Precision Health Economics Study Approach and Methodology Summary:

The Precision Health Economics (PHE) report first synthesized and summarized the results from spending, utilization, and quality regression analyses of the population-specific studies conducted by Acumen, Lewin, and Harvard, allowing for easy comparison of findings across public and private payers. In order to examine variation “within” HRRs, PHE conducted a random effects regression of spending at utilization at the HSA level, with the random effects at the HRR level.

Additionally, PHE created a measure of total health care spending, attempting to account for the total United States population by including spending for Medicare, Medicaid, commercially insured, and uninsured populations. This measure was created using the following steps:

1. Obtained spending estimates for Medicare, Medicare Advantage (or Medicare managed care), Medicaid, and commercially insured populations from the empirical analyses conducted by Acumen, Lewin, and Harvard.

2. Estimated spending for the uninsured and Medicaid managed care by HRR.

3. Created payer-specific weights to estimate unadjusted, total health care spending. The OptumInsight and MarketScan spending data were alternately used as “proxies” for commercial spending.

4. Created two measures of total PMPM spending by HRR, first unadjusted and then adjusted for input prices. Both estimates were adjusted for age, sex, and health status.

PHE conducted OLS regression analysis of total health care spending following methods used by other subcontractors in the individual studies.

• Note, for reasons of parsimony, PHE created an index of “health status” rather than using the complete set of HCCs used in the Acumen studies of Medicare and Medicaid.

• The market level analysis was also conducted using a reduced set of market covariates, selected according to several criteria: policy relevance, lack of redundancy, effect size in the population-specific studies, and, finally, the availability of consistent measurement of the predictors across payers.

• Regressions were also weighted by the population in HRRs. The health status predictors were additionally weighted by that population’s share of the total HRR population.

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