Unbiased Analysis of Today's Healthcare Issues

Cost of Quality Reporting: $15.4 billion

Written By: Jason Shafrin - Mar• 09•16

Medicare aims to move away from fee-for-service reimbursement and towards value-based payment mechanisms based on quality of care.  Although the goal is laudable, there are a number of practical challenges.  First, most care is still provided via fee for service.  In 2013, 95% of all physician office visits were reimbursed using fee-for-service.  Second, collecting quality of care data comes with cost. A paper by Casalino et al. (2016) find that quality reporting is in fact extremely costly.

Each year US physician practices in four common specialties spend, on average, 785 hours per physician and more than $15.4 billion dealing with the reporting of quality measures. While much is to be gained from quality measurement, the current system is unnecessarily costly, and greater effort is needed to standardize measures and make them easier to report.

Clearly, measuring quality of care is important, but Casalino rightly notes that understanding the costs of reporting and identifying strategies to reduce the cost of reporting is vital if value-based purchasing would be able to improve the efficiency of the health care system.


Is Economics a Science?

Written By: Jason Shafrin - Mar• 07•16

That is the question addressed by in a paper by Colin Camerer and co-authors in Science. The authors repeated 18 economics experiments conducted in a laboratory setting. These articles were published in leading economics journals including the American Economic Review and the Quarterly Journal of Economics between 2011 and 2014.

As The Economist reports, they found that

For 11 of the 18 papers (ie, 61% of them) Dr Camerer and his colleagues found a broadly similar effect to whatever the original authors had reported. That is below the 92% replication rate they would have expected had all the original studies been as statistically robust as the authors claimed—but by the standards of medicine, psychology and genetics it is still impressive.

One theory put forward by Dr Camerer and his colleagues to explain this superior hit rate is that economics may still benefit from the zeal of the newly converted. They point out that, when the field was in its infancy, experimental economists were keen that others should adopt their methods. To that end, they persuaded economics journals to devote far more space to printing information about methods, including explicit instructions and raw data sets, than sciences journals normally would.

Maybe Economics is a science after all.


Cost effectiveness analysis Q&A

Written By: Jason Shafrin - Mar• 06•16

What is cost effectiveness analysis or CEA?  

One definition is that CEAs–at least in the field of health care–measure the difference or ratio between cost of care and the benefits of care for a given intervention compared to an alternative treatment strategy.  The intervention could be a new surgical procedure, a drug, a behavior modification program or any other intervention of interest.

How frequently are CEAs conducted?

Fairly commonly.  In the past, CEAs were conducted primarily in Europe for health technology assessment (HTA) organizations such as the the National Institute for Health and Care Excellence (NICE) in the UK.  However, with the advent of new initiatives to measure care value by CMS, the advent of value-based insurance design initiatives by private and public payers, and the development of independent institutions that measure cost effectiveness, CEAs are on the rise.

Are there historical data on CEAs?

In fact there are.  The Center for the Evalutation of Value and Risk in Health (CEVR) at Tufts University in fact has an entire registry of CEA studies.   CEVR was founded by Peter Neumann and Joshua Cohen and has two databases:  Cost-effectiveness Analysis Registry and the National Coverage Determinations Database.  The CEVR CEA database has been used in a number of publications.

Can I get access to the CEA registry?

The CEVR website does allow to search for CEA articles that are in their registry here.  The CEA registry FAQs are also helpful.

Friday Links

Written By: Jason Shafrin - Mar• 03•16

Core Quality Measures

Written By: Jason Shafrin - Mar• 03•16

One challenge providers have faced in the past is that quality measure reporting has been complex.  Medicare may ask for quality measures with one definition, commercial payers may define quality a second way, and Medicaid may ask for a third definition of quality.  Keeping track of these definitions and recording quality measures distracts providers from actually providing quality care to their patients.

With this issue in mind, CMS and a trade organization known as America’s Health Insurance Plans (AHIP) have create seven sets of core measures that public and private payers will use in a consistent measures.  As AJMC reports, there are  7 sets of core quality measures.   The seven sets of core measures fall into the following groups:

  • Accountable Care Organizations (ACOs), Patient Centered Medical Homes (PCMH), and Primary Care
  • Cardiology
  • Gastroenterology
  • HIV and Hepatitis C
  • Medical Oncology
  • Obstetrics and Gynecology
  • Orthopedics

Why is this coordination needed?  A CMS statement says:

“In the U.S. Health care system, where we are moving to measure and pay for quality, patients and care providers deserve a uniform approach to measure quality,” said CMS Acting Administrator Andy Slavitt. “This agreement today will reduce unnecessary burden for physicians and accelerate the country’s movement to better quality.”

Centralizing quality measures has the advantage of simplifying quality reporting for providers.  However, CMS and AHIP will need to approve changes to these core measures.  As new medical techniques and treatments become available, will the core measures be flexible to adapt to changing practice patterns?  My guess is ‘no’.  Thus, CMS should carefully consider how best to track quality while maintaining flexibility to adjust the definition of “quality” based on how the state of the science evolves over time.

Can reducing cost sharing save money?

Written By: Jason Shafrin - Mar• 01•16

Typically, economists believe that subsidizing goods or services increases utilization and the total amount of funds spent on a good. The RAND Health Insurance Experiment (HIE) proved that lowering cost sharing increases total spending on medical goods. Although reducing cost sharing on all medical care is likely to increase total healthcare spending, subsidizing highly effective therapies can actually reduce total cost.  For instance, lowering coapyments for effective pharmaceuticals may decrease overall cost if the drugs are effective and reduce unnecessary hospitalizations and ER visits.  This approach to varying cost sharing based on treatment efficacy is known as value-based insurance design.

A recent study by Maeng et al. (2016) uses data on a new Geisinger program to make just this point:

The intervention group, defined as 2251 GHS [Geisinger Health System] employees receiving any of the drugs eligible for $0 co-pay, was propensity score matched based on 2 years of pre-intervention claims data to a comparison group, which was defined as 3857 non-GHS employees receiving the same eligible drugs at the same time…Total healthcare spending (medical plus prescription drug spending) among the GHS employees was lower by $144 PMPM (13%; 95% CI, $38-$250) during the months when they were taking any of the eligible drugs. Considering the drug acquisition cost and the forgone co-pay, the estimated return on investment over a 5-year period was 1.8. 

Lowering cost sharing for highly effective treatments–even to a $0 out-of-pocket cost–can produce cost savings if the drugs in question are highly effective.

Who are the high-cost patients?

Written By: Jason Shafrin - Feb• 29•16

Accountable care organizations are responsible for managing the quality and cost of patients.  However, a small share of patients make up a large share of health care cost.  How can ACOs improve the care and reduce the cost of these patients?

First, ACOs need to understand the needs of high-cost patients.  A perspective by Powers and Chaguturu (2016) examine the complexity of these high-cost patients:

The costliest 1% of Medicare patients had an average of eight co-occurring chronic conditions. Most had cardiovascular risk factors, and more than half had end-stage sequelae of ischemic heart disease, congestive heart failure, or chronic kidney disease…In the Medicaid population, high-cost patients also had several co-occurring chronic conditions (an average of five) but there was a striking prevalence of mental health disorders. A quarter of the patients had been diagnosed with depression, another quarter with anxiety, and almost one fifth with bipolar disorder…Drivers of high costs [for the commercially insured population]…included catastrophic injuries, neurologic events, and need for specialty pharmaceuticals — particularly antineoplastics, but also biologics for multiple sclerosis or rheumatoid arthritis.

How can ACOs reduce the cost of care for these patients?  The authors suggest the following:

[For Medicare patients]…the use of nurse care managers who work with high-risk patients to coordinate care among providers, monitor and track outcomes, and engage patients in disease management has been successful in some cases. We also found that 20% of spending in this group is attributable to post-acute care, which suggests the need for strategies aimed at high-value post-acute and skilled-nursing care….[For Medicaid patients] accountable care strategies for this population to improve access to mental health care and to integrate mental health services into broader care-coordination and disease-management models…high cost commercial patients would…need to focus on ensuringappropriate use of specialtypharmaceuticals in treating chronicdisease.

Because high-cost patients in different populations have different needs, it is imperative for ACOs to tailor their case management programs to the needs of these specific patient groups.

P4P in Medicaid

Written By: Jason Shafrin - Feb• 28•16

Does Medicaid use pay-for-performance (P4P) for providers?  If so, how does it work?  And does it affect quality and cost?

These are the questions of interest to Rosenthal et al. (2015) in their study of P4P programs in Alabama, Minnesota, and Pennsylvania.  Although all three focus on physicians, the Alabama program is a medical homestructural incentive and shared savings model; Minnesota rewards intermediate health outcomes in two different ways for fee-for-service and managed care; and Pennsylvania rewards collaboration with disease management and management of chronically ill patients based on process measures of quality.  I describe each of the programs below.


The Pennsylvania Office of Medical Assistance Programs (OMAP) purchases services through contracts with managed care organizations, an enhanced PCCM [primary care case management] vendor and under a traditional, fee-for-service system for nearly 1.8 million Pennsylvania residents…In Pennsylvania, managed care is mandatory in urban counties where HMOs serving Medicaid are relatively plentiful and voluntary where there are few HMOs…Since 2000, OMAP has published a report card that compares Medicaid HealthChoices managed care plans on HEDIS and CAHPS results…

Payment incentives in Pennsylvania are at the physician level and focus on two separate goals support of chronic disease management and optimal chronic care (see Table 1). Providers have a variety of incentives to enroll patients in disease management. There are also incentives for delivering optimal treatment, measured by HEDIS process of care measures: beta blockers for patients with CHF, aspirin for patients with diabetes and CAD, a controller medication for patients with asthma, and LDL for patients with diabetes.

In this program, practitioners receive a variety of payments include a one-time $200 payment to support the program, $30 to provide patient contact information to the PCCM vendor, $40 to identify candidates for disease management, and $60 for completing a chronic care feedback form and care plan. Physicians are also rewarded for varies HEDIS measures such as beta blockers for CHF, aspirin for diabetes and CAD, a controller medication for asthma, LDL for diabetes.

Beginning in July of 2006, Minnesota’s Department of Human Services worked with private employers to customize the Bridges to Excellence (BTE) Diabetes Care link for the managed care population. Payments based on these quality measures were incorporated in 2007. Although BTE is a program, the BTE program
BTE in Minnesota, however, is a customized program that utilizes existing Minnesota-based infrastructure. The main performance measure for the BTE program is a composite measure of 5 diabetes metrics: these include 1) HbA1c ≤7.0%; (2) blood pressure <130/80 mmHg; (3) LDL < 100 mg/dl; (4) daily aspirin use for patients aged 41–75; and (5) avoidance of tobacco. Patients have to meet all 5 criteria in order for Minnesota Medicaid to consider that they have received optimal diabetes care. Providers receive $100 for every patient who reaches this benchmark.

Starting in 2005, Alabama began paying providers a fee to serve as patient’s medical home and also enacted a shared savings program. Providers in the program could keep 50% of any savings generated by primary care physicians activity along three dimensions: (i) generic medication use, (ii) emergency department utilization, and (iii) number of office visits. In addition, providers are evaluated based on a measure of efficiency which is actual charges compared to expected charges based on their patient’s demographics and health status.

Shared savings are allocated based on how physicians score on the performance and efficiency metrics relative to their peers. Physicians ranking in the lowest quartile overall are ineligible for shared savings payments.

Using a difference-in-difference structure that compares each of these states to a nearby state without P4P, the authors find the following:

In Pennsylvania, there was a statistically significant reduction of 88 ambulatory visits per 1,000 enrollee months compared with Florida. In Minnesota, there was a significant decrease of 7.2 hospital admissions per thousand enrollee months compared with Wisconsin. In Alabama, where incentives were not paid out until the end of a 2-year waiver period, there was a decline of 1.6 hospital admissions per thousand member months, and an increase of 59 ambulatory visits per 1,000 enrollees compared with Georgia. No significant quality improvements in intervention relative to control states.

To summarize, no improvements in quality were found but there was mixed evidence of reduced hospital use.


Friday Links

Written By: Jason Shafrin - Feb• 25•16

HWR is up

Written By: Jason Shafrin - Feb• 25•16

Louise Norris has a freshly posted Healthcare Reform: The Path Forward Edition of Health Wonk Review at Colorado Health Insurance Insider. She notes that it’s been nearly six years since the ACA was signed into law – and particularly in this election year, it’s all about the path forward.