April 2010

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Health Wonk Review: NBA Playoffs Edition

April 29, 2010 in Carnivals | 23 comments

In honor of the on-going NBA playoffs, the week’s edition of the Health Wonk Review will examine the top 16 health policy posts written over the past two weeks. The worthy authors have shown terrific vision and an ability to make slam dunk arguments (groan). The authors’ raw talents and athletic intellectual abilities are so overwhelming, even my own nominee was relegated to the lottery. You may support the arguments of some authors more than others, but at least we can all agree that the playoff-bound authors are smarter than this guy.

Without further ado, here are your playoff-worthy posts:

EAST

  1. The Notwithstanding Blog notes that although many wonks see salary-based physician payment as a happy medium between fee-for-service and capitation payment, these salaried physicians still may maintain significant conflicts of interest.
  2. The Incidental Economist wonders whether the Affordable Care Act is just an excuse for income redistribution.
  3. Will a robot soon replace your therapist? The Health Business Blog cites an article from the New England Journal of Medicine which concludes that Robot-Assisted Therapy may offer moderate improvements in care for stroke victims, but certainly saves cost.
  4. Georgians for a Healthy Future analyzes the Illinois Supreme Court’s decision to strip not-for-profit Provena Covenant Medical Center of its exemption from property tax, stating that the hospital did not provide enough charity care to justify that exemption.
  5. When are the provisions of health care reform going to kick in? The Digerati Life presents a Health Care Reform timeline.
  6. John Goodman’s Health Policy Blog claims that Obamacare will increase costs and that health care shortages are “plausible and even probable”.
  7. InsureBlog discusses Aetna’s decision to offer (and then withdraw) its 100%” Health Savings Account (HSA) plan. Insureblog claims that a $2500 deductible for these types of HSAs may, in fact, be too low.
  8. Say Ahhh! ponders over whether offering the poor premium assistance to buy their own health insurance is a better option than compelling poor individuals to use government-run Medicaid insurance.

WEST

  1. At Health Beat, Maggie Mahar discusses two related and very interesting points: Is the “fear of cancer can cause even more suffering than cancer itself?” and is there an “epidemic of diagnosis” due to excessive cancer screening?
  2. The Health Affairs Blog has a way to add some teeth to the health reform mandate: tying your credit score to whether or not you have health insurance.
  3. If a football player suffers dementia, can it be deemed a work-related injury? Jon Coppelman at Workers Comp Insider looks at a case in California that tests the limits of compensability.
  4. Will the FDA begin regulating medical software? The Health Blawg says the answer may be yes as the FDA has asserted the right to “regulate software as a device, not only in the context of radiology, but also in the context of electronic health records.”
  5. HealthCare Renewal says that fining large health care companies for criminal activities will not change the firms’ behavior. An idea to convince health care executives to follow the rules is to allow for the prosecution of these corporate leaders.
  6. According to the Disease Management Care Blog, the smartphone—not the screen and keyboard—may turn out to be the central hub electronic medical records and digital health care.
  7. One candidate’s has proposed to start paying for medical care with chickens, but Health Access WeBlog writes that these comments underlie a serious debate that must not be overlooked.
  8. For the inside scoop, the Colorado Health Insurance Insider says that health insurance should be regulated. “The idea that health insurance should be strictly a free market, unregulated product is popular among people who are healthy and…among people who have great health insurance provided by an employer.”

LOTTERY-BOUND

These posts were of high quality but not sufficiently so to make it to the playoffs:

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Economics of the Timing of Influenza Vaccine

April 28, 2010 in Vaccinations | No comments

Although the H1N1 influenza virus has garnered most of the media attention, protecting children against standard strains of influenza has generally been shown to be cost effective.  However, the cost effectiveness depends on the timing.  The flu season generally lasts from September to June, but flu generally has the highest incidence in November and December. A paper by Yee et al. (2010) claims that getting all kids immunized could save society between $6.4 million and $9.2 million.  Even third party payers (i.e., insurers) save between $4.1 and $6.1 million due to decrease hospitalization and illness.

The authors find that vaccinating children is cost-effective until December for trivalent inactivated viral vaccine (TIV).  Live attenuated influenza vaccine (LAIV) , however, is only cost effective through November.  But should you believe these recommendations?

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Are WHO rankings entirely worthless?

April 27, 2010 in International Health Care Systems | 5 comments

According to the World Health Organization’s (WHO) 2000 report, the U.S. ranked 37th in the world in terms of the quality of its health care system.  The placed the U.S. health system behind Saudi Arabia, Costa Rica and Morocco.  Do we need to fire all U.S. doctors?  Should everyone stop reading this blog post and immediately go for a run or eat a tofu salad?

Maybe not.

In a letter to the New England Journal of Medicine, Dr. Philip Musgrove, the former editor of the WHO report recounts the unreliable data used to rank country health systems.   In the case of the United States, the only data available were for life expectancy and child survival, which together only account for about half of the the attainment measure.  Thus, the rest of the figures in the U.S. figures had to be imputed.  In fact, the values of for many variables for many countries had to be imputed.  With such an indictment for the editor of this report, putting much value in these rankings seems dubious.  According to Dr. Musgrove:

“The number 37 is meaningless, but it continues to be cited, for four reasons. First, people would like to trust the WHO and presume that the organization must know what it is talking about. Second, very few people are aware of the reason why in this case that trust is misplaced, partly because the explanation was published 3 years after the report containing the ranking. Third, numbers confer a spurious precision, appealing even to people who have no idea where the numbers came from. Finally, those persons responsible for the number continue to peddle it anyway…Analyzing the failings of health systems can be valuable; making up rankings among them is not. It is long past time for this zombie number to disappear from circulation.”

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Medicare Spending by Program Service Categories

April 26, 2010 in Medicaid/Medicare | 3 comments

In 2008, the federal government spent $782 billion on health care through the Medicare and Medicaid program. Below is a breakdown of the expenditures incurred by service product.


Source: 2009 CMS Data Compendium.

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Duflo Wins John Bates Clark Medal

April 25, 2010 in Economics - General | No comments

From the N.Y. Times:

Esther Duflo, a development economist at M.I.T., has been awarded the John Bates Clark Medal. The award is given to “that American economist under the age of 40 who is judged to have made the most significant contribution to economic thought and knowledge.” Professor Duflo, 37, helped found the Abdul Latif Jameel Poverty Action Lab, whose affiliates do randomized experiments in poor countries to help determine what types of aid and anti-poverty programs actually work.  One of her own recent studies looked at how quota systems for female politicians affected Indian attitudes toward female leadership. Other papers have looked at ways to motivate teachers to have better attendance at Indian schools, and what effect reducing the student-teacher ratio at Kenyan schools has on test scores.

Other contenders included Sendhil Mullainathan, Jonathan Levin and one of my favorite economists Amy Finkelstein.  The Wall Street Journal reviews these ‘nominees’.  For more on Finkelstein, go here.

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Friday Links

April 23, 2010 in Current Events | No comments

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Effect of Decreasing Medicare Reimbursement Rates on CABG Surgeries

April 22, 2010 in Uncategorized | 1 comment

Many researchers claim that decreasing physician reimbursement will decrease Medicare expenditures.  Mechanically, this is true, but in reality, physicians may adjust their treatment behavior to make up for lost income.  A study by Yip (1998) evaluates how change in reimbursement for coronary artery bypass graft (CABG) surgeries affected the volume of CABG surgeries physicians perform.  Yip finds:

The results show evidence of a negative income effect that leads to increased volume as Medicare prices are cut, especially among the more intensive CABG procedures (CABG with more vessels). There is also a spillover of the negative income effect into the private sector, leading to increased private volume after Medicare fees are reduced. However, private-to-Medicare price ratios are not significant in determining the amount of spillover.

Additinoally, Yip finds that, conditional on having a CABG, the number of ancillary services performed per CABG increases when Medicare reimbursement declines.

These results, however, may not be generalizable for a number of reasons.  First, the data only come from two states: New York and Washington.  Secondly, CABG surgeries make up a large share of most thoracic surgeons’ practice volume.  “On average, CABGs (irrespective of payer type) account for 41% of total practice volume, with a payer mix of 51% for Medicare, 36% for private, and 13% for health services contractors, Medicaid and self pay patients.”  Thus, any change in reimbursement will significantly change thoracic surgeons’ income.  When fee reductions affect a smaller share of physicians’ income, the behavioral response will likely be smaller.  Finally, the behavioral response may be one of coding rather than behavior.  Yip finds that the fraction of more serious CABG surgeries (i.e., CABG-3 or CABG-4) increased after the fee decrease, but this may simply be a result of upcoding rather than a true change in behavior.

Unfortunately, Yip does not measure the affect of changing CABG reimbursement schedule on substitute treatments.

Cavalcade of Risk

April 21, 2010 in Carnivals | No comments

The latest edition of the Cavalcade of Risk is up at My Wealth Builder.

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Medicare Fees and Physicians’ Medicare Service Volume

April 21, 2010 in Medicaid/Medicare | No comments

How do changes in Medicare fees affect the quantity of medical care supplied by providers?  A paper by Hadley and Reschovsky (2006) examine this question be estimating the elasticity of supply.  They find the following:

Medicare fees are positively related to both the number of beneficiaries treated (η=0.12–0.61) and service intensity (η=1.04–1.71). Physicians with apparent incentives to induce demand appear to manipulate the mix of services provided in order to increase the effective Medicare fee.

Additionally,

…this study’s findings argue against the perception that volume offsets render the fee schedule ineffective as a tool to limit costs. Rather, the results suggest that the volume of physicians’ services to Medicare patients is very sensitive to Medicare prices and that fee reductions will lower program costs.

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A Tale of Two Bounties: Can Physicians Cost Shift from Medicare to Private-Pay Patients

April 20, 2010 in Medicaid/Medicare, Physician Compensation | 2 comments

Do physicians cost shift after Medicare reduces reimbursement rates?  A paper by Rice et al. (1999) examines whether or not this in fact occurred after Medicare reduced payment for surgical procedures in the late 1980s.  To be more specific, “The Omnibus Budget Reconciliation Act of 1989 (OBRA-89) reduced Medicare physician payment rates for thirty-six groups of so-called overvalued procedures, covering 245 individual procedure codes.” The study examines the impact of these changes using data from 1988-1991 covering the frequency of 17 major surgical procedures in 182 hospitals.  The data on privately insured individuals was obtained from the Commission on Professional and Hospital Activities (CPHA) a convenience sample of 3.7% of U.S. hospitals.

To control for omitted variable bias, the authors used a fixed effects specification.  This framework averages the effect of changes in Medicare reimbursement on quantities within each hospital.  Thus, it can control for time-invariant hospitals characteristics, but it cannot control for unobserved hospital characteristics which vary over time.

In the study period, “privately insured patients brought in far more revenue per hysterectomy than did Medicare patients: $1,538 versus $885, a ratio of 1.74…Typically, Medicare paid 60 to 70 percent as much as private insurers before the reductions in Medicare payments.”

Using this data and the empirical framework outlined above, the authors find that Medicare fee reductions increased the volume of privately insured service only in some cases.  “Of the seventeen procedures groups, twelve had the expected negative signs and seven of the twelve were statistically significant at the 5 percent or 10 percent level…”  Additionally, it appears that in some cases, a decrease in Medicare fees increases private-pay services even for procedures unrelated to those that experienced a Medicare fee decrease.  For instance, when Medicare cut cataract reimbursement rates, ophthalmologists supplied more services to private-pay patients, but not necessarily more cataract surgeries.

One drawback of this study is that it is fairly old and takes place before the rise of managed care.  Because managed care organizations can institute utilization restrictions, it is unclear if Medicare price decrease will increase the quantity of services supplied to private-pay patients as much now as they did in the late 1980s.

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