By Kristen Ukeomah 

Along with “Health Policy Valentines,” February brought a host of new health policy research. This month, we read about trends in medical and pharmacy spending, the relationship between health systems’ financial performance and amounts paid by commercial plans, and mental health provider network adequacy.

Nathaniel G. Jacobson, Dane Hansen, and Gabriela Dieguez, Trends in Medical and Pharmacy Spending in the Affordable Care Act Markets, 2015–19, Health Affairs, February 2023. Researchers reviewed claims data from Affordable Care Act (ACA)-compliant individual and small group markets and medical loss ratio data to identify trends and potential drivers in health care spending. The authors assessed utilization, unit prices, and service mix between 2015 and 2019.

What it Finds

• Total per member per month health care spending increased 4.0 percent annually in the small group market and 1.1 percent in the individual market during the study period.
• Professional and outpatient facility services drove spending growth in the small group market, with an annual trend of 5.1 percent and 4.7 percent, respectively, due primarily to unit price increases. Together, these services accounted for nearly 60 percent of total health care spending.
• In individual market, pharmacy services made the largest contribution to spending growth with an annual trend of 3.8 percent, accounting for 19 percent of total health care spending. Outpatient facility services also drove cost increases with a 2.2 percent annual trend, amounting to 30 percent of total spending. Both spending drivers are attributable in large part to unit prices as well as changes to the distribution of services used, or “service mix.”
• The individual market experienced more year-to-year spending volatility compared to the small group market. Spending trends jumped from significant decreases to increases, counteracting temporary downward trends. Authors cite factors such as membership turnover as well as policy changes, including the end of federal cost-sharing reduction payments and the effective elimination of the ACA’s individual health insurance mandate.
• Spending growth factors varied across service categories. For example, inpatient facility utilization decreased in both the individual and small group markets, but professional services utilization increased in the small group market while decreasing in the individual market. Similarly, in both the individual and small group market, there was variation in unit prices; even within pharmacy spending, generic drug unit prices decreased, while brand-name drug unit prices increased.

Why it Matters

U.S. health care spending is higher than in all other high-income countries. Over half of Americans report having difficulty affording health care costs, a trend that disproportionately impacts marginalized communities. This study illustrates some of the key factors underlying health care spending increases, including how spending trends differ across health insurance markets. As new price transparency data become available, studies like this can shed more light on rising health care costs—and hopefully methods for containing them.

Fredric Blavin, Nancy Kane, Robert Berenson, Bonnie Blanchfield, and Stephen Zuckerman, Association of Commercial-to-Medicare Relative Prices With Health System Financial Performance, JAMA Health Forum, February 10, 2023. Researchers at the Urban Institute and the T.H. Chan School of Public Health investigated the relationship between market power, hospital financial well-being, payer mix, and increases in commercial insurance prices.

What it Finds

• Commercial insurance prices for inpatient and outpatient services from 2018–2020 combined averaged approximately 224 percent of Medicare prices for the same services, with inpatient services reaching 230 percent of Medicare.
• The authors discovered a large disparity in the financial wealth of various types of hospitals, with non-profit multihospital health systems having significantly more capital available on hand than government-owned safety-net hospitals. Rural hospitals have even less capital on hand. Notably, hospitals with a higher Medicaid share of revenue had less cash on hand and lower operating margins.
• It is unlikely that relatively high commercial prices are used to offset losses from public payers, since those prices are associated with the higher profits and liquid capital at wealthier hospitals.

Why it Matters

Reimbursement rates paid by commercial payers far exceed what a public program would pay for the same service at the same hospital. The article helps debunk an oft-cited reason for high commercial prices: the need to shift costs from low reimbursement by public payers. To the contrary, researchers found that health systems with more cash on hand and greater operating margins are more likely to have a lower Medicaid share of revenue. As policymakers evaluate cost containment strategies like price regulation, data illustrating how payer mix relates to health system profitability will help guide their efforts.

Abigail Burman and Simon F. Haeder, Provider Directory Inaccuracy and Timely Access for Mental Health Care, American Journal of Managed Care, February 2022. Through a secret shopper survey, researchers evaluated provider directory accuracy and timely access to mental health providers in California, including psychiatrists and non-physician mental health professionals (NPMHPs), for Medicaid, marketplace, and off-marketplace commercial plan enrollees in 2018 and 2019.

What it Finds

• Surveyors could only reach 68.1 percent of listed psychiatrists and 59.1 percent of listed NPMHPs, facing obstacles such as providers no longer seeing patients and inaccurate contact information.
• Among providers surveyors could reach, provider directories were found to be inaccurate for 33.4 percent of listed psychiatrists and 30.5 percent of NPMHPs.
• Across product types, off-marketplace commercial plan provider directories were more accurate than either Medicaid or marketplace provider directories.
• Researchers evaluated whether surveyors could find urgent care appointments in under 96 hours and general care from an NPMHP in less than 10 days or a psychiatrist in less than 15 days.
  • For urgent care, surveyors could get timely access to psychiatrists only 47.2 percent of the time in 2018 and 49.1 percent of the time in 2019. Surveyors had more success getting a timely general appointment with a psychiatrist (73.6 percent in 2018 and 69.5 percent in 2019).
  • Surveyors could schedule timely urgent care appointments with NPMHPs in 61.7 percent of cases in 2018 and 56.9 percent in 2019.
  • Medicaid plans (compared to commercial and Covered California plans) provided the timeliest access to mental health care appointments.

Why it Matters

The Mental Health Parity and Addiction Equity Act (MHPAEA) requires parity between mental health benefits and medical/surgical benefits. Yet even insured patients face significant barriers to mental health care. This study illustrates just a few of the hurdles that patients must clear, from inaccurate listings of in-network providers to long wait times for appointments. Better enforcement of parity standards and stronger network adequacy requirements, like those in Medicaid, may help increase enrollees access to this crucial care.