Unbiased Analysis of Today's Healthcare Issues

CoR #212

Written By: Jason Shafrin - Jul• 09•14

RJ Weiss presents this week’s round-up of risk-related posts, with a heavy emphasis on risk, from cyber liability to under-reserving.

Do EHRs increase “upcoding”?

Written By: Jason Shafrin - Jul• 08•14

Upcoding occurs when physician or hospitals artificially increase the patient’s severity of illness. For instance, a hospital may record additional comorbidities. In Medicare’s inpatient prospective payment systems (IPPS), Medicare reimburses hospitals more for caring for patients who are sicker. Some health policy experts worry that electronic health records (EHRs) will decrease the cost of documenting additional illnesses; thus the number of comorbidities documented may increase and Medicare reimbursements may rise.

To determine whether or not this is the case, a study by Julia Adler-Milstein and Ashish K. Jha uses a difference-in-difference methodology to compare hospitals that adopted EHRs experience a more significant increase in patient case mix severity. Using data from the Information Technology supplement to the American Hospital Association (AHA) Annual Survey, CMS impact files, and Medicare Provider Analysis and Review (MedPAR) files, the authors found the following:

We identified 393 hospitals that newly adopted a basic EHR (181 in the cohort that adopted between 2008 and 2009, and 212 in the cohort that adopted between 2009 and 2010). These were matched to 782 control hospitals that had not adopted during the same time periods. New adopters were predominantly nonteaching (61 percent), for-profit (70 percent), and medium-size hospitals (47 percent)…
In our difference-in-differences model, we found no significant relationship between EHR adoption and patient acuity. The case-mix index increased among adopters by 0.066 and among controls by 0.065…This reflects a difference-in-differences of 0.001 (p = 0.968).

This results may not be surprising. As the authors readily admit, hospitals already devoted significant resources to optimizing coding prior to the advent of EHRs. Further, hospital adoption of EHRs is non-random. “Hospitals that adopt EHRs tend to be more sophisticated (for example, compared to controls, adopters are more likely to be larger and to be teaching hospitals), and these more sophisticated hospitals are the ones that invest in maximizing coding.” Thus, one might expect that EHRs may most affect upcoding for small and medium size physicians practices, who do not benefit from economies of scale and could increase revenue at limited cost by using EHRs to upcode.


Is real-time patient monitoring here?

Written By: Jason Shafrin - Jul• 07•14

At Boston’s Partner’s HealthCare, the answer is yes.  Venture Beat reports:

Boston’s Center for Connected Health, a division of Partners HealthCare, launched one of the first ‘connected health’ programs last month. It’s showing early signs of success, according to an article published this week in the Boston Globe.

Through the new system, patients can monitor their blood pressure, heart rate, and other key metrics from their homes and upload this data wirelessly; it’s automatically transmitted to an EMR.

This data is transmitted from a smartphone device or gadget to Partners’ database (which currently stores about 1.2 million patient vitals) and to a patient’s online medical record in minutes. Doctors can view this data at any time, and Partners’ patients can monitor their own health data through a patient portal dubbed Patient Gateway…

“This is a significant part of how we are working to change care delivery, putting the patient at the center of their care while maintaining a close watch on their condition when they are not in the hospital or doctor’s office,” said James Noga, the vice president and chief information officer of Partners HealthCare, in a statement.

There are some issues. For instance, patients may come in to see the doctor for small, clinically insignificant changes in blood pressure levels. Most importantly, however, the technology needs to work over long periods of time with little error. Once that is achieved, monitoring patient health will not be considered the technological cutting edge, it will be considered status quo medicine.

Obamacare will Increase Use of Elective Surgeries

Written By: Jason Shafrin - Jul• 06•14

Expanding health insurance causes moral hazard.  Patients who bear a lower share of cost will inevitably use more health care serices.  On the one hand, this increases the cost of the health care system; on the other hand, the patients who receive the additional care likely have better health outcomes.

However, which services will patients who are newly insured through the Affordable Care Act (ACA) choose to use?  One way to predict this is to examine what happened after Massachusetts expanded their health insurance coverage (i.e., Romney Care).  It is likely that newly insured patients use more elective surgery. WonkBlog reports:


A new study published in JAMA Surgery suggests the immediate effects of the coverage expansion will be an increase in elective surgeries aimed at improving a person’s quality of life — think of things like knee replacements and back surgeries — as opposed to surgery immediately addressing life-saving conditions…

Michigan researchers examined surgery rates for people ages 19 to 64 between 2003 and 2010, which captured the experience just before and after the Massachusetts coverage expansion took effect in 2007. Comparing surgery rates to those in New York and New Jersey, the researchers found the coverage expansion in Massachusetts increased elective surgeries 9.3 percent three years after the law took effect. The increase was more dramatic among nonwhite populations (19.9 percent), who face disparities in care.



Written By: Jason Shafrin - Jul• 03•14

Are nursing home expenses driving savings?

Written By: Jason Shafrin - Jul• 02•14

From a working paper by Karen A. Kopecky and Tatyana Koreshkova.

…even though they are only a third of OOP [out-of-pocket] health expenses, the presence of nursing home expenses accounts for more than half of savings for all health expenses…We find that 27 percent of savings for old-age OOP health expenses, 3.7 percent of private wealth, is savings for cross-sectional OOP expense risk and that more than 80 percent of these precautionary savings…is accumulated to self-insure against cross-sectional OOP nursing home expense risk. This is a substantial amount: if savings for cross-sectional OOP nursing home expense risk were held in the form of vehicles, it is large enough to account for the entire stock of transportation equipment in the US.

HT: Marginal Revolution.

What’s in store for 2015?

Written By: Jason Shafrin - Jul• 01•14

PwC’s Health Research Institute projects what is going to happen to health spending in 2015.  According to their annual report, Medical Cost Trend: Behind the Numbers:


At first glance, the health sector [in 2015] appears to be reverting to historical patterns of bouncing back as the nation recovers from the economic doldrums. Whether spending more freely because of the improved economy or shopping with insurance provided through the Affordable Care Act, consumers triggered the first bump in growth in the first quarter of 2014. We expect that to continue through next year.

But other factors are helping to moderate that growth. The $2.8 trillion industry is becoming more efficient. Doctors and hospitals are adopting standardized processes that offer the prospect of better value for our health dollar. ‘At-risk’ payment models that hold healthcare providers financially accountable for patient outcomes are beginning to take effect. One tangible sign of shrinkage: growth in healthcare system administrative and clinical employment has declined since 2011.

And major purchasers—namely the federal government and large employers—are tamping down the spending growth rate analyzed in this report, in part by demanding greater value and in part by shifting financial responsibility to consumers.

SCOTUS Obamacare Ruling

Written By: Jason Shafrin - Jun• 30•14

The Supreme Court of the United States (SCOTUS) recently ruled that family owned and other closely held companies can opt out of the Affordable Care Act’s provisions for no-cost prescription contraception in most health insurance if they have religious objections.  Is this a blow to Obamacare?  Yes and No.  The practical implications may be small but the political ramifications are large.  Politico writes:

By letting some closely held employers — like family-owned businesses — opt out of the coverage if they have religious objections, the justices haven’t blown a hole in the law that unravels its ability to cover millions of Americans. They didn’t even overturn the contraception coverage rule itself. They just carved out an exemption for some employers from one benefit, one that wasn’t even spelled out when the law was passed.

But politically, that doesn’t matter.

What matters is that the Supreme Court has ruled that the Obama administration overreached on one of the most sensitive cultural controversies in modern politics. And in doing so, the justices have given the Affordable Care Act one more setback


Dissenting Supreme Court Justices agree. Justice Ruth Bader Ginsburg–one of the dissenting justices–stated that the majority opinion was a radical overhaul of corporate rights, one she said could apply to all corporations and to countless laws.

ACA, Uninsurance and American Cities

Written By: Jason Shafrin - Jun• 29•14

The Affordable Care Act (ACA) increased the likelihood individuals have insurance by: (i) offering states money to expand Medicaid eligibility, and (ii) offering individuals subsidies to purchase insurance through newly created health insurance exchanges.  Did it work?  A Robert Wood Johnson report examines at the effect of the ACA on uninsurance rates in 14 large cities: Atlanta, Charlotte, Chicago, Columbus,  Denver, Detroit, Houston, Indianapolis, Los Angeles, Memphis, Miami, Philadelphia, Phoenix,  and Seattle. They found:

  • Among the seven cities in states that have expanded Medicaid, the ACA will likely decrease the number of uninsured by an average of 57 percent. City by city, the reduction is projected to vary between 49 percent in Denver and 66 percent in Detroit by 2016.  New federal spending on health care from 2014 to 2023 would range from $4.1 billion in Seattle to $27 billion in Los Angeles.
  • Among the seven cities in states not expanding Medicaid, the ACA will likely decrease the number of uninsured by an average of 30 percent. The decrease would range from 25 percent in Atlanta to 36 percent in Charlotte by 2016.  New federal spending due to the ACA from 2014 to 2023 would increase by between $1.9 billion in Atlanta and $9.9 billion in Houston.
  • If Medicaid eligibility were expanded in these cities, the number of uninsured would fall by an average of 52 percent, ranging from 45 percent in Houston to 59 percent in Memphis. New federal spending would increase by between $4.8 billion in Atlanta and $16.4 billion in Houston from 2014 to 2023.

We certainly see some crowd-out employer-sponsored health insurance with Medicaid and private non-group health insurance. The report states that: “In most of the cities we considered, the share of adults
with employer-sponsored insurance is noticeably lower.”

Friday Links

Written By: Jason Shafrin - Jun• 27•14