaken (and may never undertake), quantifies these savings through the application of an arbitrary numerical factor, incorporates the savings into its Medicare baseline, and measures the budgetary effects of legislation against this revised baseline.
This paper traces the history of Medicare demonstration projects and shows how CMMI’s authorities differ from its predecessors. It then examines CBO’s assumptions about CMMI, carefully tracing the reasoning that has led to its conclusions. It then shows how recent events, including the Trump Administration’s cancellation of CMMI projects that CBO believed would save money, expose flaws in CBO’s assumptions and reasoning. It concludes with recommendations for CBO, Congress and the executive branch with respect to CMMI.
This paper develops the first evidence on how individuals’ union membership status affects their net fiscal impact, the difference between taxes they pay and cost of public benefits they receive, enriching our understanding of how labor relations interacts with public economics. Current Population Survey data between 1994 and 2015 in pooled cross-sections and individual first-difference models yield evidence that union membership has a positive net fiscal impact through the worker-level channels studied.
The growth of novel flexible work formats raises a number of questions about their effects upon health and the potential required changes in public policy. However, answering these questions is hampered by lack of suitable data. This is the first paper that draws on comprehensive longitudinal administrative data to examine the impact of self-employment in terms of health. It also considers an objective measure of health – hospital admissions – that is not subject to recall or other biases that may affect previous studies. Our findings, based on a representative sample of over 100,000 individuals followed monthly from 2005 to 2011 in Portugal, indicate that the likelihood of hospital admission of self-employed individuals is about half that of wage workers. This finding holds even when accounting for a potential self-selection of the healthy into self-employment. Similar results are found for mortality rates.
Legal adult-use marijuana is associated with risks that may cause bodily injury and property damage. Many of these risks have been well documented and widely discussed in the media, including theft, fire, motor vehicle accidents and consumption-related injuries. The potential for an increase in the number and value of cannabis-related product liability claims and lawsuits, however, is of particular concern to the cannabis and insurance industries. The production, distribution and sale of an ingestible product that has psychoactive effects – accompanied by a wide range of anticipated labeling and marketing representations – will certainly result in robust product liability litigation.
U.S. policymakers, scholars, and advocates have long displayed an ideological commitment to exposing insured patients to substantial out-of-pocket expenses. These commitments derive from both overt political ideologies, which favor individual responsibility and oppose redistribution of wealth and risks, as well as more-subtle ideological commitments of academic economists, which link observed patterns of consumption to value-claims about welfare. In this symposium contribution, we document those ideological commitments and juxtapose them with a review of the scientific evidence about the actual effects of patient cost-sharing. We find, as economic theory predicts, that patients exposed to healthcare costs consume less healthcare. However, a fair review of the evidence — including the effects on health outcomes, access to care, and financial insecurity — makes it very hard to conclude that substantial and untailored cost-sharing exposure — as we have seen in actual application — is good social policy. We suggest directions for future study and reform.
With public services such as health and education, it is not straightforward for consumers to assess the quality of provision. Many such services are provided by monopoly not-for-profit providers and there is concern that for-profit providers may increase profit at the expense of quality. This paper explores whether entry by for-profit providers is good for consumers despite the problem of unobserved quality. The model generates three key policy-relevant insights. First, by developing a novel approach to competition between different organizational forms, it frames the relevant trade-offs precisely. Second, it shows the value of keeping an incumbent not-for-profit as an active provider. Third, it characterizes the optimal payment (or voucher value) to an entrant for each consumer who switches in a way that can be applied empirically.
On the Effect of Parallel Trade on Manufacturers’ and Retailers’ Profits in the Pharmaceutical SectorFebruary 14, 2018
Differences in regulated pharmaceutical prices within the European Economic Area create arbitrage opportunities that pharmacy retailers can use through parallel imports. For prescription drugs under patent, such provision decisions affect the sharing of profits among an innovating pharmaceutical company, retailers, and parallel traders.
We develop a structural model of demand and supply in which retailers can choose the set of goods to sell to consumers, thus foreclosing the consumers’ access to some less-profitable drugs, which allows retailers to bargain and obtain lower wholesale prices with the manufacturer and parallel trader. With detailed transaction data, we identify a demand model with unobserved choice sets using supply-side conditions for optimal assortment decisions of pharmacies. Estimating our model, we find that retailer incentives play a significant role in fostering parallel trade penetration. Our counterfactual simulations show that parallel imports of drugs allows retailers to gain profits at the expense of the manufacturer, whereas parallel traders also gain but earn more modest profits. Finally, a policy preventing pharmacies from foreclosing the manufacturer’s product is demonstrated to partially shift profits from pharmacists to both the parallel trader and the manufacturer, and a reduction in the regulated retail price favors the manufacturer even more.
Pregnancy as a Normal Condition of Employment: Comparative and Role-Based Accounts of DiscriminationFebruary 14, 2018
As the Pregnancy Discrimination Act of 1978 (PDA) turns forty, it is time to consider how we define pregnancy discrimination.
In recent years, courts have come to define pregnancy discrimination almost exclusively through comparison. Yet our understanding of discrimination, inside and outside the pregnancy context, depends on judgments about social roles as well as comparison. In enacting the PDA, Congress repudiated employment practices premised on the view that motherhood is the end of women’s labor force participation, and affirmed a world in which women as well as men would combine work and family—a world in which pregnancy would be a normal condition of employment. A social-roles analytic helps explain the logic of pregnancy discrimination, whether it assumes the form of hostility to pregnant workers or a simple failure to accommodate.
Drawing on this social-roles analytic, the Lecture offers a reading of Young v. UPS, the Supreme Court’s most recent decision on the PDA. Young breaks from an exclusively comparative approach and authorizes pregnancy accommodation claims under both disparate treatment and disparate impact frameworks. The Court’s approach is informed by a growing popular consensus. As the PDA turns forty, nearly half the states have enacted pregnant worker fairness acts supporting reasonable accommodation of pregnancy in the workplace.
Competition policy is there to promote competition in order to lower prices and enhance economic efficiency. It does so by challenging business conduct deemed anticompetitive. The purpose of this essay is to address two questions. First: Does competition policy really promote competition? Second: Does competition really lower prices and does it enhance efficiency? The problem with competition policy is that it often promotes competition in a narrow sense, but stands in the way of competition in a broader sense. Moreover, after a century of sharpening the pencil its enforcement criteria remain as ambiguous as ever, giving rise to substantial legal uncertainty. The problem with competition itself is that it does not always work the way it should. What makes competition often ineffective is economies of scale, particularly mass production. Unfortunately, mass production is far more effective than competition itself in both lowering prices and enhancing efficiency. What makes it worse is that the main adversary of competition policy, big business, happens to be the main ally of mass production. In that respect, competition policy may be winning some battles now and then, but is waging a lost war.