Unbiased Analysis of Today's Healthcare Issues

Medicaid Managed Care and Drug Utilization for Patients with Serious Mental Illness

Written By: Jason Shafrin - Jun• 15•16

How will Medicaid expansions affect patient access to pharamceuticals? This question is particularly relevant for patients with serious mental illness. The answer is complicated by the increasing presence of Medicaid managed care plans.

Increasingly, states have turned to contracts with Medicaid managed care plans in order to better control costs and reduce budgetary uncertainty. However, in many states, prescription drug spending is “carved out” (ie, not included) in the managed care benefit. Under a carve-out arrangement, prescription drug benefits are managed on an FFS [fee-for-service] basis, which excludes them from the set of services for which a managed care plan has oversight and direct financial liability. Conceptually, this suggests that carveout reduces both the ability of and incentives for managed care plans to coordinate pharmaceutical use with spending on other health services, potentially leading to “cost spillovers” elsewhere in the system.

How does Medicaid managed care affect drug utilization? A paper by Schwartz et al. (2016) uses Medicaid State Drug Utilization Data to measure drug use among patients with SMI. They use annual enrollment reports to measure the share of each state enrolled in Medicaid managed care plans between 1999-2011. The authors use the Medicaid Analytic Extract (MAX) Prescription Drug Tables to determine of the patient had a prescription drug carve out. The combined data produced a sample of 310 state-year observations. The authors find that:

managed care penetration increased from 54.5% nationally in 1999 to 74.9% nationally in 2011…We found cross-sectional, negative associations between the managed care penetration rate and each measure of SMI prescription utilization, although not all estimates were statistically significant (Table). In particular, a 10 percentage point increase in Medicaid beneficiaries enrolled in managed care was associated with 0.87 fewer SMI prescriptions per beneficiary with SMI…Similarly, a 10 percentage point increase in managed care penetration was associated with $103 lower SMI drug spending per beneficiary using the broad definition.

The results, however, were closer to 0 and not statistically significant when state fixed effects and state fixed effects interacted with a linear time trend were included in the model.

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ACA decreased the number of uninsured Americans

Written By: Jason Shafrin - Jun• 14•16

This is according to a Urban Institute study by Karpman, Long and  Zuckerman (2016).  They look at changes in the uninsurance rate and in the rate of full-year insurance coverage for nonelderly adults (ages 18 to 64) overall and by state Medicaid expansion status.  They found that:

The uninsurance rate for nonelderly adults fell from 17.6 percent in September 2013 to 9.9 percent in March 2016, a 43.8 percent decline representing 15.5 million fewer uninsured adults.

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  Additionally, we see the largest drop among the lowest income individuals in Medicaid expansion states.

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CRISPR as a diagnostic?

Written By: Jason Shafrin - Jun• 13•16

Innovation can occur various ways.  Consider the rapidly evolving area of clustered regularly interspaced short palindromic repeats (CRISPR)

Zika, meet CRISPR.

…researchers have incorporated the gene-editing system CRISPR into a diagnostic test — one that can differentiate between two strains of the Zika virus.

CRISPR has been hailed for its potential to fix mutations that cause disease. It has hastened the pace of discovery in research labs around the world. And it is often described as a find-and-replace or find-and-delete technique because scientists can harness it to cut DNA and insert or eliminate genetic “letters” of their choosing.

With its bloodhound-like ability to speedily sniff out exact genetic sequences, CRISPR could one day be deployed to identify which bacteria or viral strain is afflicting an individual or circulating in a community, leading to targeted treatments and a quicker understanding of bewildering infectious diseases

While CRISPR may have originally been created with the goal of editing genes, its diagnostic prospects seem attractive as well.

Patient perspective on cancer care funding

Written By: Jason Shafrin - Jun• 12•16

Improvement in survival (a.k.a. efficiacy) clearly are important, but what other factors matter?  According to a systematic literature review by MacLeod, Harris and Mahal (2016), these factors include:

patients favour funding for cancer medicines that improve health outcomes demonstrated by ‘clinical efficacy’ [Oh et al.], ‘prolonged survival’ [Goldman et al., Seabury et al. Lakdawalla et al.] and/or ‘quality-of-life benefits’ [Oh et al.], including ‘relief or prevention of symptoms or complications of disease’, or offer ‘potential survival’, reflecting the ‘value of hope’ for a response to cancer drug treatment [Seabury et al. Lakdawalla et al.].

Tailoring the medications to individual need [Burgoyne et al. Jenkins et al.] mattered as did protecting the patient from financial burden also mattered to patients.

These patients considered that cost should not be a consideration in cancer drug funding decisions, once treatment has commenced, as their government has a moral obligation to maintain the ‘continuum of care’, and should not apply rationing by withholding funding for potentially life-saving or life-extending medicines [Jenkins et al., Lakdawalla et al.]

The general public’s preferences are similar, but not identical to cancer patients.

Like patients, the public prioritizes funding for cancer treatments that are ‘effective’ and ‘life-saving’, ‘life-extending’ and/or offer ‘improved life quality to individual patients’ [O’Shea et al. , Linley et al. , Burgoyne et al.]. Unlike patients, who are individually focussed, the public also supports funding cancer medicines that offer ‘significant innovation’ (‘effectiveness’) or ‘wider societal benefits’ (e.g. reduced caregiver burden) [Gallego et al., O’Shea et al., Burgoyne et al.]. The public has a sense of solidarity with cancer patients, and prioritizes investment in innovations for people with cancer, asthma and disabilities over those with drug addiction or obesity [Erden et al.]…The public also favours funding treatments for those with high risk and increased vulnerability (e.g. high mortality risk), and for patients with prior cancer [O’Shea et al., Burgoyne et al.]….Similar to patients, the public values new cancer drugs when there are no other options [Mileshkin et al.].

Many of these patients are also willing to pay increased insurance premiums to cover expensive, but effective treatments [Romley et al.]

In contrast, the authors found that payers generally focused on value, which included “health outcomes and benefits” and how these benefits compare to cost.  Payers did consider the treatment landscape in terms of whether there was unmet need (i.e., few treatments available).  In addition, “financial constraints, political aspects, and stakeholder interests and pressure” also played a role in their decisions as well as whether the treatment was life-saving.

When comparing these criteria for patients, the general public, and payers, the authors summarize their findings as follows:

…payers consider the broadest range of criteria (35), across all categories), the general public considers a moderate number of criteria (24), and patients consider fewer criteria (12).  All three stakeholders were aligned on only eight funding criteria—which primarily encompassed the notions of funding effective, life-saving treatments that can provide patient-relevant health benefits to individuals in need…However, patients (and the general public) also consider ‘access to information’, ‘autonomy in decision making’ and the ‘value of hope’, but we found no evidence that payers also share these considerations.

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Friday Links

Written By: Jason Shafrin - Jun• 10•16

How does market structure affect technology adoption?

Written By: Jason Shafrin - Jun• 08•16

The answer: more competition leads to more technology adoption.  This is the finding from a study by Karaca-Mandic et al. (2016).  They use data from 100% Medicare claim in 2003 and 2004 as well as linked information on hospitals [American Hospital Association (AHA) Annual Survey] and physicians [American Medical Association (AMA) Masterfile].

Competition is measured two ways.  First, the authors the traditional Herfindahl Hirschman Index (HHI), which is the sum of the squares of the firms market share.  Although one can easily measure HHI within a given area, HHI does not account for the location of patients within a given area. The authors use a second approach, where the measure market share for each practice among patients who lived within 50 miles.  Following the approach of Berry (1994), they run a conditional logit at the patient level where the dependent variable was ln(shjk) – ln(sh0k), where shjk was the market share of practice j in ZIP k (the proportion of patients in ZIP k choosing practice j), and
sh0k was the share of patients living in ZIP k who chose a practice outside of the choice set (beyond the 50 mile radius). The explanatory variables were the distance from the patient’s home ZIP to the ZIP of the cardiologist’s office, this distance squared, and a vector of practice fixed effects.

The study calculates measures of competition for both physician practices and hospitals. Using either measure of market competition, the authors find that:

…substantial variation in use existed across cardiologists and hospitals. We found significant evidence that the structure of the cardiology practice market mattered. [Drug eluting stents] DESs diffused faster in markets where cardiology practices faced more competition. This finding supports the hypothesis that competitive pressure to maintain or expand PCI volume shares compelled cardiologists to adopt DESs more quickly.

On the other hand, hospital competition was not a determining factor:

“…we found no obvious evidence that the structure of the hospital market mattered.We conjectured that hospitals faced additional, conflicting influences that did not exist at the cardiologist level. Hospitals would have faced significant pressure to secure PCI volume through adoption, but they also faced the direct cost of purchasing DES.

Although this study is interesting, would its findings hold up today?  Has hospitals are buying physician practices and physicians are banding together to form accountable care organizations, the line between physician, hospital and insurer are starting to blur.  For these new organizational forms, will competition be a key driver of innovation adoption–as it was for physicians and drug eluting stents–or will it be a small factor–as it was for hospitals in this case.  That question, has yet to be resolved.

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Quotation of the Day

Written By: Jason Shafrin - Jun• 08•16

“Science is what we have learned about how to keep from fooling ourselves.”

Richard Feynman

Mental Illness is mostly costly condition in the US.

Written By: Jason Shafrin - Jun• 06•16

A recent paper by Roehrig finds that annual U.S. spending to treat mental illness is $201 billion.  This puts mental illness as the most expensive disease to treat.

Previous estimates using data such as the Medical Expenditure Panel Survey (MEPS) did not have mental illness as the most expensive disease.  However, MEPS examines health care spending for non-institutionalized patients.  Spending for mentlaly ill atients in nursing homes, psychiatric facilities and jails, however can be very large.  After taking these costs into account, mental illness leaped to the #1 category.

Regardless of the spending numbers, additional innovative treatments are  needed to ensure that patients with mental receive high-quality, high-value care.

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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.

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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.