State Fiscal Dependence and Histories, and State Operation of APCDs

• In Event: Affordability of Healthcare: Perceptions and Policy Responses

Abstract

State operation of All-Payer Claims Databases (APCDs) exemplifies how state innovations in the health policy domain influence the federal government. The APCDs collect payment data from Medicaid, Medicare, and commercial payers, and provide state policymakers with comparable price information, possibly improving price transparency and containing health care spending. For decades, state health policymakers and consumers in the U.S. have had suffered from information asymmetry. The operation of the APCDs is expected to disclose claims data and enable consumers to compare health care prices to find low-cost and high-quality providers, possibly contributing to reducing the extent of health care spending. As of July 2017, sixteen states have operational APCDs, and the five states of Delaware, Florida, Hawaii, New York, and West Virginia have enacted legislation to establish the databases and have moved toward implementing them. Following the suit, on the first day of January 2019, hospitals across the U.S. have begun to post list prices for all their services to comply with the Trump administration’s rule set by the Centers for Medicare and Medicaid Services (CMS).
This research considers state operation of the APCDs and examines how state policymakers are influenced by state fiscal dependence on the federal government in the health policy domain and histories of state strategies for cost-containment, based on state innovation model. First, we investigate how state operation of the APCDs is associated with state fiscal reliance on the federal government, indicated by the Federal Medicaid Assistance Percentages (FMAPs). For decades, states have played important health policy roles, funding Medicaid and their own health-related programs and regulating healthcare providers in their boundaries. Since Medicaid is a joint program between states and the federal, the less a state relies on the federal in financing the program, the more the state needs to fund the program using its own sources, possibly encouraging the states to consider strategies to constrain state health spending. On average, Medicaid accounted for 27% of state spending in 2016. Second, this research examines how state governments’ histories of cost-containment strategies adopted impact state decisions for the operation of the APCDs. To address the growth of Medicaid prescription spending, states have adopted state rebate programs including single-, multi-state rebate programs and Managed Care Organization rebate program for Medicaid prescription spending, which could indicate state innovative endeavors to address the growth of state health spending including Medicaid. In addition, we include several control variables such as Democratic governor, divided government, the size of Medicaid enrollees, and the extent of Medicaid spending per capita.
In the investigation of factors influencing state operation of the APCDs, this research utilizes data for 2008-2014 and adopts fixed effects regression models with Driscoll-Kraay standard errors to address autocorrelation. Initial findings show that state fiscal reliance on the federal and state histories of cost-containment strategies influence the operation of the database to enhance price transparency. First, a state fiscally less dependent on the federal tended to collect claims data from health care stakeholders. It may be because more fiscal burden in the administration of Medicaid program would encourage state officials to design policy interventions to address it. Second, a state implementing other cost-containment strategies tended to operate the database in accordance with policy innovation research. In addition, state Medicaid spending per capita, the number of Medicaid enrollees, the size of population, Democratic governor, and divided government were not associated with the dependent variable.
This study delves into important issues related to the American intergovernmental relation and state health policy and administration. This research considers the APCDs as an example of how state innovations affect federal-level innovations. Moreover, we explore whether the operation of the APCDs is associated with state fiscal reliance on the federal government and histories of adopting cost-containment strategies. Systematic approach has not been applied to investigate the effect of these factors on state operation of the databases. This study provides evidence that state utilization of the price transparency strategy was influenced by the two factors, but not by state political and socio-economic factors.

Authors

• Shihyun Noh, SUNY Brockport

• Ji Hyung Park