Unbiased Analysis of Today's Healthcare Issues

Treating Dual Eligibles

Written By: Jason Shafrin - Nov• 06•14

The PBS Newshour has an interesting story on the treatment of the 9 million dual-eligible beneficiaries in the US.  They discuss integrated care model in California, Cal MediConnect.


Donuts and drugs

Written By: Jason Shafrin - Nov• 03•14

Medicare patients are likely to discontinue their medication in December. Why? Are they busy with the Christmas holidays? Do they have additional expenses for gifts and limited funds for prescription drugs? Perhaps.

Another idea advanced by Kaplan and Zhang (2014) is that Medicare’s benefit structure encourages discontinuation. Why is that? Medicare’s Part D drug plan has an odd design where patients have a deductible for the first few hundred dollars of prescription drug, then Medicare pays 75% of cost for the next few thousand, then the beneficiary again bears 100% of the cost in the so-called donut hole until patients reach catastrophic coverage (over $5,726 in drug cots in 2008) where Medicare pays 95% of the cost.

Thus, if patients are in the donut hole, it makes sense for them to wait until January for their prescription in order to avoid having to pay 100% of the cost.

This is exactly what Kaplan and Zhang find. They use data from CMS’s Chonic Condition Warehouse (CCW) and examine patients with a myocardial infarction who have had an inpatient hospitalization in the previous year.   The compare low-income subsidy beneficiaries (non-LIS) to those beneficiaries who are eligible for a low-income subsidy (LIS). Medicare LIS beneficiaries do not pay any copayment for medications and thus are not subject to the donut hole. Non-LIS patients, however, are subject to these copayment discontinuities.

Using this approach the authors find the following:

Overall, we find that individuals who ordinarily would have reinitiated medications at the end of the year have a tendency to wait until the reset of benefits at the beginning of the year. Despite the cause, this delayed effect on medication resumption might increase the chance of uncontrolled symptoms and hospital readmission.


Who will pay the Cadillac tax?

Written By: Jason Shafrin - Nov• 02•14

Beginning in 2018, many individuals will face the “Cadillac” tax. What is the Cadillac tax?

The Cadillac tax is a tax on high-cost health insurance plans. According to a Truven report, it is calculated as “40 percent of the excess of total per employee per year (PEPY) healthcare costs above statutory threshold limits of $10,200 for individual coverage and $27,500 for family coverage.” Benefits subject to the tax include:

  • Employer and employee contributions to medical and pharmacy benefits
  • Flexible Spending Accounts (FSAs)
  • Employer contributions to Health Savings Accounts (HSAs) or Health Reimbursement Arrangements (HRAs)
  • Benefits obtained at worksite clinics

Employers who self-fund their health insurance benefits also are subject to the tax as they must calculate a premium equivalent.

How many people will be subject ot the Cadillac tax? Truven estimates:

“Beginning in 2018, 15 percent of active employee plans for U.S. employers are projected to incur the Cadillac tax; this rate is projected to increase to 19 percent by 2020…we estimate an average annual…tax amount…of $364 [per employee]… this amount represents 2.9 percent of total…costs for plans expected to incur tax.”

The probability of incurring the tax depends significantly on the composition of the employees covered under the plan. The tax will be much higher for plans covering older workers. “81 percent of early retiree plans for U.S. employers are projected to incur the Cadillac tax; this rate is projected to increase to 84 percent by 2020. For early retiree plans projected to incur the tax in 2018, we estimate an average annual PEPY tax amount of $1,069.”

Friday Links

Written By: Jason Shafrin - Oct• 30•14

Halloween CoR

Written By: Jason Shafrin - Oct• 29•14

Head over to Colorado Health Insurance Insider to take a look at the All Treats No Tricks edition of the Cavalcade of Risk.

Quotation of the Day

Written By: Jason Shafrin - Oct• 27•14
We adore chaos because we love to produce order.



Written By: Jason Shafrin - Oct• 26•14

How do you implement a cost effectiveness analysis (CEA) for the implementation of evidence-based practices (EBP)?  This is the topic Fortney et al. (2014) address.  They review four types of CEAs.

  • Trial based CEA. Relies on traditional randomized controlled trials (RCT).   Because RCTs are expensive, they are typically run on a small sample of the population of interest.
  • Policy CEA. This approach combines the results of a previous RCT to measure benefits but measures cost using the results of an implementation trial. This approach improves the cost estimates for the manner in which the EBP would be implemented but assumes the RCT results are externally valid for the population of interest.
  • Budget impact analysis and systems-level CEA. These approaches use decision analytic modeling to estimate how the adoption of an EPB would impact the allocation of treatments to patients in routine care. It estimates the estimates the size of the population reached by the EBP, and the effect of implementation on costs, but clinical outcomes also come from RCTs. Systems-level CEA “predicts both costs and clinical outcomes by having an expert panel estimate the decline in the clinical effectiveness of the intervention when it is delivered as an EBP in routine care.”
  • Population Level CEA. This approach measures the ratio of incremental population-level costs and incremental population-level effectiveness relative to the current standard of care.


The authors test how the population-level CEA would work for a rollout of telemedicine-based collaborative care for depression in VA community-based outpatient clinics. The implementation trial focuses on improving adherence to depression medications. The approach used an implementation trial which matched 11 community-based outpatient clinics lacking on-site psychiatrists with 11 other Medical centers based on region, staffing and pre-period patient adherence.


The authors found that the incremental cost of a telemedicine-based collaborative care program for depression was low ($64), but the benefit was also low (0.002 QALY). The incremental cost effectiveness ratio (ICER) was $33,905.92/QALY but this was not statistically different from zero. The authors do not take into account convenience cost to the patient however (i.e., avoiding the need to commute); doing so could improve the ICER from society’s perspective even if not from the VA’s perspective.



Friday Links

Written By: Jason Shafrin - Oct• 24•14

Plus be sure to check out this week’s health wonk review over at Colorado Health Insurance Insider.

Regulatory Tsunami?

Written By: Jason Shafrin - Oct• 22•14

Medicare is working hard to make sure that doctors are efficiently providing high-quality care. Programs such as the Physician Quality Reporting System (PRQS) and the Value-Based Payment Modifier all are aimed to improve quality and lower cost.

The downside of such programs, however, is that the impose reporting burdens on physicians. For instance, Medicare can adjust a physician’s base payment rate based on:

  • Whether or not they are able to electronically prescribe medication
  • whether or not they fulfill “meaningful use” criteria of electronic medical records
  • the PQRS quality reporting system
  • The value-based payment modifier

Each of these systems overlaps and are phased in over time making it difficult for physicians to track how what their specific payment rate will be.  The AMA states:

The tsunami of rules and policies surrounding the penalties are in a constant state of flux due to scheduled phase-ins and annual changes in regulatory requirements.  In fact, the rules have become so complex that no one, often including the staff in charge of implementing them, can fully understand and interpret them.

In addition, CMS is moving from an ICD-9 system to an ICD-10 coding system, causing the number of codes available to increase from about 13,000 today to about 68,000 codes after the transition.

Payers must balance the desire to monitor provider quality without overburdening physicians with excess regulations and reporting requirements. Finding the correct balance between physicians, CMS’s, and patient desires is a delicate task.


Written By: Jason Shafrin - Oct• 21•14

PwC just released a report on wearable technology. Some findings from the health field include:

More than 80% of consumers said an important benefit of wearable technology is its potential to make health care more convenient.

Consumers have not yet embraced wearable health technology in large numbers, but they’re interested. More than 80 percent of consumers said an important benefit of wearable technology is its potential to make health care more convenient. Companies hoping to exploit this nascent interest will have to create affordable products offering greater value for both users and their healthcare partners.

While employers and health company executives expect wearables to provide valuable insights, few consumers are interested in using wearables to share health data with friends and family, and, citing concerns about privacy, consumers trust their personal physicians most with their health data. Therefore, companies should ensure privacy policies are crystal clear…Consumers will want to see those high [privacy] standards applied to health wearables data, especially as they become integrated into electronic medical records.

Keeping the consumer engaged beyond the first few weeks of use is an important part of any wearable strategy. Companies should consider novelty, rewards, incentives and truly actionable insights the user experience.

In Pontiac, Michigan, St. Joseph Mercy Oakland hospital has been running a pilot program on Visensia, a patient vital-sign monitoring system that analyzes data streams to produce care recommendations for clinicians. In the first four years mortality rates fell 35%, according
to Crain’s Detroit Business. Length of patient stay fell half a day.12

In general, consumers are concerned about cost, privacy and the ease of use of the technology. Fitness bands (Fitbit, Fuel band) are currently attracting the most attention from consumers. CNET has recommendations on the best of wearable tech, which extends beyond the health field.