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Understanding the Hospital Consolidation Numbers: The Centrality of Data Quality

Is hospital consolidation creating new efficiencies or does it give health care providers clout over health care insurers?  A well-publicized study published in Health Affairs last year by Robert Berenson, Paul Ginsburg, et. al said the latter:  hospital consolidation has resulted in “growing provider market clout.”

The Berenson study’s key conclusion is that growing hospital clout has resulted in insurers not aggressively containing their claims payments, a view that will stun every patient who has had a health insurance company deny coverage for a procedure, prescription or preferred health care provider.

Because the Berenson study’s finding are counterintuitive to consumer experience, and because they have been widely discussed in publications ranging from Forbes to National Journal, the Center for Regulatory Effectiveness, a regulatory watchdog with extensive experience in analyzing federal health policies, undertook an analysis to see if the study complied with the Data Quality Act (DQA).

The DQA, administered by the White House Office of Management and Budget (OMB), sets standards for virtually all data disseminated by the agencies.  Under the DQA, agencies may not use or rely on data in federal work products (reports, regulations) which don’t comply OMB’s government-wide Data Quality standards. Thus, unless the Health Affairs study complies with federal Data Quality standards, it is useless to Executive Branch policy officials.

The primary data source cited by the Berenson study as the basis for their conclusions regarding trends in relative clout between hospitals and health insurers is a well-respected, longitudinal tracking study which included interviews with heath care leaders from insurance companies, hospitals, and academia.   The health care interviews, however, were only conducted in a single year following a change in longitudinal study’s methodology.

In short, the Berenson study did not use longitudinal data; it used data from a single set of observations that was mixed with other interviews conducted outside the longitudinal study.  Interviews at a single point in time with stakeholders representing various vested interests cannot be the basis of conclusions regarding trends in anything – the Berenson study design was not capable of detecting trends.

It is also important to note that CRE found the study’s methodology to be opaque; there was no indication of the process by the study’s conclusions were derived from their dataset.  Moreover, the study included no tables, charts or specific citations to the referenced longitudinal study nor any output/results from the analysis software that the authors state they used.

Even aside from the Berenson study’s lack of analytic transparency, its basic conclusion regarding relative clout between insurers and hospitals is undermined by the Medical Loss Ratio (MLR) data obtained by CRE from publicly available Congressional sources.

The MLR data indicates that most of the major insurers reporting the data enjoyed declining MLRs from 2000-2008, meaning that the insurers were paying out a decreasing share of their premiums in claims.  It was insurers keeping a greater share of consumer premium dollars that led to the MLR regulatory requirements in the Affordable Care Act.  The data showing that insurers overall have been keeping a greater share of consumer health care premiums is at stark odds with Berenson’s conclusions regarding declining insurer clout.

CRE’s analysis “A Signature Study on Hospital Consolidation Violates the Data Quality Act,” is a detailed analysis documenting the specific ways in which Berenson 2012 violate DQA requirements.  The CRE study is available for public comment on our Hospital Consolidation website, http://thecre.com/hcf/.

Bruce Levinson is the Senior Vice President for Regulatory Intervention at The Center for Regulatory Effectiveness (CRE).

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Bruce Levinson
Guest

Mr. Carroll’s point regarding possible weaknesses in the use MLR data as a proxy for leverage is definitely worth additional study. Nonetheless, I think our basic criticisms of the Berenson-Ginsburg study are valid and reinforced by a recent article in USA Today, http://www.usatoday.com/story/money/business/2013/10/13/hospital-job-cuts/2947929/ which states that hospitals are “are starting to cut thousands of jobs amid falling insurance payments and inpatient visits.”

Since insurance payments to hospitals is falling so sharply that there are widespread job losses, the Berenson-Ginsburg perspective that hospital clout over insurers is increasing remains quite perplexing.

Bruce Levinson
Guest

Mr. Carroll;

One of OMB’s requirements for assessing whether the Data Quality Act’s Objectivity criteria is met “involves whether the information is presented within a proper context. Sometimes, in disseminating certain types of information to the public, other information must also be disseminated in order to ensure an accurate, clear, complete, and unbiased presentation.”

Thus, CRE recognizes the importance of gaining insights from all perspectives, particularly those that are informed by years of relevant experience.

To further discuss, please feel free to contact me at Levinson@TheCRE.com

Barry Carol
Guest
Barry Carol

Mr. Levinson – I am not aware of formal studies on this issue. I recently retired after working as a securities analyst for a large corporate pension fund. Part of my responsibility included covering the publicly traded managed care insurers including UnitedHealth Group, Wellpoint, Aetna, Humana and Cigna among others. The people insured by these insurers include the following: Medicare Advantage members, employees of small and medium size businesses, and people who buy their health insurance in the individual insurance market. Between 50%-60% of members work for larger employers who self-insure and hire insurers to pay claims and provided other… Read more »

Barry Carol
Guest
Barry Carol

“The data showing that insurers overall have been keeping a greater share of consumer health care premiums is at stark odds with Berenson’s conclusions regarding declining insurer clout.” Baloney! Insurer claims costs consist of two components – utilization of services, tests, procedures and drugs, and PRICES for each of those. Every large insurer will tell you that prices for hospital inpatient and outpatient services, tests and procedures were the biggest single driver of their medical claims costs in recent years driven mainly by increasing hospital market power. MLR’s declined because utilization declined and drug spending decelerated as a number of… Read more »

Bruce Levinson
Guest

Mr. Carol,

You raise some interesting issues. I would like to see your data, particularly with regard to MLR trends. CRE has a Hospital Consolidation Interactive Public Docket (http://en.wikipedia.org/wiki/Interactive_Public_Docket) available at http://thecre.com/hcf/. Please feel free to post any studies, links or other materials and your comments at CRE to supplement our discussion here.

I look forward to an in-depth discussion of these key important issues.

Brad F
Guest

Bruce
Can you give a clearer example of why a study like the one above concerns you?

Based on the lit, hospitals consolidating and winning gains against providers goes beyond theory and is far from an anathema to those who follow the marketplace.

Qualitative in nature, the study does not have the rigor of others in the empirical literature, and constitutes one of many yes–but as I said above, carries themes familiar to many.

I understand your point on the DQA, but translate how you think purging the study results in alternate policy?

I assume you wish to set an example?

Thanks
Brad

Bruce Levinson
Guest

Brad, The reason why we focused on the Berenson 2012 study even though it lacks the rigour of other analyses is because it is influential. The study been widely quoted in the media, e.g., National Journal. One reason why the study may be so influential is that it is policy oriented. You asked for a clearer example of why the Berenson-Ginsburg study is of concern. When CRE transmitted our study to the Federal Trade Commission, our letter noted that: “In a November 29, 2012 press release issued by AHIP, America’s Health Insurance Plans announced the filing of an amicus brief.… Read more »

Bruce Levinson
Guest

Brad, to follow up on your most important point about the relevance of the DQA and alternative policies, CRE’s purpose is in invoking the DQA is far larger than any given study and even large than setting an alternative policy course.

Instead, CRE is making clear that the studies and other data from all sources will need to comply with federal standards for the quality, objectivity, utility, and integrity if they are to influence federal decisions.

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Editor

The DQA is an interesting approach – not sure much attention has gone into looking at this aspect of ACA …