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Background: The phenomenon of excess charge, where a healthcare service provider bills Medicare beyond the limit allowed for a medical procedure, is quite common in the United States public healthcare system. For example, in 2014, healthcare providers charged an average of 3.27 times (and up to 528 times) the allowable limit for cataract surgery. Previous research contends that such excess charges may be indicative of the actual amount that providers bill to non-Medicare patients and subsequent cost-shifting behavior, where a healthcare provider tries to recoup underpayment by Medicare from privately insured, self-pay, out-of-network, and uninsured patients., Objectives: The objective of this study is to examine the drivers of a provider's excess charge patterns, especially the extent to which the degree of excess charges may be associated with physician characteristics, Medicare reimbursement policy, or socioeconomic status and demographics of a provider's patient base., Methods: Using data from the 2014 Medicare Provider Utilization files, we identify three procedures with the highest variation in Medicare reimbursements to study the excess charge phenomenon. We then employ a two-step cluster analysis within each procedure to identify distinct provider groups., Results: Each procedure code yielded distinct healthcare provider segments with specific patient demographics and related behavior patterns. Cluster silhouette coefficients indicate that these segments are unique. Three random subsamples from each procedure establish the stability of the clusters., Conclusions: For each of the three procedures investigated in this study, a sizeable number of healthcare providers serving poorer, riskier patients are often paid significantly lower than their peers, and subsequently have the highest excess charges. For some providers, excess charges reveal possible cost-shifting to private insurance. Patterns of excess charges also indicate an imbalance of market power, especially in areas with lower provider competition and access to health care, thus leading to urban-rural healthcare disparities. Our results reinforce the call for price transparency and an upper limit to overbilling.

Abstract Background The phenomenon of excess charge, where a healthcare service provider bills Medicare beyond the limit allowed for a medical procedure, is quite common in the United States public healthcare system. For example, in 2014, healthcare providers charged an average of 3.27 times (and up to 528 times) the allowable limit for cataract surgery. Previous research contends that such excess charges may be indicative of the actual amount that providers bill to non-Medicare patients and subsequent cost-shifting behavior, where a healthcare provider tries to recoup underpayment by Medicare from privately insured, self-pay, out-of-network, and uninsured patients. Objectives The objective of this study is to examine the drivers of a provider’s excess charge patterns, especially the extent to which the degree of excess charges may be associated with physician characteristics, Medicare reimbursement policy, or socioeconomic status and demographics of a provider’s patient base. Methods Using data from the 2014 Medicare Provider Utilization files, we identify three procedures with the highest variation in Medicare reimbursements to study the excess charge phenomenon. We then employ a two-step cluster analysis within each procedure to identify distinct provider groups. Results Each procedure code yielded distinct healthcare provider segments with specific patient demographics and related behavior patterns. Cluster silhouette coefficients indicate that these segments are unique. Three random subsamples from each procedure establish the stability of the clusters. Conclusions For each of the three procedures investigated in this study, a sizeable number of healthcare providers serving poorer, riskier patients are often paid significantly lower than their peers, and subsequently have the highest excess charges. For some providers, excess charges reveal possible cost-shifting to private insurance. Patterns of excess charges also indicate an imbalance of market power, especially in areas with lower provider competition and access to health care, thus leading to urban-rural healthcare disparities. Our results reinforce the call for price transparency and an upper limit to overbilling.

The most common fracture in primary care is metatarsal fracture, but it is controversial whether to treat this fracture conservatively or surgically. We performed a cohort study to contrast metatarsal fractures that heal normally with fractures that show delayed healing. We analyzed 5% Medicare Standard Analytic Files, selecting all metatarsal fractures in 2011 to 2013, excluding patients with multiple fractures. Delayed healing was defined as treatment >14 days postfracture with either low-intensity pulsed ultrasound or surgery. Treatment for delayed healing was identified using the Current Procedural Terminology and International Classification of Diseases, Revision 9, Clinical Modification codes. Among 9482 metatarsal fractures, 256 (2.7%) showed delayed healing. Patients with delayed healing were younger (p <.0001); more likely to receive specialist referral (p <.001); more likely to have obesity (p =.005), psychosis (p =.003), chronic lung disease (p =.012), or iron deficiency anemia (p =.016); and more likely to receive surgery before ultrasound (p <.0001). Patients more likely to be treated with surgery than ultrasound included younger patients (p <.0001), obese patients (p =.02), and patients who first see a specialist (p <.05). [ABSTRACT FROM AUTHOR]

Health care providers may vertically integrate not only to facilitate coordination of care, but also for strategic reasons that may not be in patients' best interests. Optimal Medicare reimbursement policy depends upon the extent to which each of these explanations is correct. To investigate, we compare the consequences of the 1997 adoption of prospective payment for skilled nursing facilities (SNF PPS) in geographic areas with high versus low levels of hospital/SNF integration. We find that SNF PPS decreased spending more in high integration areas, with no measurable consequences for patient health outcomes. Our findings suggest that integrated providers should face higher-powered reimbursement incentives, i.e., less cost-sharing. More generally, we conclude that purchasers of health services (and other services subject to agency problems) should consider the organizational form of their suppliers when choosing a reimbursement mechanism. [ABSTRACT FROM AUTHOR]

OBJECTIVES: To inform efforts aimed at reducing Medicare hospice expenditures by describing the longitudinal use of hospice care in nursing homes (NHs) and examining how hospice provider growth is associated with use. DESIGN: Longitudinal study using NH resident assessment (Minimum Data Set) and Medicare denominator and claims data for 1999 through 2006. SETTING: NHs in the 50 U.S. states and the District of Columbia. PARTICIPANTS: Persons dying in U.S. NHs. MEASUREMENTS: Medicare beneficiaries dying in NHs, receipt of NH hospice, and lengths of hospice stay were identified. The number of hospices providing care in NHs was also identified, and a panel data fixed-effect (within) regression analysis was used to examine how growth in providers affected hospice use. RESULTS: Between 1999 and 2006, the number of hospices providing care in NHs rose from 1,850 to 2,768, and rates of NH hospice use more than doubled (from 14% to 33%). With this growth came a doubling of mean lengths of stay (from 46 to 93 days) and a 14% increase in the proportion of NH hospice decedents with noncancer diagnoses (69% in 1999 to 83% in 2006). Controlling for time trends, for every 10 new hospice providers within a state, there was an average state increase of 0.58% (95% confidence interval=0.383–0.782) in NH hospice use. Much state variation in NH hospice use and growth was observed. CONCLUSION: Policy efforts to curb Medicare hospice expenditures (driven in part by provider growth) must consider the potentially negative effect of changes on access for dying (mostly noncancer) NH residents. [ABSTRACT FROM AUTHOR]