Welcome back to the Research Review, a newsletter highlighting some of the latest studies from USC Price School faculty and students.

In this edition, researchers propose reforms to reduce Medicare Advantage overpayments, assess how population movements affect economic impacts of disasters, and examine the market power of pharmacies owned by health insurers – and more.

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A pair of reforms to Medicare Advantage (MA) could reduce overpayments – which totaled $50 billion in 2024 – caused by insurers “upcoding” patient diagnoses, according to an article co-authored by Professor Paul B. Ginsburg.

• What they analyzed: Ginsburg and Steve M. Lieberman, a Nonresident Senior Scholar at the USC Schaeffer Institute, explored ways to alleviate the unfair advantage that each Medicare Advantage insurer gains through its degree of upcoding. In the context of Medicare, upcoding occurs when insurers report diagnostic codes for more serious – and more expensive – conditions than if the same patient was in traditional Medicare.
  
  
• What they proposed: First, policymakers should increase the current 5.9% reduction applied to all Medicare Advantage enrollee risk scores that is used to compensate for higher upcoding. Second, policymakers should replace the across-the-board reduction with reductions that are linked to each insurer’s actual track record of upcoding.
  
  
• Why it matters: The Centers for Medicare and Medicaid Services overpaid Medicare Advantage by $50 billion in 2024 as a result of upcoding, according to the Medicare Payment Advisory Commission.

Read the article in Health Affairs.

Population movements are often omitted from economic impact analyses of major disasters because they are hard to estimate. But a new paper from Professor Adam Rose provides the beginnings of a framework for considering and measuring the economic impacts. 

• What they researched: Rose and a colleague presented the start of a framework for analyzing behavioral aspects of population movement after chemical, biological, radiological, and nuclear (CBRN) events.
  
  
• What they found: Omitting dimensions of population movements can lead to underestimating the economic consequences of CBRN events by one or two orders of magnitude.
  
  
• Why it matters: CBRN events can lead to devastating economic impacts stemming in large part from population movement – yet these impacts are understudied.

Read the paper in International Journal of Disaster Risk Science.

Pharmacies owned by health insurers and pharmacy benefit managers (PBMs) represent an important part of the Medicare Part D market, and these firms steered patients to their own pharmacies, according to a study by Associate Professor Genevieve Kanter.

• What they researched: Kanter and colleagues studied the prevalence of insurer- and PBM-owned pharmacies in Medicare Part D, and to what extent these firms steer patients to pharmacies they own.
  
  

• What they found: Using Medicare Part D claims data for more than 10 million patients, they found that 34.1% of all pharmacy and 37.1% of specialty pharmacy spending occurred through Cigna-, CVS-, Humana-, or UnitedHealth Group–-owned pharmacies in 2021, with variation across drug classes. 

  
  
• Why it matters: There is growing regulatory concern regarding the prevalence of pharmacies owned by insurers and PBMs. Steering may improve welfare if it helps patients access medicines or if these pharmacies offer more cost-effective services. But steering may impede rival pharmacies’ ability to compete, harming patients who may prefer those pharmacies.

Read the study in JAMA Health Forum.

Effects of Elevation: Networks on non-flat surfaces, such as transportation and urban systems in hilly places, require specialized analyses due to elevation fluctuations. Assistant Professor Geoff Boeing and colleagues present tools to help with such analyses, including lazy paths, which minimize elevation differences, and graph arduousness, which measures the tiring nature of the shortest paths. Their findings highlight the significance of elevation fluctuations in shaping network characteristics. Read in PNAS Nexus.

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