Hospitals penalized under two ACA Medicare reimbursement policies engaged in a degree of "cost shifting" to boost payments from private payers, suggests a new working paper from the National Bureau of Economic Research.
To assess for possible cost shifting after the implementation of the ACA's Hospital Readmission Reduction Program and the Hospital Value Based Purchasing program, researchers examined private payer payment data and data from about half of U.S. inpatient prospective payment hospitals compiled from 2010 to 2015.
Researchers found hospitals issued an average Medicare penalty of nearly $146,000 under the two ACA cost-containment policies negotiated 1.5 percent higher average private payer payments compared to their nonpenalized counterparts. This equates to approximately $155 in additional payment for the average acute care claim, or $82,000 per hospital, according to the paper.
Researchers said circulatory system and nervous system claims resulted in the largest increase in private payer payment, at 2.7 percent and 3.2 percent, respectively.
"These results therefore suggest that hospitals do not respond to HRRP/HVBP penalties by shifting service offerings disproportionately toward more profitable services or by treating patients more intensively," the researchers concluded. "Indirectly, the results therefore support the hypothesis that our estimated increase in payments derives from some underlying increase in actual prices."
There has been debate among health economics/policy experts over the paper's findings. Austin Frakt, PhD, a health economist and associate professor with Boston University, expressed skepticism regarding the research in his blog "The Incidental Economist."
"Based on the prior literature, we should begin consideration of the new paper with some skepticism about claims of cost shifting — it is reasonable to believe it doesn't happen," he wrote.
Additionally, Criag Garthwaite, PhD, an associate professor of strategy and the director of the Health Enterprise Management Program at Northwestern University's Kellog School of Management in Evanston, Ill., tweeted about the study.
"It's important to note that the cost shifting debate is not about the relationship but the mechanism, i.e. it's arguing that hospitals charge higher prices to one payer solely to make up for a shortfall from another," he wrote. "Arguments that government policy alters market structure or investments (e.g. causing closures or mergers) and causes a new equilibrium outcome is not cost shifting — it's just standard economics. It might be a spillover of government policy but that's not cost shifting."
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