September Research Roundup: What We’re Reading

By Emma Walsh-Alker

It’s officially fall, and along with the new season came an autumnal bounty of new health policy research. This month, we reviewed studies on the connection between medical debt and social determinants of health, private equity acquisition of physician practices, and controlling health care costs through state surprise billing laws.

David U. Himmelstein, Samuel L. Dickman, Danny McCormick, David H. Bor, Adam Gaffney, Steffie Woolhandler, Prevalence and Risk Factors for Medical Debt and Subsequent Changes in Social Determinants of Health in the US, JAMA Network Open, September 16, 2022. Using data from the Census Bureau’s Survey of Income and Program Participation (SIPP) for the years 2017-2019, researchers evaluated risk factors for experiencing medical debt using a nationally representative sample of adults in the U.S.

What it Finds

10.8 percent of adults (18.1 percent of households) had medical debt during the three-year period, with a median debt amount of roughly $2,000.
Individuals in the low- and middle-income categories were more likely to carry medical debt than individuals at the highest income levels: 12.3 percent of adults with income below the federal poverty level (FPL) had medical debt, compared with approximately 7 percent of adults with income above 400 percent FPL.
Non-Hispanic Black individuals had the highest incidence of medical debt across racial and ethnic groups (16.5 percent). Hispanic and Non-Hispanic white individuals had similar rates of debt (around 10.3 percent), while Asian individuals had the lowest level of debt (4.5 percent).
Uninsured study participants had the highest rates of medical debt at 15.3 percent. Private health plan enrollees with high deductible plan had a 12 percent rate of medical debt, and residents of states that have not expanded Medicaid under the Affordable Care Act (ACA) were 40 percent more likely to have medical debt than residents of Medicaid expansion states.
Researchers found a strong link between medical debt and housing instability, food insecurity, and other social determinants of health measures; 25.2 percent of people unable to afford housing also experienced medical debt, and individuals with medical debt were two to three times more likely to experience food insecurity, be unable to pay for utilities, and experience eviction or foreclosure.

Why it Matters
Although previous research has established the urgency of the medical debt crisis in the United States, this study offers stakeholders a new way to approach medical debt as a social determinant of health that is associated with adverse health outcomes. Individuals who are hospitalized or people with disabilities are especially vulnerable to oppressive medical debt, even if they have health insurance. The researchers point to plan benefit designs as a key determinant of medical debt, noting that enrollees in private high deductible plans are often exposed to higher out-of-pocket medical costs than those in Medicaid. A recent study by the Commonwealth Fund found that 23 percent of working age adults in the United States were “underinsured” in 2022, and many people skipped or delayed care or took on medical debt due to high out-of-pocket costs. Studies like this demonstrate the need for more robust policy solutions that tackle not only uninsurance but high out-of-pocket costs and aggressive debt collection practices.

Yashaswini Singh, Zirui Song, Daniel Polsky, Joseph D. Bruch, Jane M. Zhu, Association of Private Equity Acquisition of Physician Practices with Changes in Health Care Spending and Utilization, JAMA Health Forum, September 2, 2022. To identify if and how spending and utilization metrics shift after private equity (PE) acquisition of physician practices, researchers looked at 578 practices bought by PE firms between 2016-2020 across three specialty fields with particularly high rates of private equity acquisition (dermatology, gastroenterology, and ophthalmology) before and after acquisition, and compared PE-acquired practices with independent practices.

What it Finds

PE-acquired practices charged a mean additional amount of $71 per claim after acquisition compared to the control practices (a 20 percent difference) and saw an increase of $23 in allowed amount per claim (an 11 percent difference).
Although charges trended upward across all three specialties studied after PE acquisition, researchers found some variation. For instance, allowed amounts per claim did not increase for PE-acquired dermatology practices.
Researchers note that they were not able to determine the reasons for these cost increases in private equity-acquired practices. So, while the data showed an increase in allowed amounts, this could be because practices started offering higher priced services or because they changed their billing practices (among other potential explanations).
PE-acquired practices also saw a 16.3 percent increase in patient utilization after acquisition, primarily due to new patients entering the practice.

The mean number of patients being treated by a practice increased by 25.8 percent, and new patient visits increased by 37.9 percent.
Certain patient encounters also lasted longer following private equity acquisition. Researchers found a 9.4 increase in the share of routine visits for established patients that were billed as longer than 30 minutes.
Because the study controlled for the number of physicians at each practice before and after it was acquired, researchers attributed increased patient volume to changes in how the PE-acquired practices operated and promoted their services rather than to the practice hiring additional physicians.

Why it Matters
PE acquisitions of physician practices have become increasingly common, prompting questions about the impact of these acquisitions on health care spending and utilization. As this study demonstrates, increases in health care spending and utilization are consistent with the underlying goal of PE firms to maximize returns on their investment in physician practices. However, the application of this profit-driven model to health care services has sparked pushback from patient advocates and other stakeholders. This year, both the Biden administration and Congress have cited PE involvement in health care as a cause for concern. Although PE-funded practices are seeing more patients, spending is increasing with little evidence of better-quality care. Additional research suggests that PE acquisition of nursing homes leads to increased costs for residents and simultaneous decreases in quality of care. More regulation of PE involvement in the health care sector is needed to contain costs and protect patient interests.

Aliza S. Gordon, Ying Liu, Benjamin L. Chartock, Winnie C. Chi, Provider Charges and State Surprise Billing Laws: Evidence From New York and California, Health Affairs, September 2022. Under the No Surprises Act (NSA), new federal protections against surprise medical billing hold consumers harmless from some common out-of-network charges. The NSA provides a default arbitration process for determining payments if providers and insurers cannot agree on the out-of-network payment rate. However, some states set different standards for provider payments when balance billing protections apply, and the NSA does not displace these state-specific policies as they apply to fully insured plans. To understand the impact of different state approaches to this aspect of surprise billing regulation, researchers examined how New York and California’s distinct methods of resolving payment disputes impacted provider charges in surprise billing scenarios involving nonemergency inpatient hospitalization between 2011-2020. New York’s law uses an independent dispute resolution (IDR) process tied to provider charges. California determines provider payments based on a payment standard tied to in-network prices instead of billed charges. Outcomes in both states were compared to a group of states with no state-level payment standards (Kentucky, Ohio, Wisconsin, Indiana, Georgia, Virginia, and Colorado).

What it Finds

In a sample of 28,245 surprise bills received by commercially insured patients in New York, researchers found that out-of-network provider charges increased after the passage of New York’s surprise billing law utilizing an IDR process.

Compared to states with no state-level payment standards, provider out-of-network charges for the bills studied increased by an estimated $1,157 (a 24 percent increase).
Assistant surgeons and surgical assistants in New York had the greatest increase in charges, and comprised 19 percent of the surprise bill scenarios studied in New York.

Conversely, from their sample of 31,718 surprise bills in California, researchers conclude that provider charges decreased after passage of the state’s law.

Relative to states with no state-level payment standards, California provider charges decreased by $752 (a 25 percent decrease).
Unlike New York, billed charges from assistant surgeons and surgical assistants in California did not significantly differ from those in other states.

Why it Matters
While this study was limited to claims data from one payer (Elevance Health, formerly Anthem), it demonstrates that different methods of resolving a surprise medical bill can impact provider charges in surprise billing scenarios, with New York’s IDR process associated with an increase in provider charges. Under the NSA, arbitrators are not allowed to consider a provider’s billed charge during the IDR process in states using the federal default process. Policymakers in states with payment rules that differ from the federal IDR process should look to the growing body of evidence on how considering billed charges during arbitration can lead to inflation in out-of-network costs.