Unbiased Analysis of Today's Healthcare Issues

What is China’s NMCS?

Written By: Jason Shafrin - Jul• 14•14

In 2003, China introduced the New Cooperative Medical Scheme(NCMS), a health insurance scheme for the rural population. What is the NCMS?  Hou et al. (2014) describe the NMCS as follows:

As a voluntary and heavily subsidized scheme, it has seen extremely rapid growth of coverage in comparison with most new schemes in developing countries. By the end of 2011, 97.5% of the rural population (832 million people) had been enrolled in NCMS. Generally, the NCMS was primarily oriented at inpatient care and, especially, in the period before the 2009 Health Care Reform, characterized by rather high copayments and coinsurance rates. Outpatient care was typically covered through medical savings accounts (MSAs), which involve no risk pooling. Although the central government has issued broad guidelines for the design of the scheme, the policy details and implementation responsibilities have been decentralized to the county-level local governments. As a result, important scheme features, including the benefit package, the reimbursement level and the payment methods, display considerable variation across counties and over time, which can be used to identify the impact of the scheme.

How did NCMS affect the care patients receive? The authors exploit regional variation in the implementation of NCMS acoss six counties, three counties in Shandong province (Zhangqiu, Changle and Dong’e) and three in Ningxia province (Yongning, Qingtongxia and Zhongning). The authors find that NCMS is effective in increasing access to care but not in increasing financial protection.

We find clear evidence that adoption of a more generous scheme raises the probability of using both inpatient and outpatient care…We also find the variation in NCMS generosity to influence the choice of provider for inpatient care: all else equal, enrollees are more likely to choose providers with more generous reimbursement.

Our results indicate that NCMS has only limited effects on financial protection. No effects are found of NCMS on spending in the full sample, but conditional upon use, NCMS reduces the share of OOP spending for an outpatient visit. More worrisome is that we find higher NCMS cover to raise total spending per hospitalization and to increase the OOP spending per inpatient stay (among the users).

Based on these results, one should consider NMCS a promising first step, but currently only a partial success.

How the FDA evaluates Cancer Drugs

Written By: Jason Shafrin - Jul• 13•14

The Food and Drug Administration (FDA) reviews and approves all drugs. But what criteria does the FDA use to evaluate new drugs? Namely that they are effective (i.e., improve health outcomes) and safe (i.e., have limited adverse health events). In a 2007 guidance document from the FDA’s Center for Drug Evaluation and Research (CDER) and Center for Biologics Evaluation and Research (CBER) branches, the institution states:

The requirement that new drugs show effectiveness is based on a 1962 amendment to the Federal Food, Drug, and Cosmetic Act. This law requires substantial evidence of effectiveness and specifies that this evidence must be derived from adequate and well-controlled clinical investigations. Similarly, the Public Health Service Act requires biological products to be safe, pure, and potent. Clinical benefits that have supported drug approval have included important clinical outcomes (e.g., increased survival, symptomatic improvement) but have also included effects on established surrogate endpoints (e.g., blood pressure, serum cholesterol).

However, what does efficacy mean? What is the burden of proof for drugs that treat life-threatening illnesses. The guidance document states that these drugs can receive accelerated approval using surrogate endpoints to measure efficacy:

…additional endpoints for approval of drugs or biological products that are intended to treat serious or life-threatening diseases and that either demonstrate an improvement over available therapy or provide therapy where none exists. In this setting, the FDA may grant approval based on an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit… A drug is approved under the accelerated approval regulations on condition that the manufacturer conducts clinical studies to verify and describe the actual clinical benefit.

What endpoints does the FDA use to approve cancer drugs?

In the 1970s, the FDA usually approved cancer drugs based on objective response rate (ORR), determined by tumor assessments from radiological tests or physical examinations. In the early 1980s…the FDA determined that cancer drug approval should be based on more direct evidence of clinical benefit, such as improvement in survival, improvement in a patient’s quality of life (QOL), improved physical functioning, or improved tumor-related symptoms. These benefits may not always be predicted by, or correlate with, ORR.

Since then, the FDA now considers endpoints such as:

  • Overall survival (OS): The time from randomization until death from any cause and is measured in the intent-to-treat population
  • Disease free survival (DFS): DFS is defined as the time from randomization until recurrence of tumor or death from any cause. The most frequent use of this endpoint is in the adjuvant setting after definitive surgery or radiotherapy. DFS has been the primary basis of approval for adjuvant breast cancer hormonal therapy, adjuvant colon cancer, and adjuvant cytotoxic breast cancer therapy.
  • Objective response rate (ORR): The proportion of patients with tumor size reduction of a predefined amount and for a minimum time period. Response duration usually is measured from the time of initial response until documented tumor progression. Generally, the FDA has defined ORR as the sum of partial responses plus complete responses.
  • Time to progression (TTP): The time from randomization until objective tumor progression; TTP does not include deaths.
  • Progression-free survival (PFS): The time from randomization until objective tumor progression or death.
  • Time to treatment Failure (TTF): A composite endpoint measuring time from randomization to discontinuation of treatment for any reason, including disease progression, treatment toxicity, and death. TTF is not recommended as a regulatory endpoint for drug approval.

Both TTP and PFS seem similar. Which one is better to use? The FDA guidance doc states:

Compared with TTP, PFS is the preferred regulatory endpoint. PFS includes deaths and thus can be a better correlate to overall survival. In TTP analysis, deaths are censored, either at the time of death or at an earlier visit representing informative censoring (nonrandom pattern of loss from the study). PFS assumes patient deaths are randomly related to tumor progression. However, in situations where the majority of deaths are unrelated to cancer, TTP can be an acceptable endpoint.

So, if you are a scientist working from for a pharmaceutical company, which endpoint should you use? The process is likely to be a negotiation between the research firm and the FDA. In fact, the FDA recommends that “applicants meet with the FDA before submitting protocols intended to support NDA [new drug applications] or BLA [biologics license applications] marketing applications.”

Friday Links

Written By: Jason Shafrin - Jul• 11•14

Was Newt Gingrich Right about Medicare?

Written By: Jason Shafrin - Jul• 09•14

In 1995, Newt Gingrich claimed that Medicare would end. He stated that “going to wither on the vine because we think people are voluntarily going to leave it — voluntarily.”  Was he right?

In the one hand, Medicare total enrollment and spending is rising and the program still has widespread political support.

On the other hand, the share of Medicare beneficiaries enrolled in the traditional fee-for-service program is falling. The Kaiser Family Foundation reports that whereas only 17% of beneficiaries enrolled in Medicare Advantage in 2000, by 2014 that figure has soared to 30%.

Medicare Advantage’s large increase in market share continues despite the fact that the Affordable Care Act cut reimbursement for Medicare Advantage plans by eight percentage points from their peak in 2009 (as measured relative to the cost of traditional Medicare coverage).

What explains this trend? Austin Frakt proposes some ideas:

  • Baby boomers are more accustomed to the types of insurance Medicare Advantage offers, such as H.M.O.s, than their predecessors were.
  • Employer-based coverage for the elderly is withering away. “[P]rior generations of retirees may have been more likely to have had coverage from former employers that wrap around traditional Medicare, filling in its gaps.” Fewer and fewer retirees have this option available to them.

CoR #212

Written By: Jason Shafrin - Jul• 09•14

RJ Weiss presents this week’s round-up of risk-related posts, with a heavy emphasis on risk, from cyber liability to under-reserving.

Do EHRs increase “upcoding”?

Written By: Jason Shafrin - Jul• 08•14

Upcoding occurs when physician or hospitals artificially increase the patient’s severity of illness. For instance, a hospital may record additional comorbidities. In Medicare’s inpatient prospective payment systems (IPPS), Medicare reimburses hospitals more for caring for patients who are sicker. Some health policy experts worry that electronic health records (EHRs) will decrease the cost of documenting additional illnesses; thus the number of comorbidities documented may increase and Medicare reimbursements may rise.

To determine whether or not this is the case, a study by Julia Adler-Milstein and Ashish K. Jha uses a difference-in-difference methodology to compare hospitals that adopted EHRs experience a more significant increase in patient case mix severity. Using data from the Information Technology supplement to the American Hospital Association (AHA) Annual Survey, CMS impact files, and Medicare Provider Analysis and Review (MedPAR) files, the authors found the following:

We identified 393 hospitals that newly adopted a basic EHR (181 in the cohort that adopted between 2008 and 2009, and 212 in the cohort that adopted between 2009 and 2010). These were matched to 782 control hospitals that had not adopted during the same time periods. New adopters were predominantly nonteaching (61 percent), for-profit (70 percent), and medium-size hospitals (47 percent)…
In our difference-in-differences model, we found no significant relationship between EHR adoption and patient acuity. The case-mix index increased among adopters by 0.066 and among controls by 0.065…This reflects a difference-in-differences of 0.001 (p = 0.968).

This results may not be surprising. As the authors readily admit, hospitals already devoted significant resources to optimizing coding prior to the advent of EHRs. Further, hospital adoption of EHRs is non-random. “Hospitals that adopt EHRs tend to be more sophisticated (for example, compared to controls, adopters are more likely to be larger and to be teaching hospitals), and these more sophisticated hospitals are the ones that invest in maximizing coding.” Thus, one might expect that EHRs may most affect upcoding for small and medium size physicians practices, who do not benefit from economies of scale and could increase revenue at limited cost by using EHRs to upcode.


Is real-time patient monitoring here?

Written By: Jason Shafrin - Jul• 07•14

At Boston’s Partner’s HealthCare, the answer is yes.  Venture Beat reports:

Boston’s Center for Connected Health, a division of Partners HealthCare, launched one of the first ‘connected health’ programs last month. It’s showing early signs of success, according to an article published this week in the Boston Globe.

Through the new system, patients can monitor their blood pressure, heart rate, and other key metrics from their homes and upload this data wirelessly; it’s automatically transmitted to an EMR.

This data is transmitted from a smartphone device or gadget to Partners’ database (which currently stores about 1.2 million patient vitals) and to a patient’s online medical record in minutes. Doctors can view this data at any time, and Partners’ patients can monitor their own health data through a patient portal dubbed Patient Gateway…

“This is a significant part of how we are working to change care delivery, putting the patient at the center of their care while maintaining a close watch on their condition when they are not in the hospital or doctor’s office,” said James Noga, the vice president and chief information officer of Partners HealthCare, in a statement.

There are some issues. For instance, patients may come in to see the doctor for small, clinically insignificant changes in blood pressure levels. Most importantly, however, the technology needs to work over long periods of time with little error. Once that is achieved, monitoring patient health will not be considered the technological cutting edge, it will be considered status quo medicine.

Obamacare will Increase Use of Elective Surgeries

Written By: Jason Shafrin - Jul• 06•14

Expanding health insurance causes moral hazard.  Patients who bear a lower share of cost will inevitably use more health care serices.  On the one hand, this increases the cost of the health care system; on the other hand, the patients who receive the additional care likely have better health outcomes.

However, which services will patients who are newly insured through the Affordable Care Act (ACA) choose to use?  One way to predict this is to examine what happened after Massachusetts expanded their health insurance coverage (i.e., Romney Care).  It is likely that newly insured patients use more elective surgery. WonkBlog reports:


A new study published in JAMA Surgery suggests the immediate effects of the coverage expansion will be an increase in elective surgeries aimed at improving a person’s quality of life — think of things like knee replacements and back surgeries — as opposed to surgery immediately addressing life-saving conditions…

Michigan researchers examined surgery rates for people ages 19 to 64 between 2003 and 2010, which captured the experience just before and after the Massachusetts coverage expansion took effect in 2007. Comparing surgery rates to those in New York and New Jersey, the researchers found the coverage expansion in Massachusetts increased elective surgeries 9.3 percent three years after the law took effect. The increase was more dramatic among nonwhite populations (19.9 percent), who face disparities in care.



Written By: Jason Shafrin - Jul• 03•14

Are nursing home expenses driving savings?

Written By: Jason Shafrin - Jul• 02•14

From a working paper by Karen A. Kopecky and Tatyana Koreshkova.

…even though they are only a third of OOP [out-of-pocket] health expenses, the presence of nursing home expenses accounts for more than half of savings for all health expenses…We find that 27 percent of savings for old-age OOP health expenses, 3.7 percent of private wealth, is savings for cross-sectional OOP expense risk and that more than 80 percent of these precautionary savings…is accumulated to self-insure against cross-sectional OOP nursing home expense risk. This is a substantial amount: if savings for cross-sectional OOP nursing home expense risk were held in the form of vehicles, it is large enough to account for the entire stock of transportation equipment in the US.

HT: Marginal Revolution.