Medicaid Managed Care and Emergency Department Utilization: A North Carolina Analysis
by Temitope Ayokunmi Ojo
Abstract
In July 2021, North Carolina Medicaid switched from a traditional fee-for-service model to a Medicaid managed care (MMC) network. This thesis explores the effect of this policy change on Emergency Department (ED) utilization for Medicaid beneficiaries in North Carolina. A linear difference-in-difference model was used to estimate the change in ED visits between the treatment group, Medicaid beneficiaries, and two control groups, non-Medicaid 19–64-year-olds and 65+ NC residents. The results indicate a statistically significant decline in ED visits, about 11% decline from pre-policy visit rates, for Medicaid beneficiaries after the mandatory switch to managed care. The reduction in visits was most persistent for those related to chronic condition treatment. Furthermore, we find evidence consistent with both medical care disruption and better management of health as drivers of the decline in ED visits. Determining the cause of these patterns should be explored by deeper analyses of trends in other healthcare delivery avenues (i.e. PCP appointments or hospital admissions) post-policy implementation.
Professor M. Kate Bundorf, Faculty Advisor
Professor Grace Kim, Seminar Advisor
JEL Codes: I11, I13, I18
Keywords: Medicaid, Insurance, Emergency Department
The Effect of Community Uninsurance Rates on Access to Health Care among the Insured
by Isabella Antonio
Abstract
While the direct effects of being uninsured have been studied extensively, there is significantly less research on how a high community uninsured rate can impact health care access for insured individuals. Using data from SMART BRFSS, I examine the effect of community uninsured rates on access to health care for insured individuals ages 18 to 64 years old. Controlling for MMSA-level fixed effects and year fixed effects, I estimate the effect of community uninsurance on the likelihood of an insured individual skipping care due to cost, the likelihood of an insured individual having at least one personal doctor, and the likelihood of an insured individual delaying a physical exam, cholesterol check, or pap smear. Results suggest that a 10 percentage point increase in the community uninsured rate decreases the likelihood of an insured individual having at least one personal doctor by 0.304 percentage points and increases the likelihood of delaying a physical exam, cholesterol check, or pap smear by 0.590 to 2.31 percentage points. These findings suggests that policies aimed at reducing the uninsured rate, such as the Affordable Care Act and Medicaid expansion, may produce widespread benefits for all Americans, both the uninsured and the insured.
Professor Jeffrey DeSimone, Faculty Advisor
Professor Michelle Connolly, Faculty Advisor
JEL Codes: I1, I11, I13
Keywords: Health insurance, Health care access
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Investing in Rural Healthcare: Impact of Private Equity Acquisition on Financial and Utilization Outcomes of Rural Hospitals
by Amanda He
Abstract
Private equity investment in the healthcare sector has risen considerably in recent decades, yet the impact of private equity ownership in rural hospital markets is largely unknown. Existing research points to a correlation between private equity acquisition and increased hospital incomes and charges. Rural hospitals, however, are structurally and operationally different from their urban counterparts, with lower occupancy rates and higher susceptibility to financial distress. This paper seeks to (1) characterize the types of rural hospitals acquired by private equity firms and (2) examine the changes in rural hospital financial, utilization, and survivability outcomes following private equity ownership. Using a 15-year panel of Medicare data, I estimate the impact of 352 private equity deal-hospitals across nine financial and utilization outcomes. Additionally, I estimate the impact of private equity on hospital closures. I find that private equity acquisition improves profitability for both urban and rural hospitals, but the magnitude is smaller for rural hospitals. My results suggest that private equity-owned hospitals increase profits by reducing operating expenses. Among rural hospitals, private equity ownership is associated with fewer discharges and lower occupancy rates, which may be a concern for long-term viability. I find a statistically significant negative correlation between private equity acquisition of rural hospitals and an increased likelihood of closure. PE-acquired hospitals have a negative spillover effect on other hospitals within the same hospital referral region, leading to a higher probability of closing.
Professor Ryan McDevitt, Faculty Advisor
Professor Michelle Connolly, Faculty Advisor
Professor Grace Kim, Faculty Advisor
JEL classification: G23, G33, G34, I10, I11
Impact of Medicare Advantage Supplemental Benefit Expansion on Startup Funding
by Judy Tianhong Zhong
Abstract
In 2018, the Center for Medicare and Medicaid Services (CMS) announced that they would expand the supplemental benefits that can be included in Medicare Advantage (MA) plans. The goal was to encourage insurers to innovate and test new benefit offerings that could improve health outcomes and reduce healthcare spending. A key player in this transformation is the MA vendor that provides supplemental benefit offerings to insurance plans, but this market is rather underdeveloped. To assess the implementation of this supplemental benefit expansion, this study examines the flow of funding into the emerging market of MA vendors. This paper uses a longitudinal approach and Crunchbase data on funding for 79,004 firms from 2014 to 2018 to determine whether there is a significant jump in funding toward MA vendors with supplemental benefit services following the policy change. The results show that both the average amount of funding per deal and the number of deals a MA vendor firm receives significantly increased following the expansion when compared with all other firms. This suggests that the policy may have been successful in promoting the development of the MA vendors market and the innovation of benefit offerings as more funding goes towards these companies.
Kate Bundorf, Faculty Advisor
David Ridley, Faculty Advisor
Michelle Connolly, Faculty Advisor
JEL Codes: I1; I11; I18
Generic Entry and The Effect on Prices in the Prescription Drug Market
by Sahana Giridharan
Abstract
Drug firms have utilized a variety of strategies that contribute to rising drug prices in the U.S. for the last few years. Strategic entry timing and number of indications a drug is approved might be two factors that contribute to this rise in prices. While there have been some studies uncovering a positive relationship between generic entry and branded prices, there has been little research done on the effects of generic entry on generic prices thus far. This work can impact policy aimed at decreasing generic drug prices and increasing competition in the generic drug market. Oncology and inflammatory bowel disease (IBD) are two disease areas that have a high price burden to patients in the U.S. today, hence using Medicare Part B Average Sales Price (ASP) data, I analyze the effect of entry timing on the price of 24 drugs in these two indication areas. Using the Drugs@FDA Database, I collect data on the FDA approval date of a drug, and on the indications a drug is approved for. Utilizing OLS, my results suggest that later entry times lead to lower drug prices, with a 1 year increase in entry time resulting in a 6.99% increase in prices. Results also suggest that an increase of 1 in the number of indications a drug is approved for leads to a 49.79% decrease in drug price. This could suggest that having existing generic competitors in the pharmaceutical market decreases generic prices, and that number of indications is a strong indicator of drug price. If the current work is confirmed by future studies similar to this studying entry time and price in the generic pharmaceutical market, it is possible that future drug policy should focus on promoting competition within the pharmaceutical market to lower generic prices.
Professor Frank Sloan, Faculty Advisor
Professor Grace Kim, Faculty Advisor
Professor Kent Kimbrough, Faculty Advisor
JEL Codes: L11; I11; C3
The Effects of Pharmaceutical Price Regulation on Probability of Patenting in OECD Countries
by Rachel Korn
Abstract
The introduction of parallel trade mechanisms allowing for the free trade of pharmaceutical goods in the European Economic Area represents a significant departure from the standard monopolistic competition pricing structure in the pharmaceutical market, in which firms have a great deal of control over pricing. Another mechanism, external reference pricing, also contributes to undermining traditional price structures by imposing a price ceiling on drugs. As these methods of regulating pricing in the healthcare market are receiving growing interest in countries such as the United States, it is prudent to consider their effects. It is apparent that parallel trade and external reference pricing decrease average drug costs, but little has been said about their effects on drug availability. Using global patent data from the European Patent Office PATSTAT database as a proxy for drug availability, I investigate how parallel trade and external reference pricing affect the decision of firms to file a pharmaceutical patent in a given country. I accomplish this through a logistic regression model with a difference-in-differences approach to estimate the probability of patenting a pharmaceutical in an OECD country, given that a patent has previously been approved in the United States. I find that the presence of parallel trade in a country significantly decreases the probability of patenting and increases patent lag time while external reference pricing unexpectedly increases the probability of patenting and decreases patent lag time. These findings demonstrate the complexity in attempting to create policy to regulate rising pharmaceutical prices, as doing so may increase affordability of existing drugs in a country while decreasing availability of new ones.
Professor Michelle Connolly, Faculty Advisor
JEL Codes: I1, I11, I19
The Effects of Leveraged Buyouts on Health Outcomes
by Robert Williams
Abstract
Private equity firms first began acquiring hospitals in the United States during the early 1990s, yet the effects of private equity ownership on patient outcomes and treatment costs are still not clear. Some argue that although private equity firms are adept at improving operating efficiencies and introducing managerial expertise, these cost-cutting measures may come at the expense of patient outcomes.
Because acute myocardial infarctions (AMIs) serve as proxies for patient outcomes and treatment costs, I collect information on 30-day mortality rates and Medicare reimbursements for treatments of AMIs at US Medicare-certified short-term acute care general hospitals from 2014 to 2019. This paper uses fixed effects models to analyze the impact of leveraged buyouts, relative to strategic acquisitions, on patient outcomes. After integrating both hospital and time fixed effects, I find that private equity ownership does not lead to significant changes in Medicare reimbursements or mortality rates for AMI treatments.
Professor Ryan McDevitt, Faculty Advisor
Professor Grace Kim, Faculty Advisor
Professor Michelle Connolly, Faculty Advisor
JEL Codes: I0, I110, G340
The Effect of Competition on Strategic Discharge at Long-Term Acute-Care Hospitals
By Michael Karamardian
Because Medicare’s prospective payment system for long-term acute-care hospitals (LTCHs) makes a large lump-sum form of payment once patients reach a minimum length-ofstay threshold, LTCHs have a unique opportunity to maximize profits by strategically discharging patients as soon as the payment is received. This analysis explores how the level of competition between LTCHs in geographic markets affects the probability of a patient being strategically discharged. The results show that patients at LTCHs in more competitive markets have a lower probability of being strategically discharged than at those in less competitive markets, suggesting increased competition could help save Medicare funding.
Advisors: Kent Kimbrough and James Roberts | JEL Codes: D22, I11, I18
Incentives and Characteristics that Explain Generic Prescribing Practices
By Rahul Nayak
This study uses the National Ambulatory Medical Care Survey (2006-2010) and Health Tracking Physician Survey (2008) to study the incentives and characteristics that explain physician generic prescribing habits. The findings can be characterized into four main categories: (1) financial/economic, (2) informational, (3) patient- dependent and (4) drug idiosyncratic effects. Physicians in practices owned by HMOs or practices that had at least one managed care contract are significantly more likely to prescribe generic medicines. Furthermore, physicians who have drug industry influence are less likely to prescribe generic medicines. This study also finds consistent evidence that generic prescribing is reduced for patients with pri- vate insurance compared to self-pay patients. Drug-specific characteristics play an important role for whether a drug is prescribed as a generic or brand-name – in- cluding not only market characteristics, such as monopoly duration length, public familiarity with the generic and the quality of the generic, but also non-clinical drug characteristics, such as the length of the generic name compared the length of the brand-name. In particular, the public’s familiarity with the generic has a large effect on the generic prescribing rate for a given drug. There are few differences between the generic prescribing habits of primary care physicians and specialists after controlling for the drugs prescribed.
Advisor: Frank Sloan, Kent Kimbrough | JEL Codes: D82, D83, I11, I13, I18 | Tagged: Drug Market Characteristics, Efficient Prescribing, Electronic Prescribing, Generic Prescribing, HTPS, Industry Influence, NAMCS, Patient Preferences, Physician Incentives, Principle- Agent Problem
