How do medical expenditures affect mortality for end-stage renal disease (ESRD) patients? Avi Dor, Mark Pauly, Margaret Eichleay and Philip Held try to answer this question with data from 12 developed countries (“ESRD and Economic Incentives“). The authors end up finding that increased expenditures on ESRD have no statistically significant affect on mortality. The correlation coefficient estimates indicates that increased medical spending actually increases mortality (again, not in a statistically significant manner). The authors note, however, that richer countries–those who are likely to spend more money on medical care for all disease–have a higher percentage of individuals with ESRD.
The most interesting part of the paper, however, may be that it summarizes how different countries pay for different portions of ESRD treatment.
|(F)rance||Sick funds||Global, FFS||Salary, FFS||DRG, Global|
|(G)ermany||Sick funds||Capitation, FFS||FFS||DRG, Global|
|(J)apan||Private||FFS||Salary, FFS||FFS, DRG|
|(N)ew (Z)eland||Single payer||Global||Capitation, Salary||DRG, Global|
|US||Private||Capitation, FFS||Capitation, FFS||DRG|
|FFS||F,G, I, J, Sp, UK, US||A, B, C, F, G, J, UK, US||B, I, J, Sp|
|Salary||F, I, J, NZ, Sp|
|Capitation||B, G, US||NZ, UK, US|
|DRG||A, F, G, I, J, NZ, UK, US|
|Global||A, C, F, NZ, Sw||Sw||C, F, G, NZ, Sw|
Spain and Italy employ per-treatment reimbursement.. This is not exactly a fee-for-service (FFS) scheme. For example in Italy, “…payment is bundled, covering all direct care, ancillary care, and prescription drugs, albeit differentiated by type of modality. This creates incentives similar to those under prospective payments. ” Looking at capitated reimbursement countries, Belgium and Germany pay on a per patient per week basis while in the U.S. the rate is per patient per treatment. The UK allocates funding in a hybrid ‘global capitation’ manner in which funds for ESRD are allocated at the regional level, but then the region makes contracts with area dialysis centers to treat a specific number of patients. Reimbursement is varied according to the case mix.
Spain has a per treatment reimbursement policy but the government sets the price. Belgium covers hospital costs using social security funding and negotiates a set price with the providers. The U.S. introduced DRGs within Medicare in 1983 and the practice of reimbursing the providers based on the diagnosis has been popular in many countries. “Since DRG payments are independent of actual costs incurred, they create an incentive for the hospital to reduce costs per admission in order to maximize profit.” Canada and Sweden use the prior year’s global budget and adjust for demographic or population shifts in order to determine the subsequent years global budget. Japan uses a FFS system to compensate hospitals, but since 2003, hospitals can elect to be paid on a DRG basis as well.
Spanish and Italian physicians are always salaried employees of dialysis centers. Most other countries have FFS reimbursement with different levels of government involvement in the negotiation of fees. New Zealand is transitioning from a FFS to a capitation-based system.
The above analysis of compensation schemes is specific ESRD and I cannot comment on the generalizability of these findings outside of the care of ESRD patients.
- Dor, A., Pauly, M., Eichleay, M., Held., P. (2007) “End-stage Renal Disease and Economic Incentives: The International Study of Health Care Organization and Financing” NBER working paper #13125.