BLOOMINGTON, Ind. — An interdisciplinary team of Indiana University scientists studying Medicare data has found an association between health care industry payments to medical providers for non-research expenses and what these providers charge for medical services — shedding new light on potential hidden costs to the public.
Their findings, published Sept. 20 in Nature Communications, demonstrate that medical providers receiving higher amounts of industry payments tend to bill higher drug and medical costs. Specifically, they found that a 10 percent increase in industry payments to medical providers is associated with 1.3 percent higher medical costs and 1.8 percent higher drug costs.
For example, a $25 increase in annual industry payments to a typical medical provider would be associated with approximately $1,100 higher medical costs and $100 higher drug costs.
Jorge Mejia
“Let’s be clear here — we should not find such an association,” said Jorge Mejia, co-author on the paper and an assistant professor of operations and decision technologies at the IU Kelley School of Business. “Our findings raise the possibility that medical providers may be unduly influenced by payments from the health care industry.”
It’s important to note that an association shows that two variables appear to change at the same time, whereas causality implies that one variable causes another variable to change. This study does not prove causality, which the researchers said would be difficult to do with secondary data.
Jorge Mejia’s co-authors are Amanda Mejia, assistant professor in the Department of Statistics, and Franco Pestilli, associate professor in the Department of Psychological and Brain Sciences, both in the IU College of Arts and Sciences.
Amanda Mejia said the team controlled for several key variables to rule out the possibility of other drivers of the association between industry payments and medical costs.
“We found that the association was still there after taking into account the size of the practice, its location and drug prescribing levels,” she said.
Pestilli said the large Medicare data sets that the researchers used were made openly available as part of the 2010 Affordable Care Act.
“Our research capitalized on such openly shared data,” Pestilli said. “We demonstrate the value of open data in providing society with critical insights on hidden costs that can be addressed at the policy level.”
But Jorge Mejia said transparency alone is not enough to fix these hidden costs. That’s why studies like this one are important: They help interpret the data so the public can better understand what it means.
