The INQRI (Interdisciplinary Nursing Quality Research Initiative) Blog hosts a Veteran’s Day edition of the Health Wonk Review. Check it out.
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Tags: HWR
Today, I will review an excellent piece of investigative journalism on Medicare’s end-stage renal disease (ESRD) program. The program provides free access to medical care for patients with kidney disease. Some highlights of these ProPublica report include the following:
Program Inception
“…the new program would help about 11,000 Americans, just for starters. For a modest initial price tag of $135 million, it would cover not only their dialysis and transplants, but all of their medical needs. Some consider it the closest that the United States has come to socialized medicine.
Now, almost four decades later, a program once envisioned as a model for a national health care system has evolved into a hulking monster. Taxpayers spend more than $20 billion a year to care for those on dialysis — about $77,000 per patient, more, by some accounts, than any other nation. Yet the United States continues to have one of the industrialized world’s highest mortality rates for dialysis care. Even taking into account differences in patient characteristics, studies suggest that if our system performed as well as Italy’s, or France’s, or Japan’s, thousands fewer patients would die each year. ”
Report Findings
- Patients commonly receive treatment in settings that are unsanitary and prone to perilous lapses in care.
- Regulators have few tools and little will to enforce quality standards…CMS can demand that facilities submit correction plans, but it cannot fine violators as it can nursing homes.
- Industry consolidation has left patients with fewer choices of provider. Two corporate chains that dominate the dialysis-care system are consistently profitable, together making about $2 billion in operating profits a year.
- The government has withheld critical data about clinics’ performance from patients, the very people who need it most.
Italian Alternative
“Italy has one of the lowest mortality rates for dialysis care — about one in nine patients dies each year, compared with one in five here. Yet Italy spends about one-third less than we do per patient.” However, the article also notes that patients in Italy tend to start dialysis in better overall health. Thus, higher U.S. mortality rates may be due to the fact that American who receive dialysis treatment have more advanced kidney disease than their Italian counterparts.
“Regional health authorities pay more per treatment than Medicare – roughly 50 percent more… But per-patient costs are lower because Italy’s indirect expenses, particularly for hospitalization, are smaller and because coverage includes drugs as well as dialysis. A 2004 study found that Italian patients got half the average dose of Epogen given to U.S. patients…”
The Healthcare Economist’s Take
The ESRD program represents a poor balance between access, cost and quality. To much effort has been focused on increasing access and not enough directed towards reducing cost or improving quality.
For instance, from the patient’s perspective, the access to care is amazing. Patient do not pay for any treatment. This access, however, comes at a price. Quality is poor due to a limited choice of providers. Increasing reimbursement rates would allow for entry into the dialysis market, but with the tradeoff of increased cost. Further, the $20 billion price tag may be unsustainable in the coming years.
Taking an international perspective, systems that allow unlimited access often incorporate significant restrictions on care and/or significant quality monitoring. In the UK, where there is little cost-sharing on the patient side, the government plays a more active role in rationing and regulating the health care sector. Other countries thought to have socialized medicine, such as France, do less rationing, but higher levels of cost sharing curb patient demand for unnecessary services. Allowing for balance billing could allow for superior providers to charge Medicare patients additional fees in return for higher quality services. The Medicare ESRD program does not ration care, neither of these and as a consequence, has become a financial sink hole.
Additional Material
- Leaked copy of Kidney Care Partners (KCP) talking points response to ProPublica article
- When Needles Dislodge, Dialysis Can Turn Deadly.
Tags: Dialysis, ESRD, Kidney Disease, Medicare
Some policymakers have called for the creation of Child Development Account (CDAs). CDAs are basically savings accounts to which parents and/or the government to contribute. Children turning 18 can use the funds for various uses such as college tuition, purchasing a home, or starting a businesses. The SEED for Oklahoma Kids (SEED OK) project aims to create CDAs through 529 College Savings Plans.
Creating a pool of saving for a child’s future gives these children some liquidity to pursue their dreams. The question is, why would the government need to set up a program like this? Most parents will save money for their child’s future. The CDA may be useful in the case where parents have hyperbolic preferences and under-save for their children’s future. If parents save optimally, however, CDAs may crowd out other forms of parental saving for their children and may decrease the parent’s financial flexibility.
“Pay-for-performance (P4P) is one of the primary tools used to support healthcare delivery reform. Substantial heterogeneity exists in the development and implementation of P4P in health care and its effects.” Today, I review a paper which summarizes evidence, obtained from studies published between 1990-2009, concerning P4P effects.
Measure Effectiveness
Which types of measures produce the biggest change in physician behavior. The authors’ literature review reveals the following:
“The effect of P4P on non-incentivized quality measures varied from none to positive. However, one study reported a declining trend in improvement rate for non-incentivized measures of asthma and CHD after a performance plateau was reached.”
In addition, process measures were more effective in changing physician behavior than outcome measures. Intermediate outcome measure effect of provider behavior was between the process and pure outcome measures. Among these measure types, programs where providers were involved in the VBP implementation lead to larger gains in outcomes. The authors do not mention if this was because of easier-to-game measure selection by providers or if this represented actual improvement. Providers can also game the system by declaring a patient ineligible for certain measures. “Gaming by over exception reporting and over classifying patients was kept minimal, although only three studies measured gaming specifically (e.g., 0.87% of patients exception reported wrongly). Therefore, there is limited evidence that gaming does occur with P4P use, although it is not clear what is the incidence of gaming without P4P use.”
The most important factor may be whether the providers are aware that a P4P program has been put in place. “[S]tudies found positive P4P effects (5 to 20% effect size) with programs that fostered extensive and direct communication with involved providers.”
Payment Size and Type
The authors surprisingly found limited impact of P4P payment size on physician behavior. This may be due to the fact that in markets with payer fragmentation, even large P4P amounts will make up a small share of any one physician’s income. Generally, giving positive rewards produced better outcomes than programs with winners and losers, but the authors claim this finding is far from robust.
Payments targeted to organizations seemed to less effective than those targeted at individual providers, but programs aimed at either tended to produce positive results. “A combination of incentives aimed at different target units was rarely used, but did lead to positive results.”
Access and Equity
A survey conducted by Grant Thornton reveals that employee benefits rank at the top of employer cost control concerns. According to the survey, “A vast majority (84%) cited employee benefits (e.g., health care, pensions) as their greatest pricing pressure — up from 68% six months earlier.”
In response, about one-third of employers plan to cut employee health benefits. The good news is that more employers are planning to increase health benefits compared to March 2010.
| Change in Employee Health Benefits | Oct 2010 | Mar 2010 |
| Increase | 21% | 6% |
| Same | 49% | 66% |
| Decrease | 30% | 29% |
Most economists believe that employers view health insurance as a cost just like salary. Thus, the downside of increasing health insurance benefits is that salary increases would not be as high as they would with a smaller increase in employee benefits.
Tags: Benefits
A paper by Holmboe et al. (2010) evaluates physician performance on quality measure. The authors use a sampled the medical records of an average of 95 patients per general internist. They found that “performance on the individual and composite measures varied substantially within and between physicians…Higher certification exam scores were associated with better performance on the overall, chronic care, and preventive services composites.
The interesting part of the paper, however, is the explanations for why there is variation in physician scores. The explanations include:
- Varying degrees of physician knowledge and/or skill
- Lack of sufficient documentation in certain physician offices
- Some physicians’ office systems may be more suitably configured to execute certain tasks (e.g., immunizations, test ordering)
- Patient demand for preventive and other services will affect medical service provision and scores.
Source:
- Holmboe, E. S., Weng, W., Arnold, G. K., Kaplan, S. H., Normand, S.-L., Greenfield, S., Hood, S. and Lipner, R. S. , The Comprehensive Care Project: Measuring Physician Performance in Ambulatory Practice. Health Services Research, no. doi: 10.1111/j.1475-6773.2010.01160.x
Tags: P4P
The latest edition of the Cavalcade of Risk is up at Political Calculations. My blog post on incentives for hospitalization in long-term settings even got an Aa1 rating, the highest available!
If you don’t get enough good stuff there, here are some more links.
- Cancer stem cells?
- Vouchers instead of Medicare.
- Stool testing vs. colonoscopy.
- Providers who earned more than $100,000 total from Pharma.
- The problem with cortisone shots.
Many states rely on managed care organizations (MCOs) to provide medical services for their Medicaid beneficiaries. Contracting out medical services to private providers relies on the government’s capacity to accurately predict expected cost of care for each beneficiary. This is typically done through risk-adjusted capitation rates.
Which risk adjustment strategy works best? The answer of course depends on the context. A paper by Yu and Dick (2010) examines 5 predictors specifications to predict future expenditures for Medicaid eligible children. I list each of the five specifications and their performance (measured as the R2) below:
- Age/Gender only: 0.2%
- Age/Gender + subjective health status measure: 3.9%
- Age/Gender + CSHCN: 7.3%
- Age/Gender + HCC: 12.1%
- Age/Gender + prior year expenditure: 43.5%
One can clearly see that the best predictor of a child’s current year expenditures is the child’s prior year’s expenditures.
Tags: Risk Adjustment
If there is a boost in demand for a certain product, how will that affect wages? This seems like a straightforward question. However, a working paper by Enrico Moretti (2010) takes this analysis a step further by examining how labor market shocks affect the spatial component of the labor markets.
“In general equilibrium, a shock to a local labor market is partially capitalized into housing prices and partially reflected in worker wages. While marginal workers are always indifferent across locations, the utility of inframarginal workers can be affected by localized shocks. The model clarifies that the welfare consequences of localized productivity shifts depend on which of the two factors of production—labor or housing—is supplied more elastically at the local level. A lower local elasticity of labor supply implies that a larger fraction of a shock to a city accrues to workers in that city and a smaller fraction accrues to landowners in that city. On the other hand, a more inelastic housing supply implies a larger incidence of the shock on landowners, holding constant labor supply elasticity. This makes intuitive sense: if labor is relatively less mobile, local workers are able to capture more of the economic rent generated by the shock.”
Tags: Agglomeration Economies
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