Traditional methods of projecting population health statistics, such as calculating future death rates, can give inaccurate results and lead to inferior or even poor policy decisions. A new “three-dimensional” method of forecasting vital health statistics is more accurate because it takes into account the delayed effects of the health risks being accumulated by today’s younger generations. Applying this forecasting technique to the US obesity epidemic suggests that future death rates and health care expenditures could be far worse than currently anticipated. We suggest that public policy makers adopt this more robust forecasting tool and redouble efforts to develop and implement effective obesity-related prevention programs and interventions.
Many of the estimated thirty-two million Americans expected to gain coverage under the Affordable Care Act are likely to have high levels of unmet need for various chronic illnesses and to live in areas that are already underserved. In New Mexico an innovative new model of health care education and delivery known as Project ECHO (Extension for Community Healthcare Outcomes) provides high-quality primary and specialty care to a comparable population. Using state-of-the-art telehealth technology and case-based learning, Project ECHO enables specialists at the University of New Mexico Health Sciences Center to partner with primary care clinicians in underserved areas to deliver complex specialty care to patients with hepatitis C, asthma, diabetes, HIV/AIDS, pediatric obesity and mental illness. As of March 2011, 298 Project ECHO teams across New Mexico have delivered more than 10,000 specialty care consultations for hepatitis C and other chronic diseases.
The Coordinated-Transitional Care (C-TraC) Program was designed to improve care coordination and outcomes among veterans with high-risk conditions discharged to community settings from the William S. Middleton Memorial Veterans Hospital, in Madison, Wisconsin. Under the program, patients work with nurse case managers on care and health issues, including medication reconciliation, before and after hospital discharge, with all contacts made by phone once the patient is at home. Patients who received the C-TraC protocol experienced one-third fewer rehospitalizations than those in a baseline comparison group, producing an estimated savings of $1,225 per patient net of programmatic costs. This model requires a relatively low amount of resources to operate and may represent a viable alternative for hospitals seeking to offer improved transitional care as encouraged by the Affordable Care Act. In particular, the model may be attractive for providers in rural areas or other care settings challenged by wide geographic dispersion of patients or by constrained resources.
Managing competition among health plans that attract different risks has been a challenging policy problem. Within Medicare, the Medicare Advantage (MA) program historically attracted better risks than did Traditional Medicare (TM). This favorable selection resulted in Medicare’s paying more for persons enrolled in MA than if they had been enrolled in TM. We studied whether policies Medicare implemented in the past decade to reduce favorable selection in the MA program succeeded, in particular improved matching of reimbursement with a beneficiary’s expected cost and restricting when beneficiaries could switch from MA to TM. We found they did. Differences in predicted spending between those switching from TM to MA relative to those who remained in TM markedly narrowed, as did adjusted mortality rates. Because insurance exchanges will employ similar policies to combat selection, our results give reason for optimism about managing competition among health plans.
Health plans participating in the Medicare managed care program, now called Medicare Advantage, have historically attracted healthier enrollees than the traditional fee-for-service program. Medicare Advantage plans have gained financially from this favorable risk selection because until recently Medicare payments to plans were adjusted only minimally for the clinical characteristics of enrollees, such that payments systematically exceeded costs for healthier enrollees and were systematically lower than costs for sicker enrollees. To address favorable selection in Medicare Advantage, a new risk-adjustment system adjusting plan payments for clinical diagnoses was phased in from 2004 to 2007. Also, a lock-in provision was instituted in 2006 and strengthened in 2007 to limit midyear disenrollment by Medicare Advantage enrollees, particularly those experiencing health declines whose disenrollment could benefit plans financially. To determine if these reforms were associated with intended reductions in favorable selection in Medicare Advantage, we compared self-reported utilization and health for Medicare Advantage vs. traditional Medicare beneficiaries and for those who switched into or out of Medicare Advantage vs. non-switchers both before and after these reforms were implemented. In 2001-2003, differences in utilization and health between these groups suggested favorable selection in Medicare Advantage. By 2006-2007, however, most differences were substantially narrowed, indicating reduced selection. For example, Medicare Advantage enrollees reported 17.7% lower utilization than traditional Medicare enrollees in 2001-2003 but 8.1% lower in 2006-2007. Similar risk-adjustment methods may help may help mitigate incentives for Accountable Care Organizations participating in the Medicare Shared Savings Program and plans competing in health insurance exchanges to select patients with favorable clinical risks.
Enrollment in Medicare Advantage has grown rapidly from 2003 to today. For the years 2003–2009, we compared individual-level Healthcare Effectiveness Data and Information Set (HEDIS®) data collected from all plans on service utilization by patients enrolled in Medicare Advantage HMO plans with comparable claims-based measures for matched samples from traditional Medicare. Controlling for self-reported health, health plan enrollees had lower rates of ambulatory visits and hospitalizations initially that converged by 2008 and fewer emergency department visits and ambulatory procedures (~25–30%). Health plan enrollees received fewer hip or knee replacements (lower by ~10%) but more coronary bypass surgery. Our study suggests utilization of services may be more appropriate in Medicare Advantage.
Medicare; managed care; utilization
In China, formal long-term care services for the large aging population have increased to meet escalating demands as demographic shifts and socioeconomic changes have eroded traditional elder care. We analyze China’s evolving long-term care landscape and trace major government policies and private-sector initiatives shaping it. Although home and community-based services remain spotty, institutional care is booming with little regulatory oversight. Chinese policy makers face mounting challenges overseeing the rapidly growing residential care sector, given the tension arising from policy inducements to further institutional growth, a weak regulatory framework, and the lack of enforcement capacity. We recommend addressing the following pressing policy issues: building a balanced system of services and avoiding an “institutional bias” that promotes rapid growth of elder care institutions over home or community-based care; strengthening regulatory oversight and quality assurance with information systems; and prioritizing education and training initiatives to grow a professionalized long-term care workforce.
At stake in the May 2013 publication of the Diagnostic and Statistical Manual of Mental Disorders, Fifth Edition (DSM-5), are billions of dollars in insurance payments and government resources, as well as the diagnoses and treatment of millions of patients. We argue that the most recent revision process has missed social determinants of mental health disorders and their diagnosis: environmental factors triggering biological responses that manifest themselves in behavior; differing cultural perceptions about what is normal and what is abnormal behavior; and institutional pressures related to such matters as insurance reimbursements, disability benefits, and pharmaceutical marketing. In addition, the experts charged with revising the DSM lack a systematic way to take population-level variations in diagnoses into account. To address these problems, we propose the creation of an independent research review body that would monitor variations in diagnostic patterns, inform future DSM revisions, identify needed changes in mental health policy and practice, and recommend new avenues of research. Drawing on the best available knowledge, the review body would make possible more precise and equitable psychiatric diagnoses and interventions.
Given Medicare’s recent national coverage decision on bariatric surgery, as well as potential coverage expansions for other obesity-related treatments, data on obesity in the Medicare population have great relevance. Using nationally representative data, we estimate that between 1997 and 2002, the prevalence of obesity in the Medicare population increased by 5.6 percentage points, or about 2.7 million beneficiaries. By 2002, 21.4 percent of aged beneficiaries and 39.3 percent of disabled beneficiaries were obese, compared with 16.4 percent and 32.5 percent, respectively, in 1997. Using 2002 data, we estimate that three million beneficiaries would be eligible for bariatric surgery coverage under current Medicare policy.
Vaccination is a key deterrent to influenza and its related complications and outcomes, including hospitalization and death. Using 2006–09 data, we found a small improvement in vaccination rates among nursing home residents, particularly for blacks. Nonetheless, overall vaccination rates remained well below the 90 percent target for high-quality care, and black nursing home residents remained less likely to be vaccinated than whites. Blacks were less likely to be vaccinated than were whites in the same facility and were more likely to live in facilities with lower vaccination rates. Blacks were also more likely to be noted as refusing vaccination. Strategies are needed to ensure that facilities offer vaccination to all residents and to make vaccination more acceptable to black residents and their families.
This paper describes the pharmaceutical regulatory environment in 19 developed countries from 1992 to 2004 and examines how changes in regulatory policies affect pharmaceutical revenues. Several important findings emerge from our analysis. First, we document a trend towards increasing pharmaceutical regulation over this 13-year period. Second, we find that a majority of regulations reduce pharmaceutical revenues significantly. Third, we find that most countries that adopted new regulations since 1994 already had some regulations in place for controlling costs. We find that such additional regulation had a smaller impact on further controlling costs. However, we find that introducing new regulations in a largely unregulated market, for example the US, could reduce pharmaceutical revenues significantly. Finally, we show that the effects of price controls increase over time.
Some observers argue that the US spends more on health care than other developed countries, but does not get enough in return. We study whether higher US cancer costs, compared to the EU, are “worth it” based on differences in the survival of cancer patients. We find that the US has achieved greater survival gains for cancer patients, and that – even net of higher US cost growth – this generated $556bn of additional value for US patients diagnosed between 1983 and 1999, compared to their European counterparts. This corresponds to 78 percent of overall cancer spending or $57,000 per patient.
The proportion of Hispanics age sixty-five and older who are living in nursing homes rose from 5 percent in 2000 to 6.4 percent in 2005. Although segregation in nursing homes seems to have declined slightly, elderly Hispanics are more likely than their non-Hispanic white peers to reside in nursing homes that are characterized by severe deficiencies in performance, understaffing, and poor care.
Amid calls for physicians to become better stewards of the nation’s health care resources, it is important to gain insight into how physicians think about the cost-effectiveness of new treatments. Expensive new cancer treatments that can extend life raise questions about whether physicians are prepared to make “value for money” tradeoffs when treating patients. We asked oncologists in the United States and Canada how much benefit, in additional months of life expectancy, a new drug would need to provide to justify its cost and warrant its use in an individual patient. The majority of oncologists agreed that a new cancer treatment that might add a year to a patient’s life would be worthwhile if the cost was less than $100,000. But when given a hypothetical case of an individual patient to review, the oncologists also endorsed a hypothetical drug whose cost might be as high as $250,000 per life-year gained. The results show that oncologists are not consistent in deciding how many months an expensive new therapy should extend a person’s life before the cost of therapy is justified. Moreover, the benefit that oncologists demand from new treatments in terms of length of survival does not necessarily increase according to the price of the treatment. The findings suggest that policy makers should find ways to improve how physicians are educated on the use of cost-effectiveness information and to influence physician decision making through clinical guidelines that incorporate cost-effectiveness information.
Antiretroviral therapy for HIV may have important economic benefits for patients and their households. We quantified the impact of HIV treatment on employment status among HIV patients in rural South Africa who were enrolled in a public-sector HIV treatment program supported by the U.S. President’s Emergency Plan for AIDS Relief. We linked clinical data from more than 2000 patients in the treatment program with ten years of longitudinal socioeconomic data from a complete community-based population cohort of over 30,000 adults residing in the clinical catchment area. We estimated the employment effects of HIV treatment in fixed effects regressions. Four years after the initiation of antiretroviral therapy, employment among HIV patients had recovered to about 90 percent of baseline rates observed in the same patients three to five years before they started treatment. Many patients initiated treatment early enough that they were able to avoid any loss of employment due to HIV. These results represent the first estimates of employment recovery among HIV patients in a general population, relative to the employment levels that these patients had prior to job-threatening illness and the decision to seek care. We find large economic benefits to HIV treatment. For some patients, further gains could be obtained from initiating antiretroviral therapy earlier, prior to HIV-related job loss.
Extended work shifts of twelve hours or longer are common and even popular with hospital staff nurses, but little is known about how such extended hours affect the care that patients receive or the well-being of nurses. Survey data from nurses in four states showed that more than 80 percent of the nurses were satisfied with scheduling practices at their hospital. However, as the proportion of hospital nurses working shifts of more than thirteen hours increased, patients’ dissatisfaction with care increased. Furthermore, nurses working shifts of ten hours or longer were up to two and a half times more likely than nurses working shorter shifts to experience burnout and job dissatisfaction and to intend to leave the job. Extended shifts undermine nurses’ well-being, may result in expensive job turnover, and can negatively affect patient care. Policies regulating work hours for nurses, similar to those set for resident physicians, may be warranted. Nursing leaders should also encourage workplace cultures that respect nurses’ days off and vacation time, promote nurses’ prompt departure at the end of a shift, and allow nurses to refuse to work overtime without retribution.
Pharmaceutical companies and generic drug manufacturers have long been at odds over “data exclusivity” regulations. These rules require a waiting period of up to eight years before generic drug companies can access valuable clinical trial data necessary to bring less expensive forms of innovative drugs to market. Pharmaceutical companies want the data exclusivity period lengthened to protect their investment. Generic manufacturers want the period shortened so they can bring less expensive versions of drugs to patients sooner. We examine the long-term effect of extending the data exclusivity period for “conventional” small-molecule drugs to twelve years – the same exclusivity period already extended to large-molecule biologic drugs under the Affordable Care Act. We conclude that Americans would benefit from a longer period of data exclusivity.
Markets for innovative goods involve significant spillovers in a global economy. When US consumers pay higher prices for drugs, this stimulates innovation that benefits consumers all over the world. Conversely, when large European markets restrict prices and profits, foreign consumers bear some of the long-run cost in the form of less innovation. The result is a free-riding problem at a global level. These incentives are particularly strong for smaller markets, whose policies have relatively little impact on global innovation, but can have relatively large impacts on national pharmaceutical budgets. The result is a system in which the largest countries bear disproportionate burdens for stimulating innovation. Using a microsimulation approach, we estimate the impact of these incentive effects. The model’s baseline estimates demonstrates that the US adoption of European-style price controls would harm consumers in the US and Europe; over a 50-year period, it would cost $8 trillion in the US, and $5 trillion in Europe. Similarly, repealing European price controls would add $10 trillion to the wealth of US society, and $6 trillion to wealth in Europe. Even under the most conservative assumptions, adopting price controls generates at best a small benefit, but risks a large cost. On the other hand, reducing pharmaceutical copayments would increase wealth in both societies, a result which is robust to a wide variety of parameter values.
The Medicare Part D program allows beneficiaries to choose among Part D plans administered by different health plans in order to encourage market competition and give beneficiaries more flexibility. Currently around 40–50 Part D plans are available per region. When faced with so many options, do beneficiaries generally choose the least expensive plan? Using 2009 Part D data, we found that only 5.2% of beneficiaries chose the cheapest plan. Nationwide, beneficiaries on average spent $368 more annually than they would have spent under the cheapest plan available in their region, given their medication needs. Beneficiaries often overprotected themselves by paying higher premiums for plan features they did not need, such as generic drug coverage in the coverage gap. Our findings suggest that beneficiaries need more targeted assistance from the government to choose plans, for example, a customized letter indicating three top plans based on beneficiaries’ medication needs.
Mentally ill people may face barriers to receiving elective surgical procedures due to societal stigma, and the cognitive, behavioral, and interpersonal deficits associated with metal illness. Using data from a cohort of elderly Medicare beneficiaries in 2007, we examined whether the mentally ill have less access than persons without mental illness to several common procedures that are typically non-emergent and performed at the discretion of the provider and patient. Results suggest that Medicare patients with mental illness are between 30 and 70 percent less likely to receive these “referral-sensitive” surgical procedures. Those who did undergo an elective procedure generally experienced poorer outcomes both in the hospital and after discharge. Efforts to improve the access and outcomes of nonpsychiatric care for mentally ill patients are warranted.
Between 1999 and 2008, the number of elderly Hispanics and Asians living in US nursing homes grew by 54.9 percent and 54.1 percent, respectively, while the number of elderly black residents increased 10.8 percent. During the same period, the number of white nursing home residents declined 10.2 percent. These shifts have been driven in part by changing demographics, especially the fast growth of older minority populations. However, the numbers of minority residents in nursing homes increased more rapidly than the minority population overall, even in areas with high concentrations of minority populations. Thus, these results may indicate unequal minority access to home and community-based alternatives, which are generally preferred for long-term care. When designing initiatives to balance institutional and noninstitutional long-term care, policy makers should take steps to reduce racial and ethnic disparities.
When it is not clear that an ill patient needs to be hospitalized, he or she may be placed “under observation” in a hospital for further evaluation and short-term treatment. These hospital observation services, often a kind of halfway point between emergency department treatment and full inpatient admission, have become a hotly debated policy issue and subject of lawsuits. Using Medicare enrollment and claims data nationwide, we documented a rising trend in the prevalence and duration of hospital observation services in the fee-for-service Medicare population during 2007–09, accompanied by a downward shift in inpatient admissions. As a result, the ratio of observation stays to inpatient admissions increased 34 percent, from an average of 86.9 observation stay events per 1,000 inpatient admissions per month in 2007 to 116.6 in 2009. Medicare beneficiaries were increasingly subjected to hospital observation care and treated as outpatients instead of inpatients, which can expose them to greater out-of-pocket expenses if they are eventually admitted to skilled nursing facilities. Additionally, the nearly one million beneficiaries receiving observation services each year were, on average, being held in observation for a longer period of time per episode—some for longer than seventy-two hours. The prevalence of observation services varied greatly across geographic regions and hospitals. This may be an unintended consequence of Medicare payment policies designed to constrain hospital admissions. Additional research is needed to pinpoint the drivers and consequences of this phenomenon, as is more clarity in clinical practice and Medicare policy guidelines regarding observation care.
Relationships between academic researchers and industry have received considerable attention in the last 20 years, but current data on the prevalence, magnitude, and trends in such relationships are rare. In a mailed survey of 3080 academic life science researchers conducted in 2007, we found the majority (52.8%) of academic life scientists have some form of relationship with industry. Compared to our previous studies in 1995 and 1985, we found a significant decrease in industry support of university research, which could have major consequences for the academic life science research sector.
Since 1973 Medicare has provided health insurance coverage to all people who have been diagnosed with end-stage renal disease, or kidney failure. In this article we trace the history of payment policies in Medicare’s dialysis program from 1973 to 2011, while also providing some insight into the rationale for changes made over time. Initially, Medicare adopted a fee-for-service payment policy for dialysis care, using the same reimbursement standards employed in the broader Medicare program. However, driven by rapid spending growth in this population, the dialysis program has implemented innovative payment reforms, such as prospective bundled payments and pay-for-performance incentives. It is uncertain whether these strategies can stem the increase in the total cost of dialysis to Medicare, or whether they can do so without adversely affecting the quality of care. Future research on the intended and unintended consequences of payment reform will be critical.
Efforts to control life-threatening infections, such as with methicillin-resistant Staphylococcus aureus (MRSA), can be complicated when patients are transferred from one hospital to another. Using a detailed computer simulation model of all hospitals in Orange County, California, we explored the effects when combinations of hospitals tested all patients at admission for MRSA and adopted procedures to limit transmission among patients who tested positive. Called “contact isolation,” these procedures specify precautions for health care workers interacting with an infected patient, such as wearing gloves and gowns. Our simulation demonstrated that each hospital’s decision to test for MRSA and implement contact isolation procedures could affect the MRSA prevalence in all other hospitals. Thus, our study makes the case that further cooperation among hospitals—which is already reflected in a few limited collaborative infection control efforts under way—could help individual hospitals achieve better infection control than they could achieve on their own.