In voluntary alternative payment models, participation is essential for model viability and the progression of provider payment reform. We study participation decisions of accountable care organizations (ACOs) in the Medicare Shared Savings Program (MSSP). We leverage a natural experiment in which a 2017 rule change introduced differential shocks to an ACO’s baseline spending and performance-year spending. The net effect was an effective change in benchmarks that varied across ACOs. Dropout was 7 percentage points more likely among ACOs with effective benchmark decreases. While small reductions in the effective benchmark did not affect program participation, larger reductions increased dropout by 11 percentage points. ACOs with spending already above their benchmarks were particularly sensitive to effective benchmark reductions, consistent with the program’s weak long-term incentives to reduce spending. Our results highlight the causal role benchmarks play in determining ACO participation and the need to consider the consequences of participation effects in the design of new payment models.

This study aims to examine how variation in physicians' treatment decisions for newborn deliveries responds to changes in the hospital-level norms for obstetric clinical decision-making. We use data on all hospital-based births in Florida from 2003 through 2017. Our difference-in-differences approach leverages obstetric unit closures as the source of identifying variation to exogenously shift obstetricians to a new, nearby hospital with different propensities to approach newborn deliveries less intensively. Obstetric physician behavior change appears highly malleable and sensitive to the practice patterns of other physicians delivering newborns at the same hospital. Incentives and policies that encourage more appropriate clinical care norms hospital-wide could sharply improve physician treatment decisions, with benefits for maternal and infant outcomes.

Barriers to entry and scope of work restrictions are common features of US labor markets, especially within healthcare industries. However, concerns over access and costs of care have encouraged some deregulation. We empirically explore relaxed occupational rules of anesthesia care whereby physician-trained anesthesiologists and certified registered nurse anesthetists (CRNAs) perform overlapping services but often engage in joint production. After CRNAs were granted practice independence, we find only modest (3%) reductions in anesthesiologist billing for CRNA supervision and no evidence of greater use of CRNAs. Our results caution policymakers against overestimating the downstream impact resulting from removing these provider regulations.

The macroeconomic environment has been shown to affect health-care service utilization. We examined the relationship between unemployment rate and service intensity among a nationally representative sample of primary care office visits from Medicare patients by merging data from the 2006–2012 National Ambulatory Medical Care Survey with unemployment data from the Bureau of Labor Statistics. Multispecialty practices demonstrated increases in the number of electrocardiogram tests prescribed and the number of return appointments scheduled. In contrast, single-specialty practices did not respond on those margins and instead increased the likelihood of administering diagnostic and screening examinations. We found no significant relationship between unemployment rates and the number of laboratory and imaging services, magnetic resonance imaging use, referrals, or medication prescribing. These results were robust to controlling for extensive visit characteristics and county-, year-, and month-fixed effects. Our results suggest that physicians responded to the Great Recession by changing their practice behavior.

Medicare accounts for roughly 20 percent of medical expenditures in the United States and is the dominant payer for many treatments. Consequently, Medicare payment policy may have diffuse consequences. Using a contemporary bundled payment reform (the “CJR” program) and a difference-in-differences research design, we estimate Medicare’s spillover reach. We find that altered treatment decisions for targeted joint replacement procedures are closely, though not perfectly, mirrored between traditional Medicare, Medicare Advantage, and the nonelderly commercially insured populations. Results for untargeted procedures performed by CJR-affected physicians also show suggestive evidence consistent with a secondary spillover effect; however, this behavior change does not extend to less related procedures. Our findings align with the “norms hypothesis” for physician decision making but do not imply rigid and uniform treatment choices. Instead, key decision nodes appear to gain greater salience under Medicare’s new incentive structure, which leads to revised treatment choices for different payer-procedure combinations. Ignoring the breadth of externalities from Medicare policies risks understating their social welfare impact.

Medicare is a roughly $700 billion public program, with physician payments representing one of its largest expenditures. Medicare's prices are also administratively set, which leaves the structure of payment changes subject to a political process that may introduce idiosyncratic features and even perverse incentives. At the same time, physician responses to changes in Medicare reimbursements are likely to vary according to the policy's duration, scope, and size. We study a setting where broad federal laws contained specific provisions that financially benefit a narrow group: Alaskan physicians. The geographically targeted payment reforms were also unique along key dimensions. Using difference-in-differences strategies, we find that large, temporary price changes increase spending but elicit no detectable supply response. Conversely, generous and permanent price shocks induce greater service flows but not uniformly across specialties. Our findings suggest that Congress may engage in fiscally inefficient Medicare spending to accomplish other legislative objectives.

A longstanding literature explores how altruism affects the way physicians respond to incentives and provide care. We analyze how patient socioeconomic status mediates these responses. We show theoretically that patient socioeconomic status systematically influences the way physicians respond to reimbursement changes, and we identify the channels through which these effects operate. We use two Medicare reimbursement changes to investigate these insights empirically. We confirm that a given physician facing an increase in reimbursement boosts utilization by more when treating richer patients. We show that average supply price elasticities vary from 0.02 to 0.18 for a given physician, depending on the patient’s socioeconomic status. Finally, we show that the Medicare reforms we study led to overall reimbursement increases that raised healthcare utilization by 10% more for high-income patients compared to their low-income peers.

While salient features of the Affordable Care Act include insurance expansions and private coverage reforms, various other provisions are embedded within the law. We focus on a temporary 10 percent fee increase for primary care visits supplied to publicly insured (Medicare) beneficiaries. Using administrative and survey data, we assess the price shock's impact on service volume, physician labor supply, and quality of care. Primary care physicians (PCPs) in independent practices demonstrate, at most, a marginal 2 percent increase in new patient visits while horizontally and vertically integrated PCPs show no change. Both PCP organizational types witness declines in established patient visits, on average, but there is marked heterogeneity: established patient visits increase by 1 to 2 percent among PCPs with fewer Medicare claims in the pre-period. The Medicare fee bump did not observably impact other labor supply outcomes and quality of care margins. We estimate that the policy introduced a $1.5 billion transfer from taxpayers to providers during the initiative's first three years.

Existing research has examined the demand-side effects of ACA Medicaid expansions, but supply-side implications are not well-understood. Using a model of uncertain demand, we show how firms choose between fixed- and variable-cost labor investments. We empirically test the model predictions via a difference-in-differences strategy that uses Medicaid expansions and detailed staffing information on over 129,000 physician practices. We find no substitution toward less expensive provider types whose employment carries fixed costs in the short run; instead, practices are 4-8 percent less likely to employ any nurse practitioner or physician assistant post-expansion. Small practices seem to drive the restrained labor demand effects.

An extensive literature documents immediate and persistent adverse labor market outcomes for individuals graduating into an economic downturn, but these effects are heterogeneous across sectors, occupations, and skill levels. In particular, the impact of recessions on the labor market outcomes for new physician graduates remains unknown. We leverage a unique dataset on New York physicians to analyze if and how the Great Recession impacted the labor market of physicians who have completed their residency and fellowship training and are seeking their first job. We find that these physicians do not delay labor market entry and their job searches and other employment outcomes are unaffected by the business cycle. The collage of evidence demonstrates that new graduates were largely unfazed by the recent downturn, which sharply contrasts with other highly educated, high remunerating occupations.

Medicaid and the Child Health Insurance Programs (CHIP) are key sources of coverage for U.S. children. Established in 1997, CHIP allocated $40 billion of federal funds across the first 10 years but continued support required reauthorization. After 2 failed attempts in Congress, CHIP was finally reauthorized and significantly expanded in 2009. Although much is known about the demand-side policy effects, much less is understood about the policy's impact on providers. In this paper, we leverage a unique physician dataset to examine if and how pediatricians responded to the expansion of the public insurance program. We find that newly trained pediatricians are 8 percentage points more likely to subspecialize and as much as 17 percentage points more likely to enter private practice after the law passed. There is also suggestive evidence of greater private practice growth in more rural locations. The sharp supply-side changes that we observe indicate that expanding public insurance can have important spillover effects on provider training and practice choices.

Each year, billions of dollars are wasted owing to health care fraud, waste, and abuse. Efforts to detect fraud have been increasing, yet we have little information about physicians who have been excluded from Medicare and state public insurance programs for fraud, health crimes, or the unlawful prescribing of controlled substances. This cross-sectional study considered all physicians excluded from Medicare and state public insurance programs between 2007 and 2017. The study matched exclusion data to a comprehensive, cross-sectional database of US physicians assembled by Doximity, an online networking service for US physicians. The share of physicians excluded in each state was examined and linear trends of exclusions over time were estimated. Using physician-level multivariable logistic regression models, exclusions (binary variable) were assessed as a function of physician characteristics.Our results highlight the potential value of using physician characteristics in conjunction with information on medical claims filed by physicians to hel ap identify adverse physician behavior.

It is important to understand the relationship between drug efficacy measured in randomized clinical trials (RCTs) and real-world drug effectiveness. We estimate how RCT overall survival (OS) and RCT radiographic progression-free survival (rPFS) benefits predict the association between treatments and real-world OS gains for metastatic castration-resistant prostate cancer (mCRPC) drugs. After adjusting for treatment selection bias, RCT OS and RCT rPFS estimates serve as useful, or even conservative, predictors of RW OS gains.

Using Medicare claims, we documented US prescribing patterns for originator biologic trastuzumab (Herceptin), a targeted cancer therapy, and five biosimilar entrants since 2019. The first biosimilar captured a dominant share, but over time, average sales prices of all products declined, and later entrants became dominant in some states. Despite strong brand loyalty to the first biosimilar, competitive pressure increased with subsequent entrants.

There is a lack of evidence from nationwide samples on the disparity of initiating immune checkpoint inhibitors (ICIs) after metastatic lung cancer diagnosis. We identified metastatic lung cancer patients diagnosed between 2015 and 2020 from a large, nationwide commercial claims database. We analyzed the time from metastatic lung cancer diagnosis to ICI therapy using Cox proportional hazard models. Independent variables included county-level measures (quintiles of percentage of racialized population, quintiles of percentage of population below poverty, urbanity, and density of medical oncologists) and patient characteristics (age, sex, Charlson comorbidity index, Medicare Advantage, and year of diagnosis). We find that commercially insured patients with metastatic lung cancer who lived in counties with greater percentage of racialized population had slower initiation of ICI therapy after lung cancer diagnosis, despite greater density of oncologists in their neighborhood.

This study aimed to quantify the value of reducing chimeric antigen receptor T-cell (CAR-T) treatment wait times on patients with refractory and relapsed aggressive blood cancer who can newly gain access to treatment or access treatment earlier in their disease course. Using data from the JULIET clinical trial, we first identified the number of additional patients with diffuse large B-cell lymphoma that would have been treated with tisagenlecleucel CAR-T therapy if wait times were shortened. Next, among patients who already received CAR-T, we estimated tumor burden progression over time using a linear probability regression model. Delays affected not only access to CAR-T treatments but also treatment effectiveness. Our results highlight the survival benefits of expediting treatment access and may help explain some observed differences in CAR-T effectiveness across countries.

Costly targeted therapies are playing an increasingly important role in treating cancer. To characterize trends in spending on targeted therapies for breast cancer and to estimate the association of these therapies with cancer mortality, we analyzed cancer diagnoses in the Surveillance, Epidemiology, and End Results Program–Medicare linked database. We categorized total cancer spending into spending on targeted therapies, spending on nontargeted therapies, and spending on other cancer care. Diagnosis-year spending on targeted therapies increased from $1,024 per patient in 2000 to $18,809 per patient in 2015 for patients with advanced-stage cancer and from $82 to $3,289 for patients with early-stage cancer. For patients with advanced-stage cancer, a $1,000 increase in spending on targeted therapies in the diagnosis year was associated with a 0.55-percentage-point decrease in adjusted three-year cancer mortality, whereas for patients with early-stage cancer, there was no association. The other two types of spending (on nontargeted therapies and other cancer care) were not associated with mortality among patients with either advanced- or early-stage cancer. Our results indicate that among various types of cancer treatments, only targeted therapies generated meaningful survival gains for patients with advanced-stage breast cancer.

Biologics, large molecules produced in a living system, are one of the fastest growing segments of drug spending. In theory, biosimilars, highly similar copies of existing biologics, could lower costs. The first biosimilar to launch in the US, filgrastim-sndz, had strong adoption after just 2 years, capturing 40% of the market and lowering unit prices by 25%. However, unlike filgrastim, which treats acute indications, the second and third biosimilars to launch in the US addressed chronic conditions. We examined the uptake of Inflectra and Renflexis and investigated physician switching behavior between biologic and biosimilar versions. Two years after launch, biosimilars captured only 10% of the infliximab market and lowered reimbursements by 17%, a slower adoption trajectory relative to biosimilars in the filgrastim market. Although slower than filgrastim, biosimilar infliximab uptake in the US was similar to that in Europe—after 2 years, biosimilar infliximab garnered 13% of European market share, with subsequent uptake increasing steeply to 52% by 5 years.

This study identified differences in biosimilar uptake across providers and examined the association between provider biosimilar uptake and observable practice-level characteristics. Using 100% of a commercial medical claims database from June 2015 to June 2018, we compared trends in biosimilar uptake across 2 dimensions: provider’s place of service and provider’s prescribing exclusivity. Relative to hospital-based providers, office-based providers were earlier and quicker adopters of the biosimilar filgrastim. Across all places of service, providers predominantly prescribed either the biosimilar or biologic, exclusively, for all their patients. Any biosimilar uptake was more common among providers in office-based settings, providers with larger practice sizes, and providers with a higher share of health maintenance organization patients, nonwhite patients, and younger patients.

The prices of newly approved cancer drugs have risen over the past decades. A key policy question is whether the clinical gains offered by these drugs in treating specific cancer indications justify the price increases. We collected data on the price (in 2017 USD) per life-year gained among cancer drug-indication pairs approved by the US Food and Drug Administration (FDA) between 1995 and 2017. We modeled trends using fractional polynomial and linear spline regression models that controlled for route of administration and cancer type fixed effects. We found that between 1995 and 2012, price increases outstripped median survival gains, a finding consistent with previous literature. Nevertheless, price per mean life-year gained increased at a considerably slower rate, suggesting that new drugs have been more effective in achieving longer-term survival. Between 2013 and 2017, price increases reflected equally large gains in median and mean survival, resulting in a flat profile for benefit-adjusted launch prices in recent years.

Spending at end of life accounts for a large and growing share of healthcare expenditures in the US, and often reflects aggressive care with questionable value for dying patients. Using a novel instrumental variables approach, we conduct the first study on the causal effect of Medicare reimbursement for advance care planning (ACP)—the process of discussing and recording patient preferences for goals of care—on care utilization, spending, and mortality outcomes for critically ill Medicare patients. We find that billed ACP services substantially increase hospice use and hospice spending within a year, accompanied by corresponding increase in one-year mortality. The impacts of ACP services on hospice use and spending are especially prominent among patients with dementia and those of lower socioeconomic status. Among decedents, death is significantly less likely to occur in the hospital, and total and inpatient spending within the last 30 days of life fall significantly. Our findings suggest that paying for ACP services can be effective in improving hospice use for critically ill Medicare patients, with the (possibly intended) consequence of increased one-year mortality.

The immigrant population, the primary driver of U.S. population growth, is aging and many immigrants remain uninsured. Lack of health insurance limits access to care, aggravating the already high level of depression for older immigrants. However, there is scarce evidence on how health insurance, particularly Medicare, affects their mental health. Using the Health and Retirement Study, this study examines the effect of Medicare coverage on depressive symptoms of older immigrants in the United States. Our findings imply that immigration policies that expand health care protection to older immigrants can lead to further health benefits and reduce existing disparities for the aging population. Policy reforms such as providing limited Medicare access to immigrants who paid sufficient taxes but are still awaiting permanent residency status could increase coverage for the uninsured and improve participation of immigrants in the payroll system.

The United States has higher infant mortality than peer countries. In this paper, we combine microdata from the United States with similar data from four European countries to investigate this US infant mortality disadvantage. The US disadvantage persists after adjusting for potential differential reporting of births near the threshold of viability. While the importance of birth weight varies across comparison countries, relative to all comparison countries the United States has similar neonatal (<1 month) mortality but higher postneonatal (1–12 months) mortality. We document similar patterns across census divisions within the United States. The postneonatal mortality disadvantage is driven by poor birth outcomes among lower socioeconomic status individuals. 

One of the key recommendations of the Second Panel on Cost-Effectiveness in Health and Medicine is to take a societal perspective when evaluating new technologies—including measuring the productivity benefits of new treatments. Yet relatively little is known about the impact that new treatments have on labor productivity. We collected data on US-based RCTs with work-ability surveys from searches of Google Scholar, PubMed, Scopus, the Cochrane Central Registry of Clinical Trials, and ClinicalTrails.gov. Combining RCT data with survey data from the Medical Expenditure Panel Survey, we assessed productivity changes from new drug treatments. From our data, we estimated that drug innovation increased productivity by 4.8 million work days per year and $221 billion in wages per year. These labor-sector benefits should be taken into account when assessing the socially optimal cost for new drug innovation.

Past empirical work establishes a wage penalty from being overweight. In this paper, I exploit variation in an individual's weight over time to determine the age when weight has the largest impact on labor market outcomes. For white men, controlling for weight at younger ages does not eliminate the effect of older adult weight on wage: being overweight as a young adult only adds an additional penalty to adult wages. However, for white women, what they weigh in their early twenties solely determines the existence of an adult wage penalty. The female early-twenties weight penalty has a persistent effect on wages, and differences in marital characteristics, occupation status, or education cannot explain it. It also is not a proxy for intergenerational unobservables.