Unbiased Analysis of Today's Healthcare Issues

Inpatient Psychiatric Facilities: Patient Population and Readmissions

Written By: Jason Shafrin - Mar• 20•14

The Affordable Care Act has required that CMS begin to address excess readmissions in short term acute care hospitals paid under the Inpatient Prospective Payment System (IPPS) through the Hospital Readmissions Reduction program.  This program requires CMS to reduce payments to IPPS hospitals with excessive readmissions for a set of three conditions—acute myocardial infarction (AMI), heart failure, and pneumonia…In the 2013 IPPS Final Rule, CMS has estimated that the Hospital Readmissions Reduction Program would save $280 million for the first year.

What would happen if CMS extended the hospital readmission reductions program to inpatient psychiatric facilities (IPF) through the IPF Prospective payment System (IPF PPS)?  Currently, IPF PPS is used to reimburse two types of IPF: those that are specific units within a larger hospital and those that are freestanding units.    A policy paper by the Moran Company provides some details on current patient population using IPF PPS as well as readmission rates.

  • Medicare discharges made up around 25% of IPFs’ total discharges
  • Beneficiaries who use IPFs are likely to be poor and disabled.  In fact, a majority of Medicare beneficiaries admitted to an IPF qualified due to disability (rather than age).  Further, over half of these beneficiaries with an IPF admission are dual-eligibles.
  • Freestanding IPFs have longer lengths of stay (29 days for government facilities, 12 days for non-government) compared to inpatient psychiatric units (12 days for government facilities and 11 days for non-government).
  • Patients admitted to an IPF have higher rates of chronic illness (e.g., HIV/AIDS, diabetes) than those non-psychiatric patients in the inpatient setting.  Patients with serious mental illness are much more likely to have substance abuse problems.
  • Readmission rates for IPF are high.  Thirty percent of Medicare beneficiaries with at least one psychiatric facility stay in a given calendar  have a readmission during the same calendar year.


The Cavalcade of Risk turns 204

Written By: Jason Shafrin - Mar• 19•14

Insurance Regulatory Law blog posts this week’s edition of the Cavalcade of Risk. Check it out!

The future of cancer therapy: Viruses?

Written By: Jason Shafrin - Mar• 18•14

The Economist has an interesting profile of Dr. Angela Belcher, who uses viruses to create batteries and new touchscreens is now moving into the medical field. Here is how she proposes to improve tumor detection–and potential treatment–in the future:

The plan is to produce a medical probe which can be used to locate extremely small tumours. One way this is being tried is to get genetically engineered viruses to latch onto carbon nanotubes which glow under light from a laser. These viruses carrying the tubes would be injected into the body, and with light shining on the skin, be capable of glowing up to 10cm or so inside the body. The glow can be detected with a specialised camera.

To get these beacon viruses into the right places, the researchers engineer them to have a second affinity, one that makes them bind to certain kinds of cancer cells. They would then find any tumours, attach to them and glow.

The technique is still experimental and is being tried out in the laboratory on cellular models of ovarian cancer, which can be difficult for surgeons to detect when the tumours are tiny. There is a lot to do, but, says Dr Belcher, “I know we can find very small tumours and that should allow surgeons to remove them.”

It also raises an obvious question: if the viruses can find tumours and light them up could they also carry with them some kind of lethal weapon? Not surprisingly, that possibility is being explored, with attempts to engineer cancer-seeking viruses that can carry both an imaging material and a chemotherapy agent.

One question is how viruses are disposed of after they identify the tumor? Another is ensuring that viruses do not evolve to have a symbiotic relationship with the tumor. Nevertheless, this is a very interesting line or research.

P4P in the UK

Written By: Jason Shafrin - Mar• 16•14

General Practitioners (GPs) in the UK NHS are paid a mixture of capitation, lump sum allowances, and a pay-for-performance bonus. The P4P element, the Quality and Outcomes Framework (QOF), rewards GPs according to their performance on a large number of indicators. QOF payments represented up to 20% of GPs ’ income in the first year of its introduction.

In the 2006-2007 fiscal year, the NHS updated their quality indicator set, adding new quality metrics and retiring other ones.  The QOF is a piece-wise linear payment schedule with minimum and maximum thresholds.  In this year, minimum thresholds for payments were raised from 25% to 40% for all indicators. The maximum thresholds were raised for nine clinical indicators, whereas they were left unchanged for 25 other indicators whose definitions remained consistent. This change provides a unique quasi-experiment to evaluate how GPs respond to changes in payment thresholds by comparing the changes in their performance on indicators with increased thresholds against those with thresholds kept the same.

How did these changes effect physician behavior?  Did they improve quality for metrics with higher thresholds or those added to the QOF program?  Did quality decrease for metrics removed from the QOF program?

A paper by Feng et al. (2013) attempts to answer this question.  They use data from Scotland and apply a difference-in-differences methodology.  The find the following results.

“We find no ‘ discouragement ’ effect for GPs with a very low performance index (i.e. below 40% in 2005/2006) as the result of the increased maximum payment threshold… the effect of the increased maximum payment threshold under the QOF scheme in 2006 had a positive effect on GPs ’ QOF performance. We also conclude that the Under Performers improved the most in 2006/2007, followed by Competent Performers and Excellent Performers.”

This could mean that either that the QOF is working well, or that this is a natural phenomenon of regression  to the mean.


Friday Links

Written By: Jason Shafrin - Mar• 14•14


HWR: Mud Season Edition

Written By: Jason Shafrin - Mar• 13•14

Brad Wright has posted Health Wonk Review: Mud Season Edition at Wright on Health – you can find the link here.

Are ACOs working?

Written By: Jason Shafrin - Mar• 12•14

Maybe. An press release from CMS is very upbeat on ACOs. What do the numbers say?
Farzad Mostashari and Ross White review the CMS report and find that results were mixed:

Of the 114 ACOs in the program, 54 of the ACOs saved money and 29 saved enough money to receive bonus payments. The 54 ACOs that saved money produced shared net savings of $126 million, while Medicare will see $128 million in total trust fund savings.

There was not a large difference between the success rate of physician-led and hosptial-led ACOs. 29% of the physician-led ACOs achieved savings than expected compared to 20% for hospital-sponsored ACOs. However, this difference was not statistically significant.

Another question is: are these savings a one-time change or can decreases in spending growth continue into the future. Some evidence indicates that the latter is more likely. Mostashari and White claim that “there is some evidence that ACOs in the highest cost states are more likely to be achieve shared savings. The states with the most expensive (risk adjusted and standardized) regions for Medicare are Florida, Louisiana, Mississippi, and Texas.” Thus, the biggest ACO savings could be simply a regression to the mean phenomenon.

Further, little evidence is available on the whether cost savings decreased patient health. Although the ACOs do use a number of quality measures, most of these are process of care measures; the outcome measures used are generally crude.

Are ACOs working? The question has not yet been fully answered.

Extended Cost Effectiveness Analysis

Written By: Jason Shafrin - Mar• 10•14

Most people know what cost-effectiveness analysis (CEA), but what is extended cost effectiveness analysis (ECEA)?  A paper by Verguet, Laxminarayan,and Jamison (2014) describes the ECEA approach as it relates to the benefits of universal public finance (UPF) of specific medical treatments.  CEA measures the effectiveness of a treatment relative to its cost.  ECEA does this as well but also includes that value of UPF based on its value providing provide insurance against financial risks. Since most people are risk averse, insurance is useful in and of itself.  Second, ECEA also accounts the financial implications of crowding out private expenditures; namely, in the case of UPF that funding coverage (e.g., through taxes) creates deadweight loses.  Finally, ECEA can incorporate values society places on more or less equal distributional of resources across wealth strata of a population.

The authors apply the ECEA framework to determine the value of universal public finance (UPF) of tuberculosis (TB) treatment.  Their analysis concluded that “replacement of private finance for TB treatment in India with UPF could lead to both substantial health gains and financial risk protection bets, both concentrated among the poor.”


Does licensing increase prices for dentists?

Written By: Jason Shafrin - Mar• 09•14

Clearly the answer is yes. For many basic tasks, dentists and dental hygenists may perform task of similar quality. However, in some states, dental hygenists are not allowed to perform these tasks. A paper by Wing and Marier find the following:

United States, occupational regulations influence the work tasks that may legally be performed by dentists and dental hygienists. Only a dentist may legally perform most dental procedures; however, a smaller list of basic procedures may be provided by either a dentist or a dental hygienist. Since dentists and hygienists possess different levels of training and skill and receive very different wages, it is plausible that these regulations could distort the optimal allocation of skills to work tasks…Our empirical analysis exploits variation across states and over time in the list of services that may be provided by either type of worker. Our main results suggest that the task-specific occupational regulations increase prices by about 12%…We [also] find that allowing insurers to directly reimburse hygienists for their work increases one year utilization rates by 3–4 percentage points.

Would you be willing to pay 12% more for a dental cleaning from a dentist compared to a dental hygenists? The answer may be no, or may be yes. The individual, rather than the government, however, should be making this decision. Certifying individuals as dentists or dental hygenists provides information to consumers that can impact market prices. However, restricting the scope of services provided increases prices by restricting supply. Further, requiring patients to see a dentist rather than a dental hygenist likely hurts poor individuals who need dental care the most.

Are we running out of antibiotics?

Written By: Jason Shafrin - Mar• 07•14

Nicole Allan of the Atlantic discusses why overuse of antibiotics is making them less effective.  The fact that antibiotics are less effective did not come as a surprise to many experts.  In fact, in 1945, “while accepting a Nobel Prize for discovering penicillin, Alexander Fleming warned of a future in which antibiotics had been used with abandon and bacteria had grown resistant to them.”  More recently, the director of the CDC stated that“If we’re not careful, we will soon be in a post-antibiotic era. In fact, for some patients and some microbes, we are already there.”

Overuse of antibiotics occurs due to:

  • Unnecessary use of antibiotics to combat viral, rather than bacterial, infections
  • Use of antibiotics in food. 80 percent of all antibiotics used in the U.S. each year are given to animals in order to help them gain weight faster or use less food to gain weight.

Disease that were previously entirely treatable with antibiotics have now evolved to make the antibiotics partly or entirely ineffective. Drug-resistant tuberculosis killed 170,000 people in 2012.