Unbiased Analysis of Today's Healthcare Issues

Transformation of Mental Health Care in America

Written By: Jason Shafrin - Jun• 05•16

Mental illness is a highly prevalent class of diseases with potentially debilitating affects. About 30% of Americans have a mental illness and almost half (46%) will have a mental illness at some time in their lives.  Examples of mental illness include schizophrenia, bipolar disorder, depression, anxiety disorders. A paper by Glied and Frank (2016) summarizes the transformation of the U.S. mental health system between 1960 and today. Today, I review some of their interesting points.

In 1963 President John F.Kennedy…called on the nation to change the functions of psychiatric institutions toward a focus on active high-quality treatment, to shift the orientation of care from institutions to the community,and to integrate people with mental disorders into the mainstream of American life…In 1955 77 percent of treatment episodes took place in inpatient settings…In 2012 fewer than 6 percent of people receiving mental health treatment used inpatient care…In 1955 the outpatient mental health system provided just 379,000 episodes of treatment. Only thirteen years later, that figure had increased to almost 2 million.

How did most patients with mental illness pay for this care.  Increasingly over time, the answer has been Medicaid.

This opportunity to defray state costs with federal dollars led states to encourage the shift of many people with mental illness to other nonexempt institutions, such as nursing homes. It also encouraged them to treat people with these illnesses in the community.

For many state Medicaid agencies, care for mental health is managed by mental health carve out contracts. Specializing in mental health patients does offer the possibility for some comparative advantage including contracting with mental health specialists and more integrated care.  However, carving out mental health from physical health may serve to further isolate these patients and adversely affect the medical care they receive. Further, adverse selection may mean that the carve-out contracts outsource their most severe cases to other institutions (e.g., jails)

Whereas Medicaid provided health insurance for many patients with mental illness, the Supplemental Security Income (SSI) provided these patients with financial sustenance, although at a very low.

In 1974 about 32 percent of people with a severe and persistent mental illness received support from either Social Security Disability Insurance (SSDI) or the SSI program.By2000 the number was greater than 70 percent.

Despite these government programs to implemented–in part–to support patients with mental illness, spending has been relatively flat.  Whereas total healthcare spending increased from 5% of GDP to 17% between 1960 and 2012, spending on patients with mental illness remained flat at around 1% of GDP.

Mental illness is often blamed for violence.  There have been calls to restricted access to guns for patients with mental illness.  However, previous research has shown that mental illness is a weak predictor of violent crime.

Nonetheless, the rate of violent behavior among people who meet criteria for mental illness is about twice as high as the rate among those who do not…Rates of mental illness are very high among people who engage in disruptive (but often not violent) behavior that leads to incarceration in local jails…about 17 percent of male jail inmates and about 34 percent of female jail inmates meet criteria for a serious mental illness; the rate in the general population is about 4–5 percent.

The study also examines how mental illness exacerbates 3 market failures: moral hazard, adverse selection, and agency issue.


Friday Links

Written By: Jason Shafrin - Jun• 02•16

And last but not least, David Harlow of HealthBlawg hosts the latest edition of the Health Wonk Review.

Money back guarantee

Written By: Jason Shafrin - Jun• 01•16

With increasing pressure on the price of health care services, a number of firms are seeking innovative pricing strategies.  Stat reports:

Stryker, a medical device company, developed its SurgiCount system to accurately track these sponges. This March, it announced it is backing the product with a $5 million guarantee. If the system is used as designed and a surgeon leaves a sponge behind, Stryker will pay up to $5 million in legal costs associated with rectifying the problem. The company will also reimburse the hospital the difference in price between what it paid for SurgiCount and what it would have paid for generic sponges.

It’s not only device makers but pharmaceutical firms as well.

Cigna has announced signing contracts for two new cholesterol-lowering drugs that would reduce the price paid if real-world outcomes don’t match the results of clinical trials. Cigna will be given access to patients’ cholesterol levels and be able to tell how well the new drugs are working.

Is pay-for-performance becoming a reality in the life sciences industry?   There are a number of clear barriers, but innovative pricing arrangements are gaining a foothold.

Do physicians know whether patients are adherent?

Written By: Jason Shafrin - May• 31•16

Doctors have access to life saving medication for a number of illnesses.  However, the medication only works when patients take the drugs.  Are physicians able to determine which patients are adherent to their medication?  According to an article in JAMA Cardiology, the answer is ‘no’ for cardiology patients.

Forty (61%) patients reported rarely or never discussing their adherence to medication with their physicians. Of these patients, 8 (13%) had poor adherence and 36 (55%) had moderate adherence. Only 1 of the physicians of the patients with the poorest adherence correctly identified a patient as being poorly adherent.

In short:

Physicians acknowledge the importance of discussing adherence to medication with their patients, yet for many reasons these discussions are uncommon. More important, our study found a notable failure by cardiologists to correctly recognize which of their patients were nonadherent.

Medication adherence interventions are under-appreciated in terms of their importance in improving patient outcomes.


Are expensive cancer drugs worth the money?

Written By: Jason Shafrin - May• 30•16

A paper by Sebastian Salas-Vega and Elias Mossialos attempts to answer this question looking at nine countries (Australia, Canada, France, Germany, Italy, Japan, Sweden, the United Kingdom, and the United States) using data between 2004 and 2014.  They find that:

All nine countries—most notably France and Japan—witnessed an improvement in neoplasm-related years of potential life lost, which suggests that although the costs of drugs have risen, their therapeutic benefits have increased as well. Net economic value derived from cancer drug expenditures appears to have remained positive, with base-case analyses indicating that the United States obtained an estimated $32.6 billion in net positive return from cancer drug care in 2014.

Although cancer drugs are expensive, their value in terms of extending life has been enormous.  A 2015 study found that reduction in cancer mortality were largest in the countries that increased spending the most.  Specifically:

…the countries that increased spending the most had a 17 percent decrease in amenable mortality, compared to 8 percent in the countries with the lowest growth in cancer spending.


Our vets deserve better

Written By: Jason Shafrin - May• 29•16

The VA has been at the forefront of innovation in integrated care delivery.  ViSTA is the VA’s award winning IT system.  The VA has been aggresive in making sure veterans use generic drugs when these are available. Even if the VA provides high quality care, veterans are having increasing problems accessing this care.

The issue came to a head in 2014 during the Arizona VA scandal where VA officials used unofficial waiting lists to hide the facility’s long wait times. Some recent comments from VA Secretary Robert McDonald have demonstrated that the VA may not be focused on improving patient access. The N.Y. Times reports:

“The days to an appointment is really not what we should be measuring,” Mr. McDonald responded. “What we should be measuring is the veteran’s satisfaction. What really counts is how does the veteran feel about their encounter with the V.A.? When you go to Disney, do they measure the number of hours you wait in line? What is important is, what is your satisfaction with the experience.”

He continued: “What I would like to move to actually is that kind of measure. We are in the process of creating that kind of measure, validating that kind of measure.”

Patient satisfaction is important.  However, improving patient satisfaction for those veterans lucky enough to receive treated without focusing on those who are denied care is not only insensitive, but poor management.

John McCain’s response is the appropriate one calling these comments as “outrageous and completely inappropriate.”

Anthony Principi–a former VA Secretary–offers his thoughts on how to improve the VA.


Friday Links

Written By: Jason Shafrin - May• 26•16

Does comparison shopping work in health care?

Written By: Jason Shafrin - May• 24•16

According to a recent study in JAMA, the answer may be no.  High-deductible health plans aim to not only reduce the use of unnecessary services, but to make consumers more price sensitive and search for high quality, low priced care.  The latter goal, however, depends crucially on whether patients have access to information on accurate price information and whether they will actually use that information in selecting their health care providers.

A study by Desai et al. (2016) examines what happens when two employers offer their employees a price transparency tools indicating both the total cost of the service and the patient’s expected out of pocket cost.  They use a difference-in-difference approach and find:

Mean outpatient out-of-pocket spending among those offered the tool was $507 in the year before introduction of the tool and $555 in the year after. Among the comparison group, mean outpatient out-of-pocket spending changed from $490 to $520. Being offered the price transparency tool was associated with a mean $18 (95% CI, $12-$25) increase in out-of-pocket spending after adjusting for relevant factors. In the first 12 months, 10% of employees who were offered the tool used it at least once.

Patients may be more interested in using price transparency tools if culture changes and this becomes the norm. In the short-run, however, patients do not appear to access or use information on the price of healthcare very often.


Can behavioral health interventions really reduce cancer rates by half?

Written By: Jason Shafrin - May• 23•16

This is the claim of a new article by Song and Giovannucci (2016) in JAMA, but I am skeptical.  Here is why.  The authors compare cancer incidence and mortality between a low and high risk group.  They defined a patient as low risk based on not smoking, no or moderate alcohol use, BMI between 18.5 and 27.5, and regular exercise.  When comparing this low risk group against a high risk group, they find that the a population attributable risk (PAR) of 25%-33% within their data set.  However, their sample is made up of health professionals from the Nurses’ Health Study (NHS) and Health Professionals Follow-up Study (HPFS).  They also compare the low-risk rates to the overall US population and find that the PAR is 41%-63% for cancer incidence, and 59%-67% for mortality.

Based on these figures, the author claim:

In the 2 cohort studies of US white individuals, we found that overall, 20% to 40% of carcinoma cases and about half of carcinoma deaths can be potentially prevented through lifestyle modification. Not surprisingly, these figures increased to 40% to 70% when assessed with regard to the broader US population of whites, which has a much worse lifestyle pattern than our cohorts.

If we just got people to exercise, stop drinking and smoking, could we really reduce cancer incidence and mortality to such a degree?

Almost certainly not.  First, this is a correlation study.  Consider the case of individuals who have some ailments.  They may be more likely to exercise less, have higher BMI and also develop cancer.  Increasing the exercise levels of patients who are already ill is unlikely to happen and even if it does is unlikely to decrease cancer rates by half.  Even for relatively healthier people, if other factors (e.g., genetics) independently cause both negative health behaviors and cancer incidence, then the correlation between health behaviors is spurious.

Second, the out-of-sample extrapolation is not appropriate.  Basically, it compares low risk nurses against the general population. If the results were causal–which it is likely not–then the causal interpretation would be that improving health behaviors and becoming a nurse or health professional decreases cancer.  Clearly, becoming a nurse likely has little impact on cancer incidence but being a person who chooses to become a health professional is likely correlated with cancer incidence.

That being said, it is likely that better diet and exercise and less smoking and drinking will reduce cancer rates somewhat. Claiming that the reduction in cancer rates is 50% or more, however, appears to be a gross overestimate.


Is balance billing a good thing?

Written By: Jason Shafrin - May• 22•16

Are health care prices set on an open market? Almost certainly not. In many cases, physician fees are set by insurers. Currently, for instance, Medicare sets fees for physicians administratively. At Medicare’s inception, however, Medicare did allow physicians to charge whatever fees they wanted; Medicare would pay a base rate and patients would be responsible for any differences. This practice is known as balance billing.

How are physician prices set in the rest of the world? Is balance billing allowed? France provides one test case as outlined in a paper by Dormont and Péron (2016):

In France, a large proportion of specialists is allowed to balance bill their patients. The population is covered by mandatory NHI, and for each service provided, a reference fee is set by agreement between physicians and the health insurance administration. NHI covers 70% of the reference fee for ambulatory care. Individuals can take out supplementary private insurance: either voluntarily on an individual basis, or through occupational group contracts. Currently, 95% of the French population is covered by SHI. Supplementary insurance contracts cover the 30% of ambulatory care expenses not covered by NHI. In addition, they can offer coverage for balance billing…

In France, ambulatory care is mostly provided by self-employed physicians paid on a fee-for-service basis. Since 1980, physicians can choose between two contractual arrangement … If they join ‘Sector 1’, physicians are not permitted to balance bill…If they join ‘Sector 2’, they are allowed to set their own fees. Access to Sector 2 has been closed to most GPs since 1990, so most of them are in Sector 1: 87% in 2012. Hence, balance billing concerns mostly specialists. On average, balance billing adds 35% to the annual earnings of Sector 2 specialists. In 2012, 42% of specialists were in Sector 2. However, this proportion varies greatly across regions and specialties: for instance, the proportion of specialists in Sector 2 is 19% for cardiologists, 73% for surgeons, and 53% for ophthalmologists.

Balance billing (dépassements d’honoraires in French) clearly increase incomes for physicians. But is it good for patients? The authors use administrative data provided by the Mutuelle Générale de l’Education Nationale (MGEN) to answer this question. The authors compare individuals who left the MGEN supplemental insurance for more generous supplemental insurance coverage to those who remained with MEGN, and use an individual fixed effect to examine how insurance coverage affects use of specialists that balance bill. Clearly, changing insurance may be endogenous so the authors examine individuals who moved to a new département.   This change likely was due to other factors (e.g., job change) and is less likely to be related directly to health insurance coverage.

The authors find that:

…better coverage increases demand for specialists who charge high fees, thereby contributing to the rise in medical prices. People whose coverage improves increased their average amount of balance billing per consultation by 32%. However, the impact of the coverage shock depends on the supply of physicians. For people residing in areas where few specialists charge the regulated fee, better coverage increases not only prices but also the number of consultations, a finding that suggests that balance billing might limit access to care. Conversely, in areas where patients have a genuine choice between specialists who balance bill and those who do not, we find no evidence of a response to better coverage.

At first glance, this finding would seem to indicate that balance billing could be banned in areas with limited supply. However, allowing balance billing is the best way to attract new physicians to areas with limited supply. Thus, although in the short run balance billing may harm patient access in regions with few physicians, in the long-run, balance billing may increase the supply of physicians, potentially drive down price and increase patient access. Clearly, balance billing rates need to be clearly posted—unlike in the US—to ensure transparency.