The Healthcare Economist is taking a vacation to Sweden and Spain over the next week and a half. Blog posting will resume by Monday, September 12.
You are currently browsing the monthly archive for August 2011.
Many experts have claimed that increasing Medicare beneficiary’s access to prescription drugs through Medicare Part D is cost saving. Even if it does increase cost, by increasing patient adherence to various prescription drugs, Medicare could prevent certain expensive hospitalizations and emergency room visits.
The only problem is that it doesn’t.
According to Liu et al. (2011) :
“After adjustment, Part D was associated with a U.S.$179.86 (p=.034) reduction in out-of-pocket costs and an increase of 2.05 prescriptions (p=.081) per patient year. The associations between Part D and emergency department use, hospitalizations, and preference-based health utility did not suggest cost offsets and were not statistically significant.”
In fact, increased drug coverage could increase the number of prescriptions the elderly take and lead to a higher number of harmful drug interactions, leading to increased hospitalizations.
Another paper, however, disagrees. Afendilus et al. (2011) use HCUP data and and find that for selected ambulatory care sensitive conditions:
“…our point estimates suggest that Part D reduced the overall rate of hospitalization by 20.5 per 10,000 (4.1 percent), representing approximately 42,000 admissions, about half of the reduction in admissions over our study period…The increase in drug coverage associated with Medicare Part D had positive effects on the health of elderly Americans, which reduced use of nondrug health care resources.”
The debate rages on.
- Liu, F. X., Alexander, G. C., Crawford, S. Y., Pickard, A. S., Hedeker, D. and Walton, S. M. (2011), The Impact of Medicare Part D on Out-of-Pocket Costs for Prescription Drugs, Medication Utilization, Health Resource Utilization, and Preference-Based Health Utility. Health Services Research, 46: 1104–1123. doi: 10.1111/j.1475-6773.2011.01273.x
- Afendulis, C. C., He, Y., Zaslavsky, A. M. and Chernew, M. E. (2011), The Impact of Medicare Part D on Hospitalization Rates. Health Services Research, 46: 1022–1038. doi: 10.1111/j.1475-6773.2011.01244.x
Tags: Cost Savings, Emergency Room, Hospitalizations, Part D, Pharmaceuticals, Prescription Drugs, Prevention
The CMS Chronic Condition Data Warehouse (CCW) provides researchers with Medicare and Medicaid beneficiary, claims, and assessment data linked by beneficiary across the continuum of care. The files also use ICD-9 codes and other information to identify the chronic condition each beneficiary has. The question is, how well does the CCW identify these chronic conditions?
According to Gorina and Kramarow (2011) the results are mixed. The authors examine the strengths and limitations of using CMS’s CCW algorithm with Medicare claims data to identify chronic conditions in older persons. Their methodology is as follows:
Tags: Algorithm, CCW, Chronic Conidions, Medicare
The cover of Newsweek examines how overtreatment can harm people’s health. The article’s catchy title is “No! The one word that can save your life.”
Healthcare Economist readers have know this is the case for a while. The Institute of Medicine has noted that the prevalence of iatrogenic injuries is a serious problem, killing 100,000 patients per year. The N.Y. Times has written about the phenomenon and Sharon Brownlee even has a book out called Overtreated.
Putting an article on the cover of Newsweek which says the best way to protect your health is to, in many cases, refuse physician’s care and/or advice is important. Once excerpt from the article is the following:
The dilemma, say a growing number of physicians and expert medical panels, is that some of this same health care that helps certain patients can, when offered to everyone else, be useless or even detrimental…. At least five large, randomized controlled studies have analyzed treatments for stable heart patients who have mothering worse than mild chest pain. The studies compared invasive procedures including angioplasty…stenting…and bypass surgery. Every study found that the surgical procedures didn’t improve survival rates or quality of life more than noninvasive treatments including drugs (beta blockers, cholesterol-lowering statins, and aspiring), exercise, and a healthy diet. They were, however, far more expensive: stenting costs Medicare more than $1.6 billion a year.
Without a doubt, American spend too much on medical care. Most (but not all) Americans can agree that restricting coverage for to procedure which reduce health is a good thing. In most cases, however, procedures have some benefit and some cost. The key to reducing medical spending is getting patients agree to forgo care which is not cost effective (the benefit is too small relative to the cost). Until that happens, Medicare and the health care system in general will continue to be a growing burden on society as the baby boomers age into retirement.
Tags: Overtreatment
How much do drugs cost? The answer to this question depends who you are and how you want to measure cost. For instance, MediSpan‘s Master Drug Data Base (MDDB) defines drugs prices as follows:
- Wholesaler Acquisition Cost (WAC) – the cost reported to Medi-Span by a manufacturer at which wholesalers purchase drug products from that manufacturer. The WAC does not necessarily represent the actual sales price in any single transaction, as any manufacturer may agree to sell its products to one or more wholesalers at a lower price with that wholesaler through the inclusion of any number of methods, such as discounts or rebates.
- Average Wholesale Price (AWP) – the most common wholesaler price charged to its customers
- Direct Price (DP) - represents the price reported to Medi-Span by a manufacturer at which non-wholesalers, who may re-sell directly or indirectly to retailers, purchase drugs from that manufacturer.
- Manufacturer’s Suggested Wholesale Price (SWP) – The SWP represents the manufacturer’s suggested price for drug products sold by wholesalers to their customers.
- CSM Federal Upper Limit (CMS FUL) – CMS has developed a list of multiple-source drug products with upper price limits for each specific strength and dosage form in its Medicaid Manual. The manual establishes ceiling prices for each set of therapeutically equivalent drug products according to the formula in the Medicaid final regulation published July 31, 1987 by CMS’s parent organization, the Department of Health and Human Services (HHS). The rule’s aggregate reimbursement ceiling is set at 150% of the lowest published price for therapeutically equivalent multiple-source drug products. CMS periodically updates the list of covered drug products.
- Average AWP (AAWP) – average of all AWPs for each multi-source drug product in a given Generic Product Packaging Code (GPPC), not including the originator drug products.
- Generic Equivalent Average Price (GEAP) - The GEAP is a generic price applicable for all drug products sharing the same GPPC.
The correct price to use depends on your particular research question.
Tags: MediSpan, Pharmaceuticals, Prices
The latest edition of the Cavalcade of Risk is up at Insurance Coverage Law in Massachusetts. Yours truly has a post in the leadoff position.
Tags: CoR
- Attila the Cardiologist.
- An Epiphany On Direct-Pay Practices.
- Fast money in Workers Comp.
- Radiation.
- Conflict of interest at Moody’s.
Tags: Links
Avalere Health provides a nice summary of some of the estimates of how health reform will affect the rate at which employers offer health insurance. The provisions which may have an impact on health insurance offering include:
- Free-rider penalties (+)
- Exchanges (?)
- Medicaid expansion (-)
- Individual mandate (+)
- Small business tax credit (+)
- Insurance market reforms/grandfathering (-)
- High-cost plan excise tax (-)
Using different methodologies and data files, a variety of reputable research firms have arrived at differing conclusions on the impact of health reform on ESI. Here are six estimates ordered from most negative to most positive impact:
- Holz-Eakin: -22.3%
- Booz Allen Hamilton: -4.5%
- Congressional Budget Office (CBO): -1.9%
- The Lewin Group: -1.8%
- Urban Institute: Little net change
- RAND: +8.7%
Sources:
Tags: ESI, Health Insurance, Health Reform
Medicare recently release a request for proposal for health care agencies to participate in both the Medicare Shared Savings Program and the Pioneer Accountable Care Organization (ACO) pilot project. The Pioneer ACO project is similar to the Shared Savings Program but has higher levels of cost sharing and (in year 3 of the pilot) partially uses population-based reimbursement. The goal of both these project is basically to move towards more integrated care. Although ACOs seem new, they are basically just efforts to move towards something akin to a staff-model HMOs.
There are some differences however. Both Medicare ACO programs require the ACO to notify the beneficiary that they are participating the ACO. Further, the ACO will be responsible for reducing cost for these beneficiaries. Unlike in a traditional HMO, however, on the patients end the ACO is non-binding. Whereas many private managed care plans force patients to choose a primary care provider (PCP), Medicare patients can still see any physician they want without a referral. According to CMS:
“Medical ACO models on offer do not involved beneficiary enrollment or lock in. They do not involve gatekeeping or pre-authorization. It is traditional Medicare.”
Instead, Medicare assigns the beneficiary to physicians in the ACOs based on the patient’s base treatment history. [Note: In the Pioneer ACO, Medicare assigns beneficiaries to a physician in an ACO who has the largest amount of primary care evaluation and management (E&M) claim cost].
Another similarity between ACOs and managed care is that Medicare ACOs are moving towards capitation payments. In the third year of the Pioneer ACO pilot, Medicare will give the ACO a population-based payment worth 50 percent of the estimated cost of care for that beneficiary. Providers will only receive 50 percent of their typical payments in the for of fee-for-service reimbursement, and the ACO will determine what share of the population based payment each provider should receive.
ACOs also increase the size of the provider organizations. The Shared Shavings Program mandates a minimum number of beneficiaries of 5,000; the Pioneer ACO minimum is 15,000 (except for rural areas). This trend towards larger provider organizations could increase provider leverage in negotiations with Medicare regarding future reimbursement rates.
Why does Medicare like ACOs? It gives providers a significant incentive to reduce cost. In the Shared Savings Plan:
“…an ACO that meets the program’s quality performance standards would be eligible to receive a share of the savings it generates below a specific expenditure benchmark that would be set by CMS for each ACO. The proposed rule would also hold ACOs accountable for downside risk by requiring ACOs to repay Medicare for a portion of losses (expenditures above its benchmark).”
Putting providers at risk for cost increases will incentivize savings, but physicians are not known as the best risk managers. It a managed care, population based capitation payment is where Medicare is heading, incentivizing more people to join Medicare Advantage may be a more sensible option.
For more information on ACOs, see some of my previous posts.
Tags: Accountable Care, ACO, ACOs, Medicare, Pioneer ACO, Shared Savigns Program
Smoking Prevention in China
August 30, 2011 in Books, Public Health | 1 comment
“All tobacco companies are state-owned, and the industry provides signifiant revenue; it also directly employs more than half a million people. From the government’s perspective, smoking is important to stability, both economic and social. Some cigarettes are even subsidized–the cheapest brands cost as little as thirty cents a pack, because officials fear that farmers will become unhappy if they can’t afford to smoke.”
Tags: Books, China, Tobacco