April brought us a shower of health policy research, including studies on the implications of the American Rescue Plan Act’s (ARP) enhanced premium tax credits (PTCs) expiring for marketplace beneficiaries, how value-based payment models have fared in the commercial health insurance market, and trends in prices that private health plans pay for hospital care across the United States. We took some time away from checking out the cherry blossoms to dig in.

Matthew Buettgens, Jessica Banthin, Andrew Green, What If the American Rescue Plan Act Premium Tax Credits Expire?, Urban Institute, April 7, 2022. Since the arrival of enhanced PTCs under ARP in 2021, millions of marketplace enrollees have benefitted from more affordable coverage. Barring legislative action, the enhanced PTCs are set to expire at the end of this year. Using the Urban Institute’s Health Policy Simulation Model, researchers evaluate the consequences for health coverage across the United States if the enhanced PTCs are not extended. Because of significant uncertainty regarding coverage transitions after the public health emergency (PHE) formally ends, the study’s projections consider an average month in 2023 after Medicaid redeterminations have been completed.

What it Finds

• Overall, researchers estimate that 3.1 million more people will be uninsured if the enhanced PTCs expire, constituting a 12 percent increase over the respective uninsurance rate if the PTCs were extended.
• Marketplace enrollment hit a record high this year, likely due at least in part to the enhanced PTCs. Should they expire, researchers estimate there will be a 36.7 percent decrease in marketplace enrollment as compared to the scenario where PTCs are extended through 2023.
  • Researchers find that the PTCs expiring would have the largest impact on those with incomes between 200 and 400 percent of the federal poverty level (FPL), with an increase of 1.1 million or 17.7 percent in the number of uninsured people at this income level.
  • In addition, researchers note that those with incomes below 138 percent of the FPL would lose access to zero-dollar premium silver plans if the enhanced PTCs expire – leading to an estimated additional 1.1 million uninsured people, a 9 percent increase for this income level.
  • Researchers find that across age groups, young adults (ages 19-34) would experience the largest coverage losses should the PTCs expire, estimating a 1.5 million or 14.1 percent increase in the number of uninsured young adults relative to extending the PTCs.
  • Researchers find that non-Hispanic Black populations will also be disproportionately harmed by the PTCs expiring, potentially facing a 17.7 percent increase in the uninsured population. While researchers suggest Hispanic populations would see the least coverage disruptions, this is likely because of PTC eligibility restrictions based on immigration status – and even without major increases, the uninsurance rate for the Hispanic population remains very high at around 20 percent.
• Researchers analyzed how household and government spending would change if the enhanced PTCs expire, finding a significant impact in both areas.
  • Household spending would increase at all income levels, although marketplace beneficiaries with incomes over 400 percent of the FPL would lose eligibility for subsidies entirely, leading to an estimated annual increase of $2,003 their premiums.
  • Researchers also estimate that extending the enhanced PTCs would increase the federal deficit by $25.3 billion in 2023. However, this could be offset by legislation that extends the PTCs while also raising revenue.
• Finally, researchers found substantial variation in outcomes of the PTCs expiring across the states: residents of states that have not expanded Medicaid, including Georgia, Texas, and Florida, will likely face the largest coverage losses if the PTCs expire. States that have adopted their own programs expanding eligibility for PTCs – Massachusetts and New York – will be least impacted.

Why it Matters
This study’s findings indicate that failing to extend the enhanced PTCs would have significant consequences, particularly for Black, young adult, and low-income populations who are likely to suffer the largest coverage losses. Extending the enhanced PTCs should be a top priority for lawmakers. Not only do current marketplace enrollees benefit from more affordable subsidized coverage, but additional millions of people who may be newly eligible for marketplace coverage once the public health emergency ends risk becoming uninsured without continued affordable coverage options. Insurers, marketplaces, federal and state agencies, and consumer advocates will require time to ensure that potential legislation extending PTCs is implemented effectively and that consumers are aware of their eligibility for subsidized coverage. As such, time is of the essence for Congress to take action.

Marina A. Milad, Roslyn C. Murray, Amol S. Navathe, Andrew M. Ryan, Value-Based Payment Models in the Commercial Sector: A Systematic Review, Health Affairs, April 2022. Researchers reviewed 59 analyses of various value-based payment models implemented by commercial insurers, including pay-for-performance, bundled/episode-based payment, shared savings/shared risk, and population-based payments. The analyses evaluated the models’ impact on health care quality, spending, and utilization.

What it Finds

• Overall, researchers found mixed results: while most studies suggested that value-based payment models have positively impacted quality outcomes, their effect on spending or utilization outcomes was more variable.
  • Under pay-for-performance models, outcome measures either improved or remained stable.
    • Some studies found that this model increased the quality of care for certain health conditions – for example, by generating higher cancer screening rates – but decreased the prevalence of screening for other conditions, like sexually transmitted infections.
    • Researchers found some evidence that pay-for-performance models lowered health spending – for instance, Michigan’s Physician Group Incentive Program reduced adult and pediatric medical spending by 1.1 and 5.1 percent, respectively. This program also decreased the likelihood of patient readmissions and emergency department visits.
  • Less data is available on bundled/episode-based payment models, with mixed results across outcome measures.
    • Researchers found no quality differences for UnitedHealthcare’s bundle of breast, lung, and colon cancer treatment, but the program did generate significant estimated savings of $33 million over six years of treatment.
  • Similar to pay-for-performance models, evidence suggests that shared savings/shared risk models improve quality, but their effect on spending and utilization is less clear.
    • Massachusetts’s Alternative Quality Contract, one of the more successful models studied, increased quality across adult and pediatric preventive care. While the model decreased spending, researchers attribute 71 percent of this reduction to lower care utilization under the program.
  • Finally, researchers found that population-based payment models may improve quality but have had limited success in reducing spending.
    • Of the few studies examining population-based primary care models that have piloted in Hawaii and New York, one found that Hawaii’s program increased quality across a variety of care measures by 2.3 percentage points. However, New York’s program did not reduce overall spending and decreased primary care utilization by 3.9 percentage points.

Why it Matters
Value-based payment models have become increasingly prevalent over the past two decades as payers seek to contain health care costs without compromising quality. Commercial insurance is especially ripe for these cost-containment efforts, given that the average annual rate of spending growth per enrollee for commercial insurance was almost double that of Medicare from 2010-2019. Yet, this review of the evidence gives a “yellow light” to commercial plans considering value-based payment models. While a few of the pilot models highlighted in the study positively impacted outcome measures, there is little evidence that they reduce costs. Researchers emphasized that further evaluation is necessary to determine how commercial insurers can best employ value-based payment models. Before purchasers or payers pursue value-based payment models, they should consult some of the lessons learned and best practices outlined in the study.

Zachary Levinson, Nabeel Qureshi, Jodi L. Liu, Christopher M. Whaley, Trends in Hospital Prices Paid by Private Health Plans Varied Substantially Across the US, Health Affairs, April 2022. Researchers used RAND Hospital Data – which synthesizes annual reports submitted by all Medicare-certified hospitals to the Healthcare Cost Report Information System – to evaluate variation in prices commercial health plans pay for hospital care across 3,612 hospitals in the United States from 2012 to 2019. The analysis examined hospital commercial-to-Medicare price ratios for each year, comparing this data at the hospital referral region (HRR) and national level.

What it Finds

• Commercial health plans pay much more for hospital care than public payers, and although average commercial-to-Medicare price ratios were relatively stable during the study period, researchers found variation across geographic regions.
  • Between 2012 and 2019, price ratios increased by an average of 7 percentage points. However, there were substantial differences in spending growth trends among HRRs with both high and low-price ratios.
    • Of the HRRs that started out with highest price ratios in 2012, the top quartile of regions studied saw an increase of 38 percentage points in their price ratios over the study period while the bottom quartile of regions saw a decrease of 38 percentage points.
    • Of the HRRs with the lowest price ratios, the regions with the largest growth had increases of 31 percentage points in their price ratio, compared to a 16-percentage point decrease in regions that saw the largest declines in their price ratio.
    • The researchers concluded that these trends were primarily a result of hospitals changing their commercial rates over time.
  • Although researchers were not able to determine why price ratios increased dramatically in certain regions while falling in others, they connect this data to observed changes in health care markets: for instance, many hospitals with large increases in price ratios were located in Northern California, where the dominant hospital system Sutter Health recently entered a $575 million settlement for anticompetitive practices.

Why it Matters
Commercial insurers drive a significant portion of health care spending in the United States. As the researchers point out, the substantial regional variation in commercial-to-Medicare price ratio trends suggests that cost containment efforts could be more intentionally directed towards HRRs with the highest ratios. Policymakers should be cognizant of these trends when developing cost containment strategies for skyrocketing hospital prices that are increasing premiums and cost-shifting to consumers, which can often lead to crippling medical debt.