Medicare & Medicare Prescription Drugs
Call for Papers
Medicare & Medicare Prescription Drugs: Expense or
Investment?
Chair: Len Nichols, Ph.D.
Sunday, June 6 • 9:30 a.m.-11:00 a.m.
• Identifying High Risk Medicare Enrollees, Improved
Identification and Payment Possible?
Jonathan Weiner, Dr. P.H., Chad Abrams, M.A., Richard
Lieberman
Presented by: Chad Abrams, M.A., Systems Analyst/Project
Manager, Health Policy and Management, Johns Hopkins
University, 624 N. Broadway, #600, Baltimore, MD 20215; Tel:
410.614.3957; Fax: 410.955.0470; E-mail: cabrams@jhsph.edu
Research Objective: The objective of this project was the
development of a prospective payment model for Medicare
based upon the ACG Case-Mix System, an alternative to the
prevailing disease-specific approaches. The intent was to
provide adequate compensation for treating sick individuals
while at the same time minimizing incentives for targeting
healthier than average enrollees.
Study Design: This project augments previous work aimed at
developing ACG-based payment models for Medicare with the
inclusion of new indicators. The project tested a revised and
expanded “hosdom” marker, which indicates a high
probability of a future admission, and introduced a new
diagnosis-based measure, “frail symptoms,” which reflects
diagnoses associated with high risk or frail beneficiaries. The
“hosdom” marker was expanded by incorporating additional
years of data and underwent substantial clinical review for
completeness and face-validity. These two variables, along
with Johns Hopkins Expanded Diagnosis Clusters (EDCs), a
taxonomy focusing on common diseases/conditions which
have significant impact on resource use which were used to
juxtapose the impact of incorporating disease-specific
measures, were combined in various means to assess their
impact on explanatory power and predictive ratios of potential
prospective payment models.
Population Studied: CMS provided data extracted from the
1996 and 1997 five percent Medicare Standard Analytical Files
consisting of nearly 1.4 million aged and disabled Medicare
beneficiaries meeting selected enrollment criteria. Diagnoses
streams from 1996 were used to assign risk assessment
variables which were then used to predict actual expenditures
recorded in calendar year 1997.
Principal Findings: The hosdom and frail symptoms variables
were found to be extremely powerful markers for identifying
individuals at risk for future high expenditures. When
incorporated in a prospective payment model, these variables
led to increased r-squared while simultaneously reducing the
sum of errors and generating predictive ratios closer to one
for all cost quintiles. In contrast, the impact of introducing
disease-specific conditions was mixed. While the r-squared
improved, there was a simultaneous increase in total dollars
mis-allocated and predictive ratios based on year-1 cost
quintiles moved farther away from (rather than closer to) 1.0
for the lower quintiles.
Conclusions: The two new indicators show promise as
predictors for high future resource use. The frail marker may
also serve as a potential proxy for ADL-type measures typically
drawn from survey data. Higher r-square values do not
necessarily equate with more accurate payment models.
Models with both high explanatory power and predictive ratios
close to 1.0 across the year-1 cost quintiles may be achieved
when disease markers are combined with more
comprehensive measures.
Implications for Policy, Delivery or Practice: More accurate
payment models can be developed if attention is given to
more comprehensive risk assessment variables as an adjunct
to the current linearly additive disease specific approach,
especially for frail and vulnerable sub-groups of the
population.
Primary Funding Source: CMS
• Estimating the Value of Investment: Medicare and the
Overall U.S. Health Care Service
Bryan Luce, Ph.D., M.B.A., Frank Sloan, Ph.D., Josephine
Mauskopf, Ph.D., Clark Paramore, M.S.P.H., Manishi Prasad,
M.P.H.
Presented by: Bryan Luce, Ph.D., M.B.A., Senior Research
Leader; Chairman of Board, MEDTAP International, 7101
Wisconsin Avenue, Bethesda, MD 20814; Tel: 301.664.7274;
Fax: 301.654.9864; E-mail: luce@medtap.com
Research Objective: To estimate the economic value of
investment in health care.
Study Design: Three methods were used to estimate this
value: 1) Incremental adjusted total national health care costs
were compared with national health indices (1980-2000); 2)
Changes in Medicare expenditures for acute myocardial
infarction (AMI), stroke, diabetes and breast cancer were
compared to health benefits (1984-2000), using Medicare
claims data and National Long-Term Care Survey data; 3) An
exhaustive list of key treatment innovations (1970-2000) for
the above four conditions were identified, as were all costeffectiveness (cost/life year; cost/QALY) studies pertaining to
those innovations. Mortality health benefits derived from all
three methods were converted into dollars using published
estimates of the value of a statistical life (estimated from
established health economic literature to be
$100,000/undiscounted life year; $173,000/discounted life
year). Disability gains were recorded but were not valued.
Population Studied: Method 1: the entire U.S. population;
Method 2: hospitalized Medicare beneficiaries with ICD-9-CM
codes for the four listed conditions; Method 3: patients
suffering from one of the four conditions studied and treated
with one of the key interventions.
Principal Findings: From 1980-2000, although annual,
adjusted health costs increased by $2,254 (102%), each dollar
spent on health care in the U.S. is estimated to produce health
gains valued between $2.40 to $3.00. Without the health
improvements and associated investments, the U.S. would
have spent and estimated $634 billion less on health care but
would have experienced an estimated 470,000 more deaths,
2.3 million more people with disabilities, and 206 million days
in the hospital. Every additional dollar Medicare spent on the
indicated conditions produced the following health gains:
AMI = $1.10; diabetes = $1.49; stroke = $1.55; breast cancer =
$4.80. In addition, the cost-effectiveness literature considered
eligible for analysis showed that key innovations for the four
diseases are estimated to return positive economic value. For
example, each dollar spent on health care produced health
gains valued as follows: beta-blockers = $6.50-$35.00 and
Mobile CCUs = $10.00 in the treatment of AMI; screening and
treatment for retinopathy = $36.00 and intensive glycemic
control = $36.00 in patients suffering from diabetes; rtTPA =
$9.00 in the immediate treatment of stroke; adjuvant
chemotherapy = $2.40-$7.30 in women suffering from breast
cancer.
Conclusions: Expressed in dollar terms, the value of
improved health in the U.S. population and in Medicare
beneficiaries, as well as benefits derived from key
interventions for the four indicated conditions studied appear
to significantly outweigh the costs expended.
Implications for Policy, Delivery or Practice: The cost of
health care is a continuing national, state, local and
organizational concern. Charted by itself, the policy response
is often to seek solutions to contain those costs without
regard, necessarily, to benefits potentially forgone. Results
from this study suggest that, even in the face of doubtless
numerous inefficiencies in the U.S. health care system (e.g.
medical errors), overall health care expenditures in the U.S.
appears to be a good buy.
Primary Funding Source: American Hospital Association,
Federation of American Hospitals, Advanced Medical
Technology Association, American College of Cardiology,
Healthcare Leadership Council, National Pharmaceutical
Council, Pharmaceutical Research and Manufacturers of
America
• Drug Expenditures in Canada: A Population-Based
Analysis of Trends and Causes
Steve Morgan, Ph.D., Charlyn Black, M.D., Ph.D., Morris
Barer, Ph.D., M.B.A., Rob Reid, M.D., Ph.D., Robert Evans,
Ph.D., Jonathan Agnew, Ph.D.
Presented by: Steve Morgan, Ph.D., Assistant Professor,
Centre for Health Services and Policy Research, University of
British Columbia, 429 - 2194 Health Sciences Mall, Vancouver,
British Columbia V6T 1Z3; Tel: 604.822.7012; Fax:
604.822.5690; E-mail: morgan@chspr.ubc.ca
Research Objective: From 1991 to 2001, Canadian
expenditures on pharmaceuticals doubled. Current forecasts
suggest they could double again by 2007, significantly
affecting both the necessity and the affordability of other
health care services that might be provided to Canadians. The
purpose of this study is to quantify the relative and absolute
impact of potential determinants of drug expenditures during
a recent period of rapid cost growth.
Study Design: We build a population-based pharmaceutical
dataset describing the type, quantity, and cost of every
prescription drug purchased by residents of British Columbia
over the period of 1996 to 2002. We further develop a
methodological framework for classifying and measuring cost
determinants. We then quantify the relative and absolute
impact of six potential determinants of prescription drug
expenditures that fall into four distinct categories: population
characteristics, utilization volume, therapeutic choices, and
price factors.
Population Studied: This project studies the prescription
drug use of all residents of British Columbia over the period of
1996 to 2002. Individual drug use and cost histories are
constructed for each of the 4.1 million residents of this
Canadian province. The model stratified the population into
groupings by age, sex, and overall level of clinical complexity
(ACG scores).
Principal Findings: Per capita drug expenditures increased by
59 percent over the study period. A majority of prescription
drug spending growth in BC was concentrated among 5
therapeutic classes. Demographic changes had a minimal (2
percent) impact on drug expenditures over the period of
analysis. After adjusting for generic drug use, direct price
factors actually created a cost-decreasing effect of 4 percent.
Increased utilization of prescription drugs explained two third
of the total increase in per capita spending; these dynamics
were sufficient to increase per capita costs by 48 percent.
Changes in therapeutic choice contributed a 17 percent cost
increase. Cost dynamics differed by age category: ‘babyboomers’ created the largest impact on utilization volume;
therapeutic choices were a more significant determinant of
seniors cost dynamics.
Conclusions: Despite the Canadian systems of price
regulation and negotiation, expenditures in British Columbia
increased dramatically over the study period. Whereas
demographic change is often cited determinant of spending, it
was not a significant cost driver. Drug utilization volume and
broad therapeutic choices were the most significant
determinants of drug spending in this Canadian province.
Implications for Policy, Delivery or Practice: Determining
the causes and appropriateness of changes in the level and
patter of drug utilization is a policy priority. Further research
is now underway to determine the health and health system
impact of observed utilization trends.
Primary Funding Source: Canadian Institutes of Health
Research
• The Impact of Prescription Coverage on Drug and Nondrug Spending under Medicare
Bruce Stuart, Ph.D., Jalpa Doshi, Ph.D., Becky Briesacher,
Ph.D., Marian Wrobel, Ph.D.
Presented by: Bruce Stuart, Ph.D., Professor, Pharmaceutical
Health Services Research, University of Maryland Baltimore,
515 W. Lombard Street, Room 157, Baltimore, MD 21201; Tel:
410.707.5389; Fax: 410.706.1488; E-mail:
bstuart@rx.umaryland.edu
Research Objective: To determine whether prescription drug
coverage for Medicare beneficiaries produces cost offsets in
Medicare Part A and B spending.
Study Design: We created a 2-year panel of respondents
(1999-2000) to the Medicare Current Beneficiary Survey
(MCBS). We estimated 4 cross-sectional regression models
for spending in 2000 for (1) prescription drugs measured in
average wholesale prices (the AWP measure standardizes
differences in drug spending for persons with and without
coverage and avoids the problem of comparing retail prices
for the former with discounted prices for the latter), (2)
hospital services,(3) physician services, and (4) all Medicare
covered services combined. Explanatory variables included a
binary measure of drug coverage and lagged values (1999) for
an extensive list of demographic and health status
characteristics including predicted Medicare spending derived
from the Diagnostic Cost Group/Hierarchical Coexisting
Condition (DCG/HCC) risk adjuster developed by CMS. The
regressions were estimated using generalized linear models
with a gamma distribution and log link. Tests for endogeneity
and omitted variable bias were conducted. The analysis was
replicated using propensity scoring (PS) techniques in which
subjects observations were weighted based on their
propensity to have drug coverage derived from predicted
values in a logistic regression containing the same variables
as in the GLM regressions.
Population Studied: Community-dwelling MCBS respondents
enrolled in fee-for-service Medicare throughout 1999 and
2000. Sample (N=3,365) was restricted to persons with
Medicare supplementation that included drug coverage or not
for both years of the study.
Principal Findings: Drug coverage was associated with a
statistically significant increase in AWP-priced drug spending
of between 49% (GLM) and 66% (PS). Drug coverage had an
insignificant effect on all of the Medicare spending measures.
Coefficient values varied from +7% (total Medicare spending
in the GLM model) to -3% (hospital spending using PS
methodology).
Conclusions: Drug coverage induces significant additional
spending on prescribed medications by Medicare
beneficiaries. Higher spending on drugs among those with
coverage appears to have little aggregate impact on spending
for hospital and physician services. This does not mean that
drug therapy cannot substitute or complement other
therapies, but rather that neither effect predominates across
the Medicare population as a whole. Additional research is
necessary to identify particular disease-therapy combinations
for which cost offsets are likely to occur.
Implications for Policy, Delivery or Practice: The new
Medicare drug benefit is likely to result in a large increase in
spending on prescribed medications for those who currently
have no coverage, particularly for low-income beneficiaries
who qualify for the most comprehensive benefits. The impact
of the drug benefit on the rest of the Medicare budget remains
to be seen. If the management of drug therapy by private
health plans under the law follows the current practices of
third party payers, our findings suggest that the law will have a
neutral effect on non-drug spending.
Primary Funding Source: CMS
• How Much Would a Medicare Prescription Drug Benefit
Cost? Offsets in Medicare Part A Cost by Increased Drug
Use
Zhou Yang, Ph.D., Edward Norton, Ph.D.
Presented by: Zhou Yang, Ph.D., Assistant Professor,
Medicine, Michigan State University, B412 Clinical Center,
East Lansing, MI 48824; Tel: 517.432.8653; Fax: 517.432.9471; Email: zhou.yang@ht.msu.edu
Research Objective: To investigate the effect of outpatient
prescription drugs utilization on demand for inpatient care
and Medicare Part A cost and quantify the offsets in Part A
cost from more drug use among elderly Medicare
beneficiaries.
Study Design: This study estimates a set of dynamic
simultaneous demand equations of outpatient prescription
drugs and other Medicare covered health services based on
health capital and health production function theory to
quantify the effects of outpatient prescription drugs use on
subsequent demand for inpatient care and Medicare Part A
cost. The longitudinal Medicare Current Beneficiary Survey
data from 1992 to 1998 is used to estimate the empirical
model. Demographic features, insurance status, functional
status and health shocks are controlled as independent
variables in all the demand equations. Discrete random effect
is used to control for unobserved individual level factors that
may lead to biased estimation of the relationship between
drug use and other medical care cost.
Population Studied: Medicare beneficiaries age 65 or more,
from 1992 to 1998.
Principal Findings: Increase in outpatient prescription drugs
use leads to a minor, but significant offsets in subsequent
Medicare Part A cost at 4.4 percent on average for the entire
sample over a year. The magnitudes of the offsets differ
across different subgroups. The offset rates of Medicare Part
A cost from more drug use are higher among people without
disability (offset rate 4.9%), with chronic diseases (diabetes,
offset rate 10.9%), in lower income (less than $15,000 a year,
offset rate 7.3%) than people with disability, without chronic
diseases and in higher income level.
Conclusions: More outpatient prescription drugs use may
help the elderly Medicare beneficiaries to maintain better
health, and reduce their subsequent demand for inpatient care
as well as Medicare Part A cost. Increase in prescription
drugs utilization could be more influential among people in
low income or high demand for drugs, like chronically ill
patients to help them rely less on inpatient care.
Implications for Policy, Delivery or Practice: The future cost
of Medicare drug benefit may not be as much as the
predictions from previous research that did not consider
possible offsets in Medicare Part A cost from the increased
outpatient prescription drugs consumption stimulated by the
drug benefit. However, the magnitudes of the offsets are not
as optimistic as predicted by other existing research that
concluded the savings in hospital care cost could even exceed
the increase in drug cost. Further research consider both the
immediate effect of drug use on demand for inpatient care
and long term effect of drug use on general health, disability,
mortality and total demand for inpatient care at the
population level will inform the Medicare drug policy debate
even better.
Primary Funding Source: NIA
Call for Papers
Plan & Beneficiary Decisions in the Medicare+Choice
Program
Chair: Adam Atherly, Ph.D., M.A.
Monday, June 7 • 10:30 a.m.-12:00 p.m.
• Transitions in Health Plan Choice: Changes in FEHBP
Plan Selection When Beneficiaries Begin Medicare
Coverage
Curtis Florence, Ph.D., Adam Atherly, Ph.D., Kenneth Thorpe,
Ph.D.
Presented by: Curtis Florence, Ph.D., Assistant Professor,
Health Policy and Management, Emory University, Rollins
School of Public Health, 1518 Clifton Road, N.E., Atlanta, GA
30322; Tel: 404.727.2818; Fax: 404.727.9198; E-mail:
cfloren@sph.emory.edu
Research Objective: The Federal Employees Health Benefits
Program (FEHBP) has been suggested as a model for
Medicare reform. In the FEHBP, enrollees choose from a
menu of competing national Preferred-Provider Organizations
(PPO) and local Health Maintenance Organizations (HMO),
with the government paying 75 percent of the premium, up to
a predetermined cap. In general, the HMOs offer low
premium plans with low out-of-pocket expenses, but with
closed networks. The PPO plans tend to have higher
premiums and greater costs sharing for hospitalization and
physician office visits, but have the option of open provider
networks. The relative benefit differences in the plans change
when an FEHBP beneficiary is also enrolled in Medicare, while
the premiums stay the same. Most of the plans, both PPO
and HMO, waive out-of-pocket payments for hospital and
physicians office visits for Medicare beneficiaries. Since the
HMO plans tend to have relatively low co-payments for these
services in the absence of Medicare, this tends to cause a
greater relative increase in the benefits of the PPO plans.
Such a change in benefits without a change in premiums may
induce enrollees to leave the HMO plans and enroll in the
PPO plans. If this occurs, the incentive for enrollees to
choose lower costs plans in the FEHBP is compromised.
Study Design: We estimate a multinomial logit model where
the outcomes are whether the enrollee picked the Blue
Cross/Blue Shield (BCBS) Standard Option PPO (the most
popular plan in the program), one of the other PPO plans, or
an HMO plan. This choice is modeled as a function of age,
income, gender. We use administrative data from the Office
of Personnel Management that records the plan choice of
each federal employee and retiree, and also contains basic
demographic information.
Population Studied: A time series of plan choices by federal
retirees who were age 64 in 1999 (and therefore not Medicare
eligible), through 2003.
Principal Findings: We find that a significant share of federal
retirees change their health plan choice as they transition into
Medicare coverage. However, this change is not primarily a
change from HMOs to the national PPO plans. Instead, most
of the change in enrollment is into BCBS from the other
national PPO plans. In the initial year of our panel, 42 percent
of enrollees in our panel are in BCBS, 31 percent are in other
PPOs and 27 percent are in HMOs. By 2003, 49 percent are
in BCBS, 25 percent are in other PPOs and 26 percent are in
HMOs. Our regression results show that these trends still
hold when controlling for age, income, gender and attrition
from the sample.
Conclusions: The differences in plan benefits when enrolled
in Medicare does induce shifts in plan enrollment, but most of
the changes are among the national PPO plans, not from
HMOs to PPO plans.
Implications for Policy, Delivery or Practice: Medicare
reform proposals that incorporate plan choice usually envision
managed care competing with traditional Medicare. However,
we find most movement of enrollees among national PPO
plans. This suggests that reform proposals should consider
choices among open network plans as well.
Primary Funding Source: RWJF
• Medicare+Choice Plan Decisions, 1999-2001
Rachel Halpern, M.P.H.
Presented by: Rachel Halpern, M.P.H., Ph.D. Candidate,
Division of Health Services Research and Policy, University of
Minnesota, MMC 729, 420 Delaware Street, S.E., Minneapolis,
MN 55455; Tel: 612.625.5906; Fax: 612.624.2196; E-mail:
halp0011@umn.edu
Research Objective: To model Medicare+Choice (M+C)
plans' decisions to leave counties, change premiums, and
change benefits from 1999-2000 and 2000-2001.
Study Design: This is a retrospective study that uses
secondary data principally from CMS (MedicareCompare
databases, State/Plan/County penetration files, geographic
service area files, monthly managed care reports), the Area
Resource File, and InterStudy. In the first part of the analysis,
the decision to drop a county from an M+C plans' service area
is estimated with a reduced-form logit equation. The second
part of the analysis - currently in progress - models the
decisions to change premiums and benefits. In order to look
at changes in premiums and benefits, I use the low-price
product an M+C plan offered in each county it served.
Approaches for modeling these changes include a fullinformation maximum likelihood function or a multinomial
probit equation that reflects choices between combinations of
premium and benefit changes (e.g., no change in
premium/decrease in benefits, increase premium/decrease
benefits, etc.)
Population Studied: All M+C plans between 1999-2001
Principal Findings: The number of counties with served by
any M+C plan decreased significantly between 1999-2001, and
M+C plans were far more likely to drop counties than to add
them. Preliminary results for the service area analysis indicate
that low payment was a highly significant factor in M+C plans'
decisions to leave a county between 1999 and 2000, as were
low M+C plan enrollment in the county, high costs as
measured by the demographic factor-adjusted FFS per-capita
expenditures, and the presence of a VA hospital in the county.
There also were limited national firm effects. Payment
appears not to have been a significant factor in plans'
decisions to drop counties between 2000 and 2001 for most
models. Low M+C plan enrollment remained significant
during this time period and national firm effects increased in
number and significance. It also appears that economies of
scope, as measured by total M+C enrollment across the M+C
plan's entire service area and the HMO's commercial
enrollment, were significant during this period.
Preliminary descriptive results for the premium and benefit
decisions show that, in general, the level of supplemental
benefits tended to decrease between 1999-2001. There was a
marked increase in the degree of intra-county product
differentiation between 1999 and 2000. This tendency to offer
multiple M+C products within a county resulted in M+C plans
offering $0 premium products as well as products with
positive premiums. Thus, although the average M+C product
premium rose between 1999-2000, it is important to account
for the spectrum of products offered within counties during
this period.
Conclusions: This study provides theory-based empirical
models for M+C plan decisions regarding service areas,
premiums, and benefits. The changes in the M+C program
between 1999-2001 were complex. While the number of
counties served by any M+C plan decreased dramatically,
many M+C beneficiaries experienced an increase in M+C
product options. There does not appear to be one, monolithic
set of determinants of M+C plans' decisions over time;
instead it appears that M+C plans react to changes in
government payment rates differently in different years.
Implications for Policy, Delivery or Practice: If the M+C
program is to survive (and thrive), CMS needs a strategy that
will retain plan participation and that will be financially
feasible. The success of the M+C program, then, depends on
understanding the determinants of M+C plans' decisions, as
well as the impact of those decisions on Medicare
beneficiaries. Results from studies like this one should
provide information that will inform CMS in its negotiations
with health plans.
Primary Funding Source: CMS
• Impact of Medicare+Choice Lock-In Provisions: Who
Would Be Affected?
Mary Laschober, Ph.D., Gabrielena Alcala-Levy, M.A., Erika
Alexandra Melman, M.P.P.
Presented by: Mary Laschober, Ph.D., Senior Manager,
Health Practice, BearingPoint, 1676 International Drive,
McLean, VA 22102; Tel: 703.747.6458; Fax: 703.747.8750; Email: mlaschober@bearingpoint.net
Research Objective: BBA97 “lock-in” provisions will limit the
number and timing of allowed health plan changes for
Medicare beneficiaries beginning in 2006. Assumptions
underlying lock-in’s goals include that a significant number of
beneficiaries switch plans multiple times a year or mid-year to
“game” the system. This study investigates these
assumptions, analyzing the law’s potential impact by
examining recent health plan switching behavior.
Study Design: Cross-sectional/longitudinal design using the
complete Medicare history for individuals enrolled in a
Medicare Group Health Organization (GHO) any time during
1999-2001. Employs multivariate logistic regression, using
Medicare’s Enrollment Database linked to M+C plan and
market characteristics, to examine relationships between
beneficiary, plan, and market characteristics and the likelihood
of making multiple plan elections; a health plan change; or a
“prohibited election.”
Population Studied: 1999-2001 Medicare GHO enrollees
(n=6.7 to 7.5 million beneficiaries). Key outcomes: “multiple
switchers” (made two or more health plan elections in a
calendar year); “prohibited elections” (a health plan election
disallowed under the lock-in rules based on the number,
timing, or circumstances of plan change).
Principal Findings: Multiple switchers averaged 1.7 percent of
GHO enrollees (125,000), declining from 1999-2001; nearly 90
percent made only two health plan elections. Variables
associated with multiple switching include: African
Americans/Hispanics; Medicaid eligibility; under-age-65disabled; first time GHO enrollee (but not new to Medicare);
previous enrollment in the same GHO; M+CO availability; and
M+CO withdrawal announcement. Prohibited elections
constituted less than 10 percent of all enrollment periods,
affecting 11 percent of the GHO population, but accounted for
60 percent of health plan elections. Prohibited elections were
increasingly to Medicare FFS. About 85 percent of prohibited
elections were due to timing and not a multiple plan election,
and 70 percent occurred in the second and third quarters.
Beneficiary choices displayed the strongest associations with
prohibited elections: GHO plan election made from another
GHO; previous enrollment in the same GHO during the year;
first time ever GHO enrollment; and markets with a
withdrawing GHO. Three-fourths of “snowbirds” (n=2,700)
made a prohibited plan change.
Conclusions: The 1999-2001 experience strongly indicates
that the lock-in provisions would directly affect a very small
fraction of the Medicare population. Findings show little
health plan switching, although they suggest some multiple
switching might be to “game” the system. Multiple switches
were more likely for some traditionally vulnerable beneficiaries
and first-time ever GHO enrollees. The lock-in rules would
most impact the timing of plan changes, many of which may
be difficult to accelerate or delay. Few beneficiary, plan, or
market characteristics showed any systematic association with
the likelihood of a prohibited election, primarily being affected
by beneficiary choice.
Implications for Policy, Delivery or Practice: Direct lock-in
impacts would be small, but could negatively impact choice
for traditionally vulnerable Medicare populations and mid-year
plan switchers because mid-year disenrollment decisions are
more often motivated by perceived problems with accessing
needed care, desired providers, or plan information. Current
lock-in provisions permitting disenrollment due to quality or
access issues need to be adequate to protect mid-year and
multiple choices. Expected indirect lock-in consequences (e.g.,
decline in aggregate M+C enrollment) cannot be modeled
until the rules take effect.
Primary Funding Source: CMS
• Medicare Drug Benefits and Selection Bias in HMO
Enrollment and Mortality in Diabetes
Matthew Maciejewski, Ph.D., Paul Hebert, Ph.D., Marshall
McBean, M.D., Bryan Dowd, Ph.D.
Presented by: Matthew Maciejewski, Ph.D.,
Investigator/Assistant Professor, HSR&D / Health Services,
VA / University of Washington, VA Puget Sound Health Care
System, Stop 152, 1660 S. Columbian Way, Seattle, WA 98108;
E-mail: mlmaciej@u.washington.edu
Research Objective: Two aspects of Medicare HMOs may be
appealing to chronically ill beneficiaries: a focus on preventive
care and the provision of drug benefits. We examine whether
selection bias by beneficiaries with diabetes occurred between
1995-1998 and whether Medicare HMOs affected mortality
rates of these high-risk beneficiaries.
Study Design: Data are drawn from the 1994-1998 Medicare
Part A, Part B, and Denominator files from the nationallyrepresentative National Medicare Diabetes Cohort. This data
are merged with 2000 zipcode-level Census and county-level
Medicare AAPCC and HMO benefit files from 1994-1998.
Beneficiary risk was proxied by 1994 total Medicare
reimbursement and four indicators for diabetes complications
of the eye, heart, kidney and lower extremity. A repeated
measures logit model was run to estimate discrete-time
survival until first HMO enrollment, and repeated measures
logit mortality model was also run, controlling for risk proxies,
age, gender, race, income education, and county-level
variables including AAPCC, out-of-pocket premiums, drug
coverage, and eye and ear benefits. Models included time
effects and clustering for repeated measures. Initial results
will be compared with similar analyses based on a sample
matched on age, gender, race, survival time and baseline total
costs to reduce selection bias.
Population Studied: Our final sample included 51,222 FFS
beneficiaries and 9,333 HMO enrollees that were observed for
a total of 2,107,766 person-months.
Principal Findings: Beneficiaries with diabetes complications
or higher total costs at baseline were less likely to enroll in
Medicare HMOs between 1995 and 1998. Greater availability
of drug benefits led to greater odds of enrollment. HMO
enrollees were less likely to die than FFS beneficiaries.
Beneficiaries with diabetes complications and higher baseline
costs, regardless of HMO status, were more likely to die.
Conclusions: Selection bias into Medicare HMOs is evident
in a cohort of beneficiaries with diabetes and the availability of
drug benefits is an important determinant of enrollment.
Preliminary results indicate that HMO enrollment appears to
be protective against mortality, even when time-varying and
time-invariant risk proxies are controlled.
Implications for Policy, Delivery or Practice: The new
Medicare drug benefit may be an important innovation for
Medicare beneficiaries with diabetes who rely upon
pharmacotherapy to manage their condition.
Primary Funding Source: AHRQ
• Quality of Evidence and CMS Review Times for Medicare
National Coverage Decisions, 1998-2003
Peter Neumann, Sc.D., Nomita Divi, M.Sc., Molly Beinfeld,
M.P.H., Batsheva Levine, M.D., Patricia Keenan, Scott Gazelle,
M.D., Ph.D.
Presented by: Peter Neumann, ScD., Associate Professor of
Policy and Decision Sciences, Health Policy and Management,
Harvard School of Public Health, 718 Huntington Avenue,
Boston, MA 02115; Tel: 617.432.1312; Fax: 617.432.0190; E-mail:
pneumann@hsph.harvard.edu
Research Objective: In 1998, Medicare amended its
procedures for making national coverage decisions for new
technologies in an attempt to make the process more
consistent, transparent, and evidence-based. We examined
the quality of evidence available to Medicare decision makers
for each technology reviewed since then, as well as CMS
review times and factors influencing the time to final CMS
decision.
Study Design: We reviewed all complete Medicare national
coverage decisions from 1998 through 2003 (n=72), based on
publicly available decision memoranda posted on the CMS
web site. Each memorandum was scrutinized independently
by two trained reviewers, who recorded detailed information
on approximately 30 variables, including the type of
technology assessed, the quality of evidence available (e.g.,
whether from randomized clinical trials), CMS review times,
and the final decision rendered.
Population Studied: Medicare Beneficiaries
Principal Findings: National Medicare coverage decisions
have pertained mostly to medical devices (41%) and surgical
procedures (23%). CMS has referred about one quarter of
these decisions to the Medicare Coverage Advisory
Committee (MCAC). Only 16% of technologies were
supported by what CMS considered “good” quality evidence;
in contrast, 42% had “fair” and 32% “poor” evidence. For
most technologies, CMS decided to “cover with conditions,”
rather than reject or accept a new technology. CMS reviews
have averaged 8.9 months. MCAC involvement added about
8 months to review compared to decisions not requiring
MCAC involvement (p<0.0001). Reviews during 2001-2003
took on average 5 months longer than reviews during 19992000 (p<0.01). 46 % of cases have exceeded CMS’ own
guidelines for timely review.
Conclusions: The Medicare national coverage process has
become more transparent in recent years. Despite the call for
evidence-based decisions, the quality of evidence available to
CMS for the vast majority of technologies has been suboptimal. CMS frequently fails to meet its standards for timely
reviews.
Implications for Policy, Delivery or Practice: Coverage of
new medical technologies has long presented challenges for
public and private payers. CMS’ call for a more open and
evidence-based process is commendable. It has become
much easier to track CMS decisions and the rationale
underlying them. However, this study demonstrates that
good clinical evidence is often lacking for new technologies. It
also underscores the tradeoffs between requiring rigorous
review and timely decision-making.
Primary Funding Source: RWJF
Related Posters
Poster Session A
Sunday, June 6 • 6:45 p.m.-8:00 p.m.
• The Impact of the Medicare Prescription Drug
Legislation’s Payment Increases for Medicare Managed
Care Plans on Health Plan Participation, Premiums, and
Benefits in 2004
Lori Achman, M.P.P., Marsha Gold, Sc.D, M.P.H.
Presented by: Lori Achman, M.P.P., Health Analyst,
Mathematica Policy Research, Inc., 600 Maryland Avenue,
Suite 550, Washington, DC 20024; Tel: 202.264.3464; Fax:
202.863.1763; E-mail: lachman@mathematica-mpr.com
Research Objective: The Medicare Prescription Drug,
Improvement, and Modernization Act (DIMA) increased
payment rates for Medicare managed care plans in an effort to
stabilize the program as a prelude to expanding private plans
options in 2006. Because the increases are based on a
complex set of changes, the amounts will vary by county but
policy analysts expect them to be substantial. (Updated rates
will be released on January 16, 2004, with any changes in
participation or benefits effective March 2004.) This paper
will build on ongoing work to monitor plan participation and
benefit package design in the program to assess the
immediate effects of the payment increases in this area,
including the extent to which any changes in benefits and
premiums alter the course of trends in the Medicare+Choice
program, which has been towards higher premiums and less
generous benefit packages since 1999.
Study Design: Analysis of a research database we have
created from CMS’s Medicare Compare, which provides
information on plan benefit packages and services areas for all
Medicare Advantage (formerly Medicare+Choice) contracts.
This information is merged with enrollment and payment rate
data from CMS as well. The database is current as of January
2004 and we will be adding March information when that
becomes available.
Population Studied: Medicare+Choice coordinated care plans
from 1999 through 2004.
Principal Findings: Pre-DIMA plan filings for 2004 show a
continuation in historical trends toward somewhat fewer plans
available to beneficiaries, more limited pharmacy benefits,
greater cost sharing and higher premiums, although the
decline is less dramatic than in recent years. We will reexamine these data in light of March 2004 filings to assess (1)
the extent to which increased payments generated immediate
changes in benefits or premiums versus increased provider
payments or use of stabilization funds; (2) the magnitude and
kinds of changes that resulted from the enactment; (3) the
particular kinds of counties or plans in which changes were
made; and (4) how these changes affected existing trends in
these areas.
Conclusions: Between 1999 and 2003, the Medicare+Choice
program experienced significant health plan withdrawals,
declining enrollment, increasing premiums, and constricting
benefit packages. These findings will provide early evidence
on the extent to which the increased payments authorized by
DIMA are beginning to stabilize the market and the
immediate implications for beneficiaries of the hefty increases.
Implications for Policy, Delivery or Practice: As plan
premiums have risen and benefits declined, few health plans
have been actively recruiting new enrollees to their
Medicare+Choice plans. However, should plans put their
payment increases into premium reductions and/or benefit
expansions, plans may begin actively marketing to Medicare
enrollees once again, signaling a renewed interest in the
Medicare market. The manner in which health plans use their
payment increases from DIMA will likely signal plan strategies
going into 2006 and ultimately the potential of Medicare
Advantage under the reformed Medicare system.
Primary Funding Source: CWF
• Out-of-Pocket Prescription Drug Costs and Use among
the Elderly: Analysis of 1998 and 2000 MEPS Data
Jonathan Agnew, Ph.D., Adams Dudley, M.D., M.B.A., Steve
Morgan, Ph.D., Aman Bhandari, M.Sc., Helene Lipton, Ph.D.
Presented by: Jonathan Agnew, Ph.D., Post-Doctoral Fellow,
Centre for Health Services and Policy Research, University of
British Columbia, 429-2194 Health Sciences Mall, Vancouver,
BC, V6T 1Z3; Tel: 604.822.4731; Fax: 604.822.5690; E-mail:
jagnew@chspr.ubc.ca
Research Objective: Out-of-pocket prescription drug (OOPPD) costs are rising significantly for all age groups, particularly
the elderly, who are the highest users of prescription drugs.
Federal and state policy makers, private insurers and
employers, and advocates for the elderly need to understand
the determinants of OOP-PD costs to develop policies that
control expenditures while ensuring access to needed drugs.
However, little is known about trends in OOP-PD costs and
predictors of such costs for the elderly. Previous studies have
tended to rely on data sources that underestimate OOP-PD
costs, do not address how such costs vary among vulnerable
and growing populations (e.g., Hispanics), have excluded
some key demographic and social variables, and are cross
sectional.
By using the latest available data, our proposed project
addresses these limitations in the literature by examining the
following: 1) how much the elderly pay out-of-pocket for
prescription drugs; 2) how these payments vary among
vulnerable elderly sub-groups (e.g., low-income, “oldest-old,”
minorities, those with multiple chronic conditions); and 3)
how these payments have changed over time.
Study Design: Secondary data analysis of the 1998 and 2000
MEPS datasets. The primary outcome variables were total
number of prescriptions per year and OOP-PD. We use a twopart model (logisitic regression to separate those with at least
one prescription from those with none, followed by OLS
regression) to predict total OOP-PD costs and number of
prescriptions. Independent variables were selected according
to the Andersen-Newman behavioral model of health services
utilization.
Population Studied: All Medicare beneficiaries age 66 or
older in 1998 (N= 2562) and 2000 (N=2697).
Principal Findings: Average OOP-PD costs increased 22%
over the two-year period 1998-2000, from $463.69 (95% CI
426.52-500.87) to $564.15 (526.17-602.14). Average number of
prescriptions increased 3.6% over the same period, from 20.4
(19.07-21.74) to 21.14 (19.86-22.42). Increases in OOP-PD
costs were greater for Hispanic (38%) and African-American
(33%) Medicare-eligible elderly than for whites (21%). Those
living in the Northeast had greater increases in OOP-PD costs
and prescription drug use than their counterparts from other
regions. Marital status, household size, education level,
gender, income, insurance status, race, health status, and
ethnicity were significant (p<0.10) predictors of OOP-PD costs
and use.
Conclusions: These findings suggest that OOP-PD costs and
prescription drug use relate to important, yet understudied,
socio-economic and demographic predictors such as region of
residence, rural/urban residence, oldest-old, and
race/ethnicity. Changes in OOP-PD costs and use over time
and across elderly sub-populations suggest that some
vulnerable populations may bear a greater burden of cost
increases. How the Medicare prescription drug benefit
influences such effects will be of prime concern for policy
makers.
Implications for Policy, Delivery or Practice: Results from
this study can be used to aid policy makers when designing,
monitoring and potentially modifying the Medicare
prescription drug benefit. Quantitative measures of changes
over time can provide benchmarks for achieving policy
objectives with respect to OOP-PD costs for vulnerable
populations. Future research using multiple years of data to
analyze trends over time and addressing un-studied or understudied populations is needed. Additional research should
pay particular attention to the clinical effects (e.g., curtailment
of needed medications) of increased OOP-PD costs.
Primary Funding Source: , Jonathan Agnew is supported in
part by a post-doctoral fellowship from the Western Regional
Training Centre for Health Services Research.
• Medication Costs: The Role Physicians Play with Their
Senior Patients
Mary Sue Beran, M.D., M.P.H., Marianne Laouri, Ph.D.,
Marika Suttorp, M.S., Robert Brook, M.D., Sc.D.
Presented by: Mary Sue Beran, M.D., M.P.H., Clinician
Investigator, Internal Medicine, Park Nicollet Health Services,
3800 Park Nicollet Boulevard, Minneapolis, MN 55416; Tel:
952.993.4528; E-mail: beranm@parknicollet.com
Research Objective: To examine how often physicians
discuss out-of-pocket medication costs with their senior
patients, and the cost reducing strategies they employ when
these discussions occur.
Study Design: Cross-sectional design, using a mailed, selfadministered questionnaire.
Population Studied: Cross-sectional, random sample of 1200
internal medicine and family practice physicians in California,
selected from the American Medical Association Masterfile.
Principal Findings: We obtained completed surveys from 678
of 1098 (62%) eligible physicians. 68% of physicians reported
medication cost as "somewhat important" or "very important"
when prescribing to seniors, and 43% reported discussing
medication costs with more than half of their senior patients
in the last 30 days. 40% reported that there was at least one
time in the last 30 days when they did not discuss cost but
wish they had. The most common reason given was "I ran out
of time" (14%). When cost was discussed, 65% of physicians
reported that patients initiated the discussion. Predictors of
discussing medication cost with half or more of senior
patients were group practice setting (vs. other practice
settings) and physician rating of cost as of high importance
when prescribing a medication for a senior patient (OR 1.5, CI
1.07-2.24). Physician gender, race, specialty, drug cost
knowledge score, years in practice, patient volume, and
percentage of senior patients seen were not associated with
frequency of discussing medication costs. Finally, the most
common cost reducing strategy used by physicians was
generic substitution (33%) followed by offering samples
(25%).
Conclusions: More than two-thirds of physicians believe that
out-of-pocket medication costs are important, and a
surprisingly large percentage of physicians are spending time
discussing cost with their senior patients.
Implications for Policy, Delivery or Practice: Physicians can
play a critical role in helping to address the high out-of-pocket
medication costs many seniors face. However, because of
time constraints in practice, a tool for accurate and efficient
identification of seniors for whom medication costs represent
a substantial financial burden is needed.
Primary Funding Source: RWJF
• Do Hospitals Restrict Utilization of High Cost
Pharmaceuticals When the Medicare Payment Rate is Cut?
Mary Jo Braid-Forbes, M.P.H., Kevin Forbes, Ph.D.
Presented by: Mary Jo Braid-Forbes, M.P.H., Principal, The
Moran Company, 1655 N. Fort Myer, Arlington, VA 22209; Tel:
703.841.8402; Fax: 703.465.9969; E-mail:
mjbraid@themorancompany.com
Research Objective: Under the Medicare Hospital Outpatient
Prospective Payment System hospitals could receive passthrough payments for pharmaceuticals, calculated at 95
percent of Average Wholesale Price (AWP). Because the
statutory limit on pass-through payments was projected to be
exceeded, the Centers for Medicare & Medicaid Services
(CMS) instituted an across the board pro-rata reduction to
these payments in 2002. The following year payment rates fell
further as the products came off pass-through status. The
objective of this research is to examine whether the reduction
in payment for pass-through drugs that were in effect April 1,
2002 through December 31, 2002 reduced utilization of high
cost therapies whose reimbursement fell below acquisition
cost. Further, we will investigate whether for-profit hospitals
exhibited a more sensitive response to the payment change.
Study Design: Data on actual hospital acquisition costs of
pharmaceuticals products separately reimbursed under the
Outpatient Prospective Payments System (OPPS) were
obtained from hospital pharmacy departments who
volunteered their data. We analyzed these data relative to the
payment rate effective after the pro-rata reductions went into
effect. Utilization trends were calculated from the 2001 and
2002 Medicare Outpatient PPS claims files. An econometric
model of the relationship between the ratio of payment rate to
acquisition cost and utilization trends was estimated. The
effect of the hospitals for-profit status on the model was also
estimated.
Population Studied: Hospital acquisition costs for separately
reimbursed pharmaceutical products were obtained from two
large hospitals. Quarterly utilization trends were obtained
from the Medicare Hospital Outpatient PPS claims files for
2001 and 2002.
Principal Findings: Because the final 2002 dataset was not
available from CMS until late December 2003, preliminary
findings are not yet completed.
Conclusions:
Implications for Policy, Delivery or Practice: The hospitals’
response to reductions in reimbursement for specific
therapies has implications for beneficiary access to care. The
hospitals’ response to the pro-rata reductions may
foreshadow their response to the larger cuts that occurred in
2003.
Primary Funding Source: Corporate
• Variation in Charges and Reimbursement for Colorectal
Cancer Screening Procedures
Jeffrey Burkhardt, Ph.D., Maria Pisu, Ph.D., Xinzhi Zhang,
M.D., Ph.D., Mohamad Eloubeidi, M.D., Gerald Glandon,
Ph.D., Norman Weissman, Ph.D.
Presented by: Jeffrey Burkhardt, Ph.D., Associate Professor,
Health Services Administration, University of Alabama at
Birmingham, 1675 University Boulevard, Birmingham, AL
35294; Tel: 205.934.1670; E-mail: jburkhar@uab.edu
Research Objective: We examine charges and
reimbursements for colonoscopy and flexible sigmoidoscopy,
two of the primary colon cancer screening procedures, and
characterize their variation. Primary factors under
consideration as causes of variation are region of the country,
specialty of the provider, practice setting, health insurance
plan, and type of personnel performing the procedure. We
look at market factors that might also contribute to the
variation, and examine the variation in the difference between
the level of charges and reimbursement.
Study Design: We analyzed submitted charges and
reimbursement for physician services only through a series of
Ordinary Least Square (OLS) regressions. These analyses
identify independent predictors of the average charge or
reimbursement and the difference between reimbursement
and charges.
Population Studied: We used data from the Medicare
Physician/Supplier Procedure Summary files for the years 1997
to 2001, the Military Health System’s Management Analysis
and Reporting Tool (M2) for 1999 to 2001, and MarketScan
commercial claims data from the Medstat Group for 1999 to
2001.
Principal Findings: There were differences in reimbursement
and submitted charges, not only by insurer (Medicare, M2, or
MarketScan), but also by region and specialty of provider. The
average reimbursement from Medicare and M2 was very
similar. For colonoscopy, the average payment from both
Medicare and M2 was $232, while reimbursement for flexible
sigmoidoscopy was $69 and $61, respectively. The
commercial insurance payments from the MarketScan data
were almost three times greater for both types of procedures
($764 for colonoscopy and $161 for flexible sigmoidoscopy).
Under Medicare, reimbursement was approximately 30% of
submitted charges for both procedures, while MarketScan
commercial claims paid nearly 70% of submitted charges.
When comparisons are made of the four regions (Northeast,
South, Midwest, and West), submitted charges and
reimbursement were generally highest in the Northeast for
colonoscopy and flexible sigmoidoscopy across all payers.
Using regression analysis and controlling for externalities, the
South frequently had submitted charges that were greater than
the West or Midwest, but reimbursement was generally lower.
The exception was in the MarketScan data, which showed that
charges and reimbursement for colonoscopy were highest in
the South. When the procedure was performed by a specialist
rather than a generalist, specialists were generally paid
significantly more than non-specialists.
Conclusions: Generally, procedures performed in the
Northeast or by specialists were reimbursed at a higher rate
than other regions or by generalists. The commercial claims
of the MarketScan data reimbursed a much larger proportion
of a much larger amount for both flexible sigmoidoscopy and
colonoscopy. Payments to commercial providers were nearly
three times greater than to Medicare or M2 providers.
Implications for Policy, Delivery or Practice: While Medicare
has made payment for colorectal screening procedures part of
its benefit package, the low reimbursement paid for
performing the procedure may be a deterrent to Medicare
providers. Many commercial insurers are reimbursing at a
much higher rate. This may be incentive for physicians to
perform the lower cost colorectal cancer screening procedures
on Medicare recipients, while performing the better paying
colonoscopies on patients with commercial insurance.
Primary Funding Source: CDC
• Efficacy and Toxicity of Simvastatin Compared to
Therapeutic Diet in the Treatment of Hyperlipidemia: A
Clinical Study
Fernando Del Fiol, Ph.D., Lara Cristina Casadei Ubeda, Prof.
M.S.
Presented by: Fernando Del Fiol, Ph.D., School of Pharmacy,
University of Sorocaba, Rua Eng. Urbano P Araujo, 134 ap. 42,
Cerquilho, 18520000; Tel: 55.1533843397; E-mail:
fernando.fiol@uniso.br
Research Objective: Hyperlipidemia occurs because of the
increase in the plasmatic concentration of total cholesterol
and triglycerides. These increase leads to the development of
arteriosclerosis and consequently to coronary heart disease.
One of the most used drugs to control the levels of
cholesterol and triglycerides is simvastatin, but its use has
been related to a great many side effects, involving muscular,
heart and hepatic alterations. The objective of our study was
to evaluate in humans the efficacy and safety of simvastatin in
patients with hyperlipidemia.
Study Design: All the patients were submitted to a controlled
and standardized diet with low fat levels, composed of 55%
vegetables, 30% carbohydrates and 15% proteins. The
patients were then divided into two groups. The treated group
received simvastatin (10mg/day) plus the recommended diet
and the control group received a placebo plus the
recommended diet. The groups were submitted to the
treatment for 60 days.
To assess the efficacy and the toxicity of the drug, blood
samples were collected weekly from the patients and the
following were assessed; LIPID PROFILE: total cholesterol
(TC), high density lipoprotein cholesterol (HDL), low density
lipoprotein (LDL), very low density lipoprotein (VLDL) and
triglycerides, HEART PROFILE: creatine kinase (CK), lactic
dehydrogenase (LDH) and HEPATIC PROFILE: alkaline
phosphatase (ALP), aspartate aminotransferase (AST), alanine
aminotransferase (ALT), bilirubin and gammaglutamyltransferae(GGT).
Population Studied: To assess the efficacy and toxicity of
simvastatin use, a double blind study was carried out on 25
patients with diagnosed hyperlipidemia.
Principal Findings: Nine weeks after starting the treatment, a
reduction in the total cholesterol of 55% was observed for the
treated group and of 33% for the control group. For LDL the
reduction in the treated group was 64% and for the control
group it was 40%. The reduction in the triglycerides levels
was 69% for the treated group and 60% for the control group.
The HDL levels increased by about 43% for both groups.
In the hepatic and muscle toxicity assessment of the drug,
increases were observed of 63% in ALP, 158% in AST, 198% in
ALT, 102% in bilirubin, 147% in GGT and 102% in CK for the
group that received simvastatin. No alteration was detected
in patients in the control group
Conclusions: With the data from the present study, it was
concluded that although the drug was more effective than the
diet in decreasing the cholesterol levels, the side effects
presented suggest that in some cases only the isolated
therapeutic diet can be effective in hyperlipidemia treatment
• Generosity of Drug Coverage and Use of Effective
Cardiovascular Medications among Aged Medicare
Beneficiaries with Heart Disease
Jalpa Doshi, Ph.D., Bruce Stuart, Ph.D.
Presented by: Jalpa Doshi, Ph.D., Health Services Research
Scientist, School of Medicine, University of Pennsylvania,
Blockley Hall, Room 1214, Philadelphia, PA 19104-6021; Tel:
215.898.7989; Fax: 215.898.0611; E-mail:
jdoshi@mail.med.upenn.edu
Research Objective: Under the new Medicare drug benefit
legislation, the proportion of drug costs paid out-of-pocket by
beneficiaries will vary directly with their total annual drug
spending levels. However, the relationship between
generosity of drug coverage and essential medication use has
not been formally assessed till date. The objective of this study
is to examine the impact of generosity of drug coverage on the
use of four cardiovascular medications selected from wellestablished quality indicators: 1) warfarin in patients with atrial
fibrillation(AF); 2) beta-blockers for patients post-acute
myocardial infarction(MI); 3) statins in patients with
hyperlipidemia and coronary artery disease(CAD); and 4) ACEinhibitors in patients with diabetes and a cardiovascular risk
factor.
Study Design: The study used the 1997-2000 Medicare
Current Beneficiary Survey, a nationally-representative survey
of the Medicare population linked with Medicare claims.
Disease conditions were identified using ICD-9-CM codes in
the claims. We defined drug use as any report of the study
medication filled during the year. Generosity of drug coverage
was defined as the percentage of the beneficiary’s annual drug
expenditure paid by insurance. All beneficiaries were classified
into one of four categories, namely, 0%, 1-50%, 51-75%, and
76-100%. Logistic regressions estimated the likelihood of
receiving the study medication while controlling for
beneficiary- and disease-related confounders.
Population Studied: Fee-for-service community-dwelling
Medicare beneficiaries aged 65 years or older with: 1)AF
[n=2,915], 2)MI [n=1,522], 3)hyperlipidemia and CAD [n=3,331],
and 4)diabetes with a concomitant cardiovascular risk factor
[n=3,515]
Principal Findings: Overall, only about half to two-thirds of
the Medicare beneficiaries with heart disease used
cardiovascular medicines recommended for their conditions
(warfarin 49.8%, beta-blockers 52.7%, statins 67.1%, ACEinhibitors 52.1% in 2000). No clear association was observed
between generosity of drug coverage and use of warfarin or
beta-blockers. In contrast, statin and ACE-inhibitor use
increased with increasing generosity of drug coverage.
Beneficiaries with more than three-quarters of their annual
drug bills paid by insurance had over twice the odds of
receiving a statin than those with no third-party payments [OR
2.23; 95% CI(1.81-2.74)]. Beneficiaries with >50% of their
annual drug bills paid by insurance had higher odds of
receiving an ACE-inhibitor than those with no third-party
payments or those with 1-50% of their expenditures paid by
insurance.
Conclusions: Substantial under-use of highly effective
cardiovascular medications exists among community-dwelling
aged Medicare beneficiaries. Under-use of warfarin and betablockers, which are relatively inexpensive due to the availability
of generic substitutes, is not explained by generosity of drug
coverage. On the other hand, a strong association was
observed for the expensive statins and ACE-inhibitors. Not all
beneficiaries who had some drug coverage were at an
advantage; use of these expensive medications was correlated
with more generous coverage.
Implications for Policy, Delivery or Practice: With the
passage of the Medicare drug benefit legislation, policymakers
have begun to evaluate how the new law will affect drug use
among Medicare beneficiaries. This study suggests that the
law will fail to provide access to needed but expensive drug
therapies for those beneficiaries whose out-of-pocket expenses
are not sufficiently reduced under the drug benefit design, but
would probably not affect beneficiary use of relatively cheaper
medications.
• The Impact of the Interim Payment System on Ohio
Home Healthcare Agencies
Abigail Gerding, B.S.N., M.S., Ph.D., Pamela Salsberry, BSN,
M.S.N., Ph.D.
Presented by: Abigail Gerding, B.S.N., M.S., Ph.D., Assistant
Professor, Family and Community Nursing, East Tennessee
State University College of Nursing, Box 70676, Johnson City,
TN 37614-1709; Tel: 423.439.5623; Fax: 423.439.4050; E-mail:
gerding@etsu.edu
Research Objective: The overall objective of the research was
to determine the changes that occurred in the home health
delivery system with the implementation of the Interim
Payment System (IPS) in the state of Ohio. There were three
primary issues that were of interest-structural changes in the
delivery system, caseload changes, and utilization changes.
Study Design: This was a retrospective, explanatory study to
examine the impact of the implementation of the IPS on Ohio
Certified Home Health Agencies using the Andersen-Aday
Model to guide the research.
Population Studied: Four hundred and two Ohio certified
home healthcare agencies from 1996 and 326 Ohio home
healthcare agencies from 1999 were included in the study.
Agencies with less than 6 months of service were excluded
from the study.
Principal Findings: There were 402 agencies in 1996, 326
agencies 1999, and 277 agencies functioning in the market in
both 1996 and 1999. 125 agencies left, while 49 agencies
entered the Ohio market between 1996 and 1999.
Distribution of agencies by agency control demonstrated
significant differences (prob<0.0002). Proprietary agencies
showed the greatest fluidity with respect to market entry and
exit. Rural agencies were less likely to go out of business than
urban agencies. With agencies that remained in the market,
there was some growth in services offered and most notably
an increase in pediatric care. DME, pharmaceuticals,
psychiatric care, and respiratory services were dropped by
many agencies with significant differences between 1996 and
1999. There was a significant shift downward in the age of the
patients cared for by home health agencies in 1999. There
was a significant decline in Medicare (non-profit and
proprietary, p<0.0001, government, p=0.0018). Case mix
demonstrated a significant drop from 3.00 in 1996 to 2.14 by
1999 (p<0.0001). A significant decrease was in mean number
of visits per patient with 36% decrease by 1999 (p<0.0025)
and mean cost per patient with greater than 30% decrease
(p<0.0001).
Conclusions: These changes and reductions are impressive in
the speed in which they were accomplished and in their
magnitude. These results clearly demonstrate the power of
reimbursement policy to shape practice as posited by the
Andersen-Aday model. While these results show that the IPS
was successful in changing practice, it is not entirely clear if
the reduced services and fewer visits resulted in limited access
for Medicare patients.
Implications for Policy, Delivery or Practice: Given the
continued economic environment to reduce costs and
utilization, home healthcare administrators need to persist in
the mechanisms that deliver quality care to those clients who
need it while developing strategies to streamline care and
productivity. Since home care service seems to be focused on
specific needs and more acute care, the need for service to
patients with chronic, debilitating disorders must not be
overlooked. Reimbursement strategies that allow delivery of
care to clients with long term needs should to be investigated,
especially those clients who can still manage much of their
care with little assistance.
Primary Funding Source: Center for Community Based
Homecare
• Composite Quality Scoring and Pay-for-Performance: The
Premier Hospital Quality Incentive Demonstration Project
Benjamin Gutierrez, Ph.D., Chris Craver, MA, Stephen
Stemkowski, MHA
Presented by: Benjamin Gutierrez, Ph.D., Senior Director,
Analytics & Research, Premier, Inc., 2320 Cascade Point
Boulevard, Charlotte, NC 28208; Tel: 704.733.5447; Fax:
704.733.4666; E-mail: ben_gutierrez@premierinc.com
Research Objective: A recent initiative has focused national
attention on pay-for performance approaches to reimbursing
hospitals. However, researchers and policy-makers currently
have limited understanding of effective aggregate performance
measurement and incentives for hospitals to more
consistently deliver evidence-based clinical interventions. We
have refined a composite scoring methodology that
incorporates hospital process and outcome measures for
three disease categories that will be used in a Medicare
demonstration project. The composite scores will be used to
measure hospital performance and award bonus payments to
top performing hospitals.
Study Design: We used patient-level discharge, billing, and
JCAHO Core Measure data for the six-month period ending
March 31 2003 for 189 hospitals with more than 30 discharges
in at least one of three disease categories. Using the quality
score, we cross-tabulated the results to explore variation
among hospitals based on various hospital characteristics.
Population Studied: Our sample of 189 hospitals was drawn
from the 278 U. S. acute care hospitals that have agreed to
participate in the three year project. Each hospital will submit
patient-level discharge, billing and performance measurement
data to Premier’s national hospital data repository quarterly.
Twenty individual process and outcome indicator values for
acute myocardial infarction (AMI), heart failure, and
community-acquired pneumonia will be calculated for each
hospital and reported semi-annually. Composite scores for
each disease category will be calculated to determine top
performers, from which incentive payments will be
determined.
Principal Findings: Our intent was to illustrate preliminary
findings after applying the composite score methodology to
hospital data and assess the methodology’s capability to
discern differences in hospital performance. Preliminary data
show considerable variation among sample hospitals in both
individual measure values and composite score. For example,
aspirin at arrival rate ranged from 84.4% to 99.2% and the
beta-blocker at arrival rate ranged from 71.6% to 97.2% for
AMI patients. Greater variance was observed for time to
thrombolytics, 14.6% to 67.7%, and time to PTCA, 16.7% to
83.3%. Similarly, composite AMI scores ranged from 50.19 to
99.89. The data show comparable variation in other disease
categories and across hospital demographic factors.
Conclusions: We anticipate that the range of scores for
participating hospitals in the demonstration project will
decrease significantly over the course of the project and that
the median score for the cohort across disease categories will
increase as a result of the composite score and the potential
for incentive payments to top performing hospitals.
Implications for Policy, Delivery or Practice: Introducing
payment differentials based on quality may be an effective
policy initiative to reduce the variation observed across
hospital services.
• The Impact of Medicare’s Prescription Drug Law:
Empirical Estimates
Kevin Hawkins, Ph.D., Ronald Ozminkowski, Ph.D, Jodi
Peters, B.S., William Marder, Ph.D., William Crown, Ph.D.
Presented by: Kevin Hawkins, Ph.D., Senior Economist,
Outcomes Research & Econometrics, The Medstat Group, 777
E. Eisenhower, Ann Arbor, MI 48108; Tel: 734.913.3145; Fax:
734.913.3200; E-mail: kevin.hawkins@medstat.com
Research Objective: The new Medicare prescription benefit
has sparked debate, but little research with real data has been
conducted. This paper utilizes healthcare and pharmaceutical
claims from Medicare beneficiaries in supplemental plans to
better understand how the prescription law may impact
utilization and expenditures. The objectives are: 1) Identify the
top 10 most common conditions afflicting Medicare
beneficiaries, 2) estimate what percent of expenditures for
these conditions are accounted for by pharmaceuticals, 3)
illustrate what percent of the population would face the
different drug copayment tiers embedded within the new law.
Study Design: : The MarketScan Disease Profiler was used to
identify the top 10 most common diseases and summarize
annual pharmaceutical expenditures for Medicare
beneficiaries. The Profiler summarizes inpatient, outpatient,
emergency room (ER) and pharmaceutical utilization statistics
for over 600 diagnostic categories that include all ICD-9-CM
diagnosis codes. The Profiler produces summary statistics
noting the amount paid by Medicare and by the patient for
each condition. Information for each part of the treatment
process (inpatient, outpatient, ER, and pharmaceutical) is
produced as well.
Population Studied: The MarketScan Medicare database for
2002 was used for this analysis. The data base contains
inpatient, outpatient, enrollment and pharmacy claims data
from over 960,000 Medicare beneficiaries, from all 50 States,
who were covered by supplemental health plans.
Principal Findings: The 10 most common conditions for
Medicare beneficiaries include: Essential Hypertension,
Diseases and Disorders of Skin and Subcutaneous Tissue,
Coronary Artery Disease, Cataract, Osteoarthritis, Respiratory
System disorders, Disorders of the Gastrointestinal Tract,
Nutritional/Immune/Metabolic Disorders, Back Disorders,
and Diseases of the Ear/Nose/Throat (ENT). The percent of
the population inflicted with each of these conditions varied,
with hypertension at 37% and ENT problems in tenth place
with 15%. The average annual healthcare expenditure per
patient for these conditions is $9,994, with drugs accounting
for 29% of the total.
After summarizing the Medicare drug spend, 11% of the
population would have annual drug spending less then $250,
where the copayment rate is 100%. 52% would be in the $251$2,250 range, where the copayment rate is 25%. About 29%
would be in the so called “donut hole” ($2,251-$5,100), where
the copayment rate is 100%. The remaining 8% would have
drug expenditures over $5,100 and have a copayment of 5%.
Conclusions: Conclusions The most common health
conditions for the Medicare population are chronic and affect
a significant portion of the population. The average annual
costs of treating these conditions is about $10,000 each, with
drugs making up almost a third of the treatment costs. About
half of the Medicare patients would face a 25% drug
copayment rate, but almost 1/3 would fall into the donut hole
and pay 100% for at least some of their drugs.
Implications for Policy, Delivery or Practice: Policy In 2006,
millions of Medicare beneficiaries will receive pharmaceutical
coverage, the effect on these individuals, employers,
pharmaceutical manufacturers, and the Government is largely
unknown. The impact of the new drug program will vary by
condition. The need for additional coverage is not likely to
disappear.
Primary Funding Source: The Medstat Group
• Developing a Reliable Medicare Case Mix Adjuster for
Renal Dialysis Facilities
Richard Hirth, Ph.D., John Wheeler, Ph.D., Alyssa Pozniak,
M.A.E., Marc Turenne, Ph.D., Erik Roys, M.A., Philip Tedeschi,
Ph.D.
Presented by: Richard Hirth, Ph.D., Associate Professor,
Health Management and Policy, University of Michigan
School of Public Health, 109 S. Observatory, Ann Arbor, MI
48109-2029; Tel: 734.936.1306; Fax: 734.764.4338; E-mail:
rhirth@umich.edu
Research Objective: To inform the development of a
Medicare case mix adjuster for dialysis facilities by estimating
the relationships between case mix and treatment costs using
two available data sources to describe each facility's patient
population.
Study Design: Regression models were estimated explaining
costs per dialysis treatment as a function of the dialysis
facility's case mix. Dependent variables include total dialysis
facility costs, costs for services provided under the existing
composite rate for a limited bundle of dialysis-related services,
and costs for services that are currently billed separately from
the composite rate but are being considered by the Centers for
Medicare and Medicaid Services (CMS) for inclusion in an
expanded prospective payment system. Cost data are derived
from the CMS Cost Report filed annually by each dialysis
facility on CMS Form 265-94. All models include a set of basic
demographic and clinical indicators for the facility's patient
population as well as the CMS area wage index. In addition,
the models include alternative measures of patient
comorbidities derived from two sources: CMS Form 2728,
which measures a baseline history of comorbid conditions at
the onset of renal failure, and a measure of the presence of
comorbid conditions based on diagnoses reported in
Medicare claims for services other than dialysis.
Population Studied: All free-standing dialysis facilities in the
United States in 2001 linked to information on the
characteristics of their patient population.
Principal Findings: Models using claims-based comorbidity
data performed better than those using baseline comorbidity
data from CMS form 2728. These models explain about 11%
of the variation across facilities in total and composite rate
costs per treatment and about 16% of the variation in
separately billable costs. Predicted cost differences are
financially significant, with a standard deviation of $12 per
treatment, representing over 5% of the average cost per
treatment. Using two years of claims data rather than one
year of data to identify diagnoses did not improve the model's
performance. To reflect the potential for delays in data
availability, we estimated claims-based models using different
lags between the measurement of comorbidities and costs.
Models using claims data with a one year lag performed
similarly to those with contemporaneous data in explaining
composite rate costs, but somewhat worse in explaining
separately billable costs. Performance of all models
deteriorated when using claims data with a 2 year lag.
Conclusions: Case mix adjustment would result in a
significant shift in payments among facilities to reflect the
relative costliness of their patient populations. Given the
relative homogeneity of the dialysis patients and their
treatment, the magnitude of predictable variation in costs is
substantial. Claims data out-performed baseline data and are
likely to be more reliable and less subject to "gaming" because
claims from non-dialysis providers have lower potential for
strategic overreporting of comorbidities. Given that new
dialysis patients under age 65 generally do not have a
Medicare claims history, claims and baseline data could be
combined to provide a timely and complete picture of a
facility's case mix Both the modelling approach and the
combination of baseline and claims data could be useful for
Medicare case mix adjustment methods outside of dialysis as
all Medicare case mix adjustment systems have to deal with
the issue of patients new to the Medicare program.
Implications for Policy, Delivery or Practice: Our findings
imply that a meaningful renal case-mix adjustment system
could be built using existing CMS data. The importance of
case mix adjustment would increase further if CMS adds
services that are currently billed on a fee-for-service basis,
primarily injectible medications, to the prospectively paid
service bundle. Further, CMS is expanding the role for case
mix adjustment in several areas of the Medicare program. For
example, Medicare managed care plans will received
capitation rates adjusted for 65 groupings of diagnoses in
addition to the basic demographic variables used in the past.
This approach is similar to the one we test for dialysis
providers. An approach that combines data collected at
baseline with claims-based diagnoses that accrue over time
could also be a useful template for case mix adjustment in
other areas of Medicare policy.
Primary Funding Source: CMS
• Prescription Drug Coverage and Use among Elderly
Medicare Beneficiaries
Soonim Huh, M.P.H., Thomas Rice, Ph.D., Susan Ettner,
Ph.D.
Presented by: Soonim Huh, M.P.H., Ph.D. Student, Health
Services, UCLA, 650 S. Young Drive, Los Angeles, CA 900951772; Tel: 310.206.3538; Fax: 310.825.3317; E-mail:
soonim@ucla.edu
Research Objective: The issue of supplemental prescription
drug coverage and drug utilization among Medicare
beneficiaries has been a national concern. To date, a majority
of prior studies on drug coverage and drug utilization are
largely descriptive rather than analytical and, therefore,
additional multivariate studies are crucial to investigate the
determinants of prescription drug coverage for Medicare
beneficiaries and the impact of drug coverage on prescription
drug utilization. Furthermore, a few previous multivariate
analyses using cross-sectional data have the potential problem
of selection bias since the beneficiary’s decision to purchase
drug coverage can be correlated with the unobservable
characteristics. Thus, the effect of drug coverage on use is a
difficult question to study because imprecise estimation that’s
the problem with selection bias can create a bias towards
results. The objectives of this study are (1) to determine the
factors that affect ownership of prescription drug coverage
among Medicare beneficiaries aged 65 and older; and (2) to
investigate the impact of supplemental drug coverage on
prescription drug utilization by Medicare beneficiaries with
and without taking selection bias into account.
Study Design: We used nationally representative data from
the 2000 Medicare Current Beneficiary Survey (MCBS) Cost
and Use file. It includes detailed information on the
demographic, socioeconomic, health status, and health care
experiences including prescription drugs. A probit regression
was employed to predict the probability of purchasing drug
coverage, which includes proxy measures for the premiums of
drug coverage and supply of health insurance as identifying
variables. The effect of drug coverage on drug use was
estimated by a two-part model, controlling for the observable
characteristics. First, any use of drugs was predicted by a
probit regression, followed by OLS regressions to predict the
level of use, measured as the total number of prescriptions
and drug expenditures per year. In order to take self-selection
into drug coverage into account, we estimated the two
equations simultaneously, allowing the error terms to be
correlated.
Population Studied: Medicare beneficiaries aged 65 or above,
dwelling in the community, enrolled in Part A and Part B.
Those with end-stage renal disease and those who died any
time during the year were excluded.
Principal Findings: Preliminary estimates are expected in
April.
Conclusions: It's expected in April.
Implications for Policy, Delivery or Practice: Findings from
this study will address whether Medicare beneficiaries with the
need for drug coverage obtain it and to what extent drug
coverage has impact on drug utilization after controlling for
the potential selection bias. The results will have implications
for the outpatient prescription drug benefit and future
prescription drug expenditures of Medicare beneficiaries.
• Patterns of Prescription Drug Use and Cost among
Medicaid-Medicare Dually Eligible Beneficiaries and
among Medicaid Beneficiaries Who Resided in Nursing
Facilities in 1999: An Analysis of MAX 1999 Files
Myoung Kim, Ph.D., Deo Bencio, M.A., Jim Verdier, J.D.,
Jennifer Schore, M.S.
Presented by: Myoung Kim, Ph.D., Health Researcher,
Mathematica Policy Research, 600 Alexander Park, Princeton,
NJ 08540; Tel: 609.275.2383; Fax: 609.799.0005; E-mail:
mkim@mathematica-mpr.com
Research Objective: To examine, at the national and the state
level, the pattern of prescription drug use and Medicaid
expenditures among dually eligible beneficiaries and among
beneficiaries residing in nursing facilities in 1999, by
beneficiary and by drug characteristic.
Characteristics of beneficiaries are defined by basis of
Medicaid eligibility, age group, sex, race, and use of nursing
facilities during 1999.
Characteristics of prescription drugs are defined by brand
status (patented brand-name, off-patent brand-name, and
generic), therapeutic drug category, and drug group.
Measures of drug use and expenditure include the distribution
of beneficiaries with respect to the number of prescriptions
paid by Medicaid; number of prescriptions and expenditure
per beneficiary and per benefit month; expenditure per
prescription; pharmacy expenditure as percentage of Medicaid
expenditure; and number of prescriptions and cost, by brand
status, by therapeutic drug category, and for top 10 drug
groups.
Study Design: Using Medicaid Analytic Extract (MAX) 1999
files for 47 states, we created two analysis files for our study
population: a beneficiary-level file linked beneficiary
characteristics to measures of drug use and cost; a drug-level
file linked all drug claims associated with the study population
to a comprehensive, detailed drug classification system (up to
the drug subclass level). We tabulated measures of drug use
and expenditure, by beneficiary characteristic and by drug
characteristic, at the national level and for each state. We
made comparisons among states and examined the nationallevel pattern of use and Medicaid expenditure among dual
beneficiaries and nursing facility residents. Use and
expenditure measures were compared across states with
different pharmacy benefit features to illustrate the potential
effect of pharmacy benefit design.
Population Studied: (1) Medicaid beneficiaries who were
eligible for Medicare and received full Medicaid benefits
(including pharmacy benefit) and (2) Medicaid beneficiaries
who had full Medicaid benefit and resided in nursing facilities
in 1999.
Principal Findings: The results cannot be released at this
time because they have not yet been cleared by CMS for
release. We anticipate, however, the full results to be released
in time for the conference. The following is a small sample of
outcome measures to be prepared for the presentation:
Medicaid programs spent $__ on prescription drugs in 1999.
Dually eligible beneficiaries accounted for a large share (__
percent) of this spending; __ percent was for beneficiaries
residing in nursing facilities. While __ to __ percent of nondual beneficiaries filled at least one prescription in 1999, the
share among dual eligibles and nursing facility residents was
as much as __ percent and __ percent, respectively. Dual
eligibles filled __ prescriptions per benefit month, __ times as
high as that among non-dual eligibles. Nursing facility
residents filled an average of __ prescriptions per month. The
share of generic prescriptions among dual and non-dual
eligibles was comparable (__ percent). This share was higher
in states with generic substitution requirements.
Antidepressants and antipsychotics combined accounted for
as much as __ percent of all Medicaid prescription drug
expenditures, __ percent for dual eligibles, and __ percent for
nursing facility residents.
Implications for Policy, Delivery or Practice: Despite the
importance of understanding prescription drug use pattern
among dual eligibles—who account for up to 80 percent of
Medicaid pharmacy expenditures, detailed data on patterns of
drug use and expenditure in this group have not been readily
available. In particular, there is little reliable information
about the amount and pattern of prescription drug use among
beneficiaries who reside in nursing facilities. The new MAX
files offers an opportunity to develop in-depth analyses to be
used to estimate Medicare prescription drug costs for dual
eligibles and nursing facility residents. These estimates will
illuminate Medicaid and Medicare prescription drug issues for
federal and state policymakers, stakeholders, and researchers
with a degree of detail that was not readily accessible before.
Primary Funding Source: CMS
• New Medicare Beneficiaries’ Understanding of the
Medicare Program
Mary Laschober, Ph.D., Gabrielena Alcala-Levy, M.A.
Presented by: Mary Laschober, Ph.D., Senior Manager,
Health Practice, BearingPoint, 1676 International Drive,
McLean, VA 22102; Tel: 703.747.6458; Fax: 703.747.8750;
E-mail: mlaschober@bearingpoint.net
Research Objective: CMS began fielding the monthly Survey
of New Medicare Beneficiaries (SNMB) in February 2003 to
assess its Initial Enrollment Package, Medicare & You
campaign, and other informational materials. This study
profiles new eligibles with respect to their basic knowledge of
Medicare benefits and supplemental insurance options,
awareness of initial decision requirements, sources and
usefulness of information, and supplemental insurance
holdings.
Study Design: The mail-administered SNMB yields
approximately 300 completed interviews per month. The
cross-sectional sample consists of new Medicare eligibles 65
years old living in the 50 states, DC, and Puerto Rico. It is prestratified by M+CO availability (including PFFS plans), then by
resident state and beneficiary characteristics. Frequency and
contingency tables were produced for the first six months of
data (n=1,901). Statistical significance tests of differences in
proportions were conducted to detect variation in subgroup
responses.
Population Studied: Individuals newly eligible to Medicare
recently turning age 65. Sample persons receive their
questionnaires within two months after initial Part A
enrollment.
Principal Findings: A sizeable number of new eligibles are
aware of several important Medicare features (e.g., Medicare
does not pay all health care expenses (88%), right to decline
Medicare Part B (75%), and ability to purchase a Medigap plan
(78%)). Many are also familiar with their IEP package (89%)
and Medicare Handbook (82%). However, relatively few are
aware of the following: Medicare HMO option (56%), right to
appeal Medicare decisions (58%), coverage of preventive care
services (25%), the Medicare Savings Programs (47%), and
the six-month Medigap guarantee (40%). Awareness of
Medicare’s toll-free number (50%) and website (40%) is also
relatively low. Overall, 86 percent of respondents had
supplemental insurance when surveyed. However, there is a
significant overlap among Medicare HMO enrollees, and
those with employer-sponsored coverage, who had a Medigap
policy. Some traditionally vulnerable subgroups (racial/ethnic
minority beneficiaries, those in poor health, and low-educated
individuals) are substantially less likely to report
understanding Medicare features, are less able to effectively
use information, and had no supplemental insurance when
surveyed.
Conclusions: A large percentage of new Medicare enrollees
are aware of several important features of their Medicare
coverage. However, about one-fourth of respondents said they
had very little knowledge about Medicare’s basic features.
Additionally, relatively few respondents are aware of some
important program aspects, and there is considerable
variability in knowledge about specific features. Of particular
concern is the comparatively significantly lower proportions
(in terms of statistical tests and magnitude) of some
traditionally vulnerable beneficiary subgroups who have good
Medicare program knowledge.
Implications for Policy, Delivery or Practice: There is still
room for improving information to a sizeable group new to
Medicare. SNMB findings can be used to investigate whether
knowledge differences are related to intensity, complexity, or
mode of message delivery. Additionally, the findings can be
used as benchmarks to assess the early impact of specific or
general CMS communication interventions and to aid in
intervention design. Differences among beneficiary subgroups
signify a continuing need to segment and target Medicare
communications, particularly to individuals often in most
need of understanding Medicare benefits, rights, and choices.
Primary Funding Source: CMS
• Racial Difference in Prescription Drug Expenditures
among Medicare Only and Dual Eligibles, 1996-2000
Sangho Moon, Ph.D., Alex Sekwat, Ph.D., Jaeun Shin, Ph.D.
Presented by: Sangho Moon, Ph.D., Assistant Professor,
Institute of Government, Tennessee State University, 330 10th
Avenue N., Nashville, TN 37203-3401; Tel: 615.429.7712; Fax:
615.963.7245; E-mail: smoon@tnstate.edu
Research Objective: The purpose of this study is to estimate
the trend and patterns of the rescription drug expenses
among Meicare-Medicaid dual eligibles (e.g., persons having
both Medicare and Medicaid) and Medicare only beneficiaries
who are either Afro-American or white recipients, focusing on
the role of individual-specific medical conditions.
Study Design: We used Negative Binomial (NB) regression
model to estimate correlations of the prescription drug
expenses and daul eligibility associated with diverse ethnic
background over the period 1996-2000. The dependent
variable is the annual amount of prescription drug expenditure
(rxexp). Independent vairables include demographic
characteristics, dummies for dual eligibles, race/ethnicity (i.e.,
asian, hispanic, black, etc.), and interaction of the two binary
indicators. Individual-specific chronic health conditions (i.e.,
diabetes, hypertension, ischemic heart disease, arthritis,
depression, etc.) are contolled to obtain unbiased, consistent
estimates.
Population Studied: The prescription drug expenditure
information was from the Medical Expenditure Panel Survey
(MEPS) 1996-2000. The source data presented the expenses
and frequency of refills for prescription drugs of racial
minorities (i.e., Afro-Americans, Hispanics, and Asians) and
whites who are either dual eligibles or Medicare only
beneficiaries over 1996-2000.
Principal Findings: A test of the prescription drug
expenditure sample means of dual eligibles and Medicare only
beneficiaries showed that dual eligibles' prescription drug
expenses are significantly higher than Medicare only
beneficiaries, e.g., $1,194.33 versus $822.68; a = .05 and Z
calculated = 149.80. NB regression results reveal that dual
eligibles are 68% more likely to spend prescription drug
expenses than Medicare only recipients. Black dual eligibiles
are 38% more likely to spend prescription drug expenses
compared with white dual eligibles. The size and statistical
significance of the correlation coefficients constantly increased
over the years 1996-2000.
Conclusions: The proportion of dual eligibles with chronic
health conditions was higher by 4.6% than that of the
Medicare only beneficiaries and that dual eligibles made more
frequent refills of prescription drugs. Both expenses and the
number of refills were significantly higher for Afro-American
dual eligibles than white dual eligibles. This finding seems to
be contributed by relatively high medical needs among dual,
and particularly black dual, eligibles due to prevalent multiple
chronic diseases.
Implications for Policy, Delivery or Practice: It is an
important issue in the U.S. public health care finance that
prescription drug expenses of Medicare-Medicaid dual
eligibles are much higher than those of Medicare only
beneficiaries. In order to have cost-effective public health care
system facing with increased health care demand among black
dual eligibles, the precise assessment of their medical service
need is prerequisite. Based on the need assessment, the CMS
can provide culturally-sensity coordinated care between
Medicare and Medicaid. Additionally, case/disease specific
utilization review to monitor physicians’ supply of services is
helpful to control the possible overutilization problem among
dual eligibles. Induced private competition among MCOs
within public health care system is providing an alternative
strategy.
Primary Funding Source: TSU Alumni Research Fund
• Physician Practice Patterns in the Management of
Ischemic Heart Disease Among Medicare Beneficiaries
Soma Nag, Ph.D., Dennis Shea, Ph.D., Joseph Vasey, Ph.D.,
Ibrahim Ibrahim, M.D., Ph.D.
Presented by: Soma Nag, Ph.D., Health Policy and
Administration, The Pennsylvania State University, 1402
Braeburn Terrace, Lansdale, PA 19446; Tel: 215.631.9012; Fax:
215.652.0860; E-mail: soma_nag@merck.com
Research Objective: Physician practice patterns significantly
impact the cost and quality of care received by patients. The
objective of this study is to examine patient, physician, and
health system factors associated with the occurrence of
physician practice patterns in the treatment of ischemic heart
disease - IHD. The research examines the relationship
between these factors and the use of consultation, referral,
and treatment by the usual physician as practice patterns.
Study Design: The data used link together the Medicare
Current Beneficiary Survey - MCBS - for 1992 to 1995 including
the Part B physician-supplier claims, the 1994 Physician
Identification Master Record file, and the 1990 Area Resource
File. The unit of analysis is the individual with information on
each year split into two half-year observation periods, which
are derived based on the claims and total 13,894 for the 4,817
beneficiaries in the sample. A consultation visit was identified
using CPT codes related to both office and hospital based
consultations with physicians. If a visit was not a consultation,
it was considered as treatment by the usual physician if the
usual physician and the treating physician were the same, or a
referral - which may have been self-referral or a physician
initiated referral - if the usual physician differed from the
treating physician. The ordered logit method was used to
estimate the factors associated with all three practice patterns.
Population Studied: The study population included Medicare
beneficiaries with evidence of IHD in the MCBS for the years
1992-1995.
Principal Findings: Consultation, referral, and treatment by
the usual physician account for 9.6%, 54.9, and 35.5% of the
total of 13,894 half-year observations. The usual physician’s
specialty being in internal medicine; p=0.0026 or cardiology ;
p<0.0001 versus in general or family practice reduces the
probability of both, consultation by 0.06-2.5% and referral by
3.3-13.1%, and raises the probability of being treated by the
usual physician by 3.9-15.6%. Increased IHD severity raises the
probability of consultation and referral by 1.6% and 8.4%
respectively, while lowering the probability of treatment by the
usual physician by 1.0%; p<0.0001. Compared to Medicare
only coverage, the presence of supplemental insurance that is
obtained either through Medicaid; p=0.0380 or an employer;
p<0.0001, or privately purchased; p=0.0001, increases the
probability of a consultation by less than 1.0% to about 1.0%
and referral by 3.6%-5.4%, while lowering the probability of
being treated by the usual physician by 4.3%-6.4%.
Conclusions: Practice patterns are primarily influenced by the
specialty type of the usual physician and patient need viz. IHD
severity.
Implications for Policy, Delivery or Practice: Variations in
practice patterns have an influence on the process of care and
related costs. Therefore, understanding factors that influence
these practice patterns which function as the point of access
to the subsequent use of resources may be important,
especially for chronic conditions such as IHD among
Medicare beneficiaries.
• Physician Practice Patterns, Interventions, and Costs in
the Management of Ischemic Heart Disease
Soma Nag, Ph.D., Joseph Vasey, Ph.D., Dennis Shea, Ph.D.,
Ibrahim Ibrahim, M.D., Ph.D., N. Edward Coulson, Ph.D.
Presented by: Soma Nag, Ph.D., Department of Health Policy
and Administration, The Pennsylvania State University, 1402
Braeburn Terrace, Lansdale, PA 19446; Tel: 215.631.9012; Fax:
215.652.0860; E-mail: soma_nag@merck.com
Research Objective: Physician practice patterns influence the
subsequent process of care and costs. This research examined
the occurrence of interventions and related costs for ischemic
heart disease -IHD - associated with differences in practice
patterns representing consultation, referral, and treatment by
the usual physician.
Study Design: The data used link together the Medicare
Current Beneficiary Survey - MCBS - for 1992 to 1995 including
the Part B physician-supplier claims, the 1994 Physician
Identification Master Record file, and the 1990 Area Resource
File. The unit of analysis is the individual where annual data
were split into two half-year observation periods - total of
13,894 half-years for 4,817 beneficiaries. A consultation visit
was identified using the relevant CPT codes related to both
office based and hospital based consultations. The most
frequently occurring physician from the claims record with a
specialty matching the usual physician specialty indicated in
the survey was tagged as the beneficiary’s usual physician.
Subsequently, if a visit was not a consultation, it was
considered as treatment by the usual physician if the usual
physician and the treating physician were the same, or a
referral - self-referral or physician referral - if the usual
physician differed from that of the treating physician.
Interventions examined include use of invasive e.g. CABG and
non-invasive procedures viz. catheterization, angioplasty, and
drug therapy. The random effects probit method estimated the
factors associated with the probability of interventions, while a
two-part model estimated the probability of and actual
charges generated as a result of these interventions. The
models controlled for patient, physician, health system
characteristics, and type of practice pattern.
Population Studied: The study population included
beneficiaries with evidence of IHD in the MCBS.
Principal Findings: Consultation or referral increase the
probability of receiving any IHD related intervention by 13.3%;
p<0.0001 and 7.2%; p<0.0001, respectively, versus treatment
by the usual physician. Increased IHD severity and poor / fair
versus very good / excellent self-reported health status are
associated with an almost 6.0%; p<0.0001 and 2.1%;
p=0.0105 increase, respectively, in the occurrence of any
intervention. Compared to physicians who are general or
family practitioners, physician specialty classified as internal
medicine or cardiology increase the probability of any
intervention by 3.8%; p<0.0001 and 8.2%; p<0.0001,
respectively. Consultation or referral, increase the probability
of generating any charges by 13.3%; p<0.0001 and 7.4%;
p<0.0001. These practice patterns also increase actual
charges generated by 55.8%; p<0.0001 and 11.9%; p<0.0001,
where mean charges are $213.38 per half year. Usual
physicians who are cardiologists (versus general or family
practitioners) generate 32.6%; p<0.0001 higher charges.
Conclusions: Consultation contributes to increased use of
interventions and charges, compared to referral or treatment
by the usual physician. Although the usual physician being a
cardiologist increases actual charges incurred by about 32.0%,
the magnitude of this impact is lower than that for
consultation but higher than that for referral.
Implications for Policy, Delivery or Practice: These findings
suggest that restricting referrals to specialists for the
management of chronic conditions such as IHD may not
necessarily be the most effective means of controlling
healthcare costs among the Medicare population.
• Burden of Illness: Medicare Beneficiaries with
Parkinson’s Disease
Katia Noyes, Ph.D., M.P.H., Yue Li, M.S., Robert Holloway,
M.D., M.P.H., Andrew Dick, Ph.D.
Presented by: Katia Noyes, Ph.D., M.P.H., Assistant
Professor, Community and Preventive Medicine, University of
Rochester Medical Center, 601 Elmwood Avenue, Rochester,
NY 14642; Tel: 585.275.8467; Fax: 585-461-4532; E-mail:
katia_noyes@urmc.rochester.edu
Research Objective: To assess the economic burden of
Parkinsons disease (PD) on Medicare beneficiaries, to
examine PD population characteristics and to identify factors
that contribute to high cost and use of medical services in this
population.
Study Design: Using the Medicare Current Beneficiary Survey
(MCBS), personal characteristics of subscribers were
compared based on their PD status. Using data from a
randomized clinical trial of PD subjects, a health status
question from the survey was mapped into subject’s health
utility score (EuroQol). Using log transformed CPI-adjusted
dollars, multivariate linear models were developed to explore
factors associated with total healthcare costs, Medicarereimbursed total costs, HMO-reimbursed costs, out-of-pocket
costs, hospitalization costs, outpatient costs, and prescribed
medication costs. Similar negative binomial models were
developed for appropriate utilization. Independent variables
included age, gender, race, residence area, health status, PD
status, co-morbidities, number of activity of daily living (ADL)
deficiencies, and year of enrollment. All analyses incorporated
complex survey design.
Population Studied: 40,881 survey participants representing
1992-1999 Medicare subscribers.
Principal Findings: Annual prevalence of PD in the Medicare
population was between 1.8 and 2.3%. PD patients were
significantly older than the rest of the Medicare population
(76.2 vs 71.0 years, p<0.0001), had lower health utility (0.68 vs
0.80, p<0.0001), had more psychiatric problems (19.8% vs
8.8%, p<0.0001) and ADLs (2.8 vs 1.1, p<0.0001). Total
annual healthcare expenditures were twice higher for the PD
patients than for other Medicare beneficiaries ($21,410 (SE
944) vs $10,686 (SE 137), p<0.0001). Average annual
Medicare reimbursement was significantly higher for the
beneficiaries with PD ($9,374 (SE 635)) than for others ($5,207
(SE 89), p<0.001). Cost of prescription medications
constituted 5.7% of total annual cost ($1,311 SE 73) for the
beneficiaries with PD, and 8.1% ($809 SE 8) for the non-PD
patients. Beneficiaries paid at least a fraction of the cost for
almost every prescription. Medicaid contributed to 25% of
prescription payments, while private HMOs paid for 10% of
drugs. Based on the results of the multivariate analysis,
beneficiary health status was the largest predictor of the health
expenditures. Other factors associated with higher costs were
age, gender, race, location (metropolitan, North West or East
of the U.S), PD status, renal, cardiovascular or psychiatric comorbidities, and ADLs. The use of health services increased
significantly every year. Patients who had PD for more than 2
years used more prescribed medications than other
beneficiaries, but newly diagnosed PD patients did not.
Conclusions: This study provides population-based estimates
of the economic burden of PD among the U.S. elderly
population. Medicare patients with PD use more healthcare
services, cost more, and have lower quality of life and more
ADLs than non-PD patients.
Implications for Policy, Delivery or Practice: Although
roughly 2% of the elderly population has PD, they consume
more than 4% of total health care resources. There is an
urgent need for disease management programs in the PD
population.
Primary Funding Source: NIA
revenues to supplement the financial contributions of
beneficiaries.
Conclusions: Based on several new circumstances in 2003,
we demonstrate why there was a historic opportunity to add a
Medicare prescription drug benefit. We also identify
numerous challenges ahead, however, to design an effective
policy that meets the actual needs of Medicare beneficiaries.
Implications for Policy, Delivery or Practice: Health services
researchers, administrators, policy analysts, and policy makers
need to understand the political context in order to
understand the multiple goals of policy makers, the
constraints on policy design, the challenges for policy
implementation, and appropriate criteria for policy evaluation.
Primary Funding Source: Kaiser Family Foundation
• A Political History of Medicare and Prescription Drug
Coverage
Thomas Oliver, Ph.D., M.H.A., Philip Lee, M.D., Helene
Lipton, Ph.D.
• Rural/Non-Rural Perceptions of Barriers to Providing
Medicare Diabetes Self-Management Education
Paige Powell, Ph.D., Saundra Glover, Ph.D., Janice Probst,
Ph.D.
Presented by: Thomas Oliver, Ph.D., M.H.A., Associate
Professor, Health Policy and Management, Johns Hopkins
University, 624 N. Broadway, Room 403, Baltimore, MD
21205; Tel: 410.614.5967; Fax: 410.955.6959; E-mail:
toliver@jhsph.edu
Research Objective: To provide a concise history and analysis
of the role of prescription drugs in the evolution of Medicare
policy.
Study Design: The study applies theories of the policy making
process to identify patterns in Medicare policy development,
specifically the many missed opportunities to add prescription
drugs to the Medicare program prior to 2003. The paper is
based on a review of the literature on Medicare politics and
policy, political theory, research on prescription drug
utilization and costs, and personal experience of one of the
authors (Dr. Lee) dating back to 1965.
Population Studied: The paper reviews eight critical episodes
in the history of Medicare and prescription drug coverage
between 1965-2003.
Principal Findings: This history illustrates how early policy
decisions led to a variety of consequences, some intended and
some unintended, that shaped policy options decades later.
Most importantly, the omission of outpatient prescription
drugs from the initial package of Medicare benefits helped
prompt the development of other sources of coverage—
employer retirement programs, privately purchased
supplemental benefits (“Medigap”), Medicaid, and managed
care plans—that generally deterred subsequent efforts to
integrate prescription drugs into Medicare. We identify
several important patterns in policy making over four decades.
First, prescription drug coverage has rarely been considered
on its own merits; instead, it has been tied to the fate of
broader proposals for Medicare reform. Second, action to add
this basic element of modern medicine has been hampered by
divided government, federal budget deficits, and ideological
conflict between those seeking to expand the traditional
Medicare program and those preferring a greater role for
private health care companies. Third, contemporary
proposals are in part legacies of missed opportunities in the
past. In particular, they keep participation voluntary and
provide significant subsidies from general governmental
Presented by: Paige Powell, Ph.D., Research Assistant
Professor, South Carolina Rural Health Research Center, The
University of South Carolina, 220 Stoneridge Drive, Suite 204,
Columbia, SC 29210; Tel: 803.251.6317; Fax: 803.251.6319; Email: ppowell@gwm.sc.edu
Research Objective: To explore the barriers that rural
practitioners face in providing diabetes self-management
education (DSME) services to Medicare beneficiaries and
determine if perceptions of barriers differ between rural and
non-rural providers.
Study Design: 1,200 American Diabetes Association (ADA)
recognized diabetes education centers (DECs) (50.5% of the
popultion) were randomly sampled. A one-page survey was
sent to the sampled facilities. Respondents were asked to rate
the extent to which they agreed or disagreed with 15 possible
general barriers to providing DSME. Respondents were then
asked if they provided DSME in rural areas and to rate the
extent to which they agreed that these 15 barriers were present
in rural areas. The same list was used for both general and
rural barriers. Thirty-nine surveys were returned invalid and
785 were returned valid, yielding a response rate of 67.6%.
Chi-square analyses were conducted between the rural and
non-rural barriers and between rural and non-rural providers
and their responses to the general and rural barriers.
Population Studied: All ADA recognized DECs in the U.S.
(n=2,375).
Principal Findings: There was more agreement on barriers to
DSME in rural areas (six factors with more than 50%
agreement) than in urban areas (three factors). Financial
factors were the most commonly identified barriers to DSME
by all respondents, regardless of service area. Financial
barriers included “Too little Medicare reimbursement” in
general (73.4%) and in rural areas (78.0%); “patient financial
problems”, with higher agreement that this was a barrier in
rural areas (72.8%) than in general (59.7%); and “Medicare
does not cover enough hours” (55.8% in general, 56.0% in
rural). For rural areas, “staffing/financial/institutional
support” and “transportation” were identified as barriers by a
greater number of respondents than the number of Medicarecovered hours, with 58.2% and 56.8% of respondents
agreeing, respectively. The ADA recognition process was
perceived to be a barrier to care in rural areas by just over half
of all respondents (51.6%). These factors were rated as
barriers to DSME in rural areas by more than half of current
rural providers: Medicare reimbursement, patient financial
problems, Medicare hours, transportation, and institutional
support. For eight of the potential barriers, agreement that
the factor was a barrier for rural providers was significantly
higher among providers who did not serve rural areas.
Conclusions: Medicare reimbursement was singled out as a
pressing problem for providing diabetes education to
Medicare beneficiaries. Patient financial problems and
Medicare’s limitation on the number of education hours
reimbursed also were prominent problems. There was some
variation between rural and non-rural providers’ responses.
More barriers were perceived as being present in rural areas
than in general. In addition, non-rural providers consistently
rated rural barriers more strongly than rural providers,
meaning that non-rural providers may have misperceptions
about the severity of problems in rural areas.
Implications for Policy, Delivery or Practice: The widespread agreement concerning inadequate Medicare
reimbursement could indicate a need for change in the current
Medicare reimbursement policies and/or amounts. Policy
makers should revisit the reimbursement requirements and
levels.
Primary Funding Source: HRSA, Office of Rural Health Policy
• Effect of Changes in Medication Cost-Sharing on Oral
Hypoglycemic Use among Diabetes Patients
Douglas Roblin, Ph.D., Richard Platt, M.D., M.Sc., Michael
Goodman, Ph.D., John Hsu, M.D., M.B.A., Pharm.D., David
Smith, Ph.D., Susan Andrade, Sc.D., Stephen Soumerai, Sc.D.
Presented by: Douglas Roblin, Ph.D., Research Scientist,
Research Department, Kaiser Permanente Georgia, 3495
Piedmont Road, N.E., Building 9, Atlanta, GA 30305; Tel:
404.364.4805; Fax: 404.364.4798; E-mail:
Douglas.Roblin@KP.Org
Research Objective: In recent years, health insurance plans
have added pharmacy benefit options that substantially
increase patient cost-sharing. The new Medicare prescription
drug benefit has complex cost-sharing provisions. There are
few current studies on how high levels of cost-sharing might
affect medication use by the chronically ill. We compared
change in oral hypoglycemic (OH) use among adults with
diabetes (DM) who experienced increases in medication costsharing compared with those who experienced constant
medication cost-sharing over a 12-month time period.
Study Design: Quasi-experimental, time series with
comparison group design. Adults with DM in 5 managed care
organizations (MCOs) who experienced an increase in
medication cost-sharing (intervention) were matched with
those who had no increase. All patients had sustained OH
use in a 6-month pre-intervention period and a pharmacy
benefit for the 12-month observation period. Patients were
matched on pre-intervention benefit, type of OH use, and
intervention year. The dependent variable was average daily
dose (ADD) standardized to each patient’s mean ADD in the
6-month pre-intervention period. The principal independent
variable was change in patient cost per 30-days OH supply
between the 6-month pre- and post-intervention periods.
Effect of change in cost-sharing on standardized ADD was
estimated using both time series regression models and
hierarchical linear models (to assess effects of patient
covariates).
Population Studied: 13,407 adults with DM and a medication
cost-sharing increase during the period 1997-2000; 13,407
who had no increase during this period.
Principal Findings: At 6-months following an increase in
cost-sharing, patients with >$10 increase ($20 median
increase) had 20.0% lower mean standardized ADD (p<0.05)
than that predicted from their pre-intervention trend in
standardized ADD. Patients either with no change in costsharing or with a $1-$5 ($3 median) or a $6-$10 ($6 median)
increase did not experience a significant change between the
pre- and post-intervention periods in the expected trend of
increasing OH dose. 11.5% of those with >$10 increase
discontinued their pre-intervention OH medication compared
with 6.0% of those with no increase (p<0.05). Postintervention mean standardized ADD among those with >$10
increase remained significantly (p<0.05) lower than that
among those with no cost-sharing change after adjusting for
patient age, gender, concurrent insulin use, and imputed
household income.
Conclusions: Large increases in medication cost-sharing
(>$10 increase per 30-days supply) were associated with
significantly reduced OH use; more modest increases ($1-$10)
were not. Whether these reductions in OH use are clinically
important (e.g. leading to worse glycemic control) remains to
be investigated.
Implications for Policy, Delivery or Practice: For patients
with a chronic disease, increased cost-sharing for medications
may lead to unintended consequences, such as reduction in
medication supply or discontinuation of essential
medications. Chronic diseases, such as DM, are prevalent
among Medicare enrollees. Design of a Medicare prescription
drug benefit needs to account for the therapeutic implications
of high levels of cost-sharing.
Primary Funding Source: AHRQ
• Medicare First Dollar Coverage of ACE-Inhibitors for
Beneficiaries with Diabetes Saves Money and Lives
Allison Rosen, M.D., M.P.H., Mary Beth Hamel, M.D., David
Cutler, Ph.D., Milt Weinstein, Ph.D., Sandeep Vijan, M.D.
Presented by: Allison Rosen, M.D., M.P.H., AHRQ Health
Services Research Fellow, Health Policy and Management,
Harvard School of Public Health, 330 Brookline Avenue,
BIDMC, Rose 130, Brookline, MA 02215; Tel: 617.667.1342; Fax:
617.667.2854; E-mail: arosen@hsph.harvard.edu
Research Objective: Diabetic nephropathy is the leading
cause of end stage renal disease (ESRD) in the United States
and is associated with marked morbidity, mortality, and costs.
ACE-Inhibitor (ACE) use in diabetics slows progression of
renal disease and also reduces cardiac morbidity and
mortality. Six percent of the Medicare budget is spent annually
on the care of the 0.6% of the Medicare population with
ESRD. The objective of this study was to assess the health
outcomes and budgetary impact to Medicare of first dollar
(i.e. no cost-sharing) coverage of ACE for elderly beneficiaries
with diabetes.
Study Design: Clinical events, survival, and Medicare costs
for 65 yo diabetic patients, with and without ACE, were
assessed using a Markov cohort model. We assumed that `no
coverage´ resulted in 40% ACE use (NHANES 4) at no cost to
Medicare, and `Medicare coverage´ increased ACE use by
20% (to 60% overall) based on price elasticity data from the
literature. Modeled outcomes included progression of renal
disease, cardiovascular events, life expectancy, qualityadjusted life years (QALYs), lifetime costs (2003 US $), and
incremental cost-effectiveness ratios. Costs and benefits were
discounted at 3%; all analyses took a Medicare perspective.
One-way and multi-way sensitivity analyses were performed on
uncertain model parameters.
Population Studied: Base case estimates are for a typical
65yo Medicare beneficiary. National aggregate estimates were
based on the age distribution of the current 6.2 million
Medicare beneficiaries with diabetes.
Principal Findings: Standard Medicare coverage results in a
discounted lifetime cost of $80,129 and quality-adjusted life
expectancy of 10.44 QALYs. The addition of first dollar ACE
coverage decreased lifetime costs to $79,005 and increased
benefits to 10.78 QALYs. Thus, Medicare ACE coverage saves
both lives and money. Results were robust to a wide range of
renal and cardiac risk reductions, costs, utilities, and discount
rates. Results were most sensitive to the cost of ACE
(threshold at which no longer cost-saving, drug price >1.8
times the annual average wholesale price) and the impact of
coverage on utilization rates (threshold at which no longer
cost-saving, increase in ACE use of <7% ). Applying our model
to the 6.2 million current Medicare beneficiaries with diabetes,
first dollar coverage of ACE would result in a total of 1.3
million QALYs gained and 4.88 billion dollars saved over this
cohort's life.
Conclusions: Medicare first dollar coverage of ACE-Inhibitors
extends life and reduces Medicare program costs.
Implications for Policy, Delivery or Practice: A reduction in
program costs from one cost-saving intervention will result in
more money to spend on other health care needs of the
elderly.
• The Pent-Up Demand for Medical Services in the
Transition from Uninsurance to Medicare at Age 65
Jody Schimmel, M.A.
Presented by: Jody Schimmel, M.A., Ph.D. Candidate,
Economics, Institute for Social Research, University of
Michigan, 426 Thomspon Street, Room 3050, Ann Arbor, MI
48109; Tel: 734.761.3441; E-mail: jodys@umich.edu
Research Objective: To analyze the effects of uninsurance
and intermittent insurance coverage in the years prior to
Medicare eligibility on utilization and expenditures once
enrolled in the Medicare program at age 65. This study
attempts to disentangle the simple price effects of switching
to the Medicare system from the effects of pent-up demand,
which would lead to initial increased utilization by those who
were not previously insured.
Study Design: Difference-in-difference regression models are
estimated to analyze the change in service utilization before
and after Medicare eligibility for previously uninsured and
insured. Changes in utilization and out-of-pocket
expenditures are considered for hospital services, doctor
visits, outpatient surgery and other clinical services.
Regression models include standard demographic controls as
well as controls for baseline health status and chronic health
conditions. The use of the entire HRS panel from 1992-2002
allows observation of longer windows of insurance patterns
and utilization adjustments.
Population Studied: Respondents from the Health and
Retirement Study (HRS) born between 1931-1941 and their
spouses. The HRS is a nationally representative panel of the
non-institutionalized United States population over age 50.
Specifically, individuals who first reported being age-eligible
for Medicare in interview years 1994, 1996, 1998 and 2000 are
studied.
Principal Findings: Preliminary results indicate that
previously uninsured Medicare recipients were more likely
than those who were previously insured to increase service
utilization after Medicare enrollment. In particular, 6 percent
more of the previously uninsured saw a doctor two years after
Medicare enrollment (compared to two years prior to
enrollment), compared to only about a 2 percent increase in
visiting a doctor for those who had been insured prior to
Medicare. Doctor visits were higher by about one doctor visit
per year for those who had been previously uninsured in the
two years after Medicare eligibility. The percentage change in
hospital visits between the two years prior to and the two
years after enrollment is roughly 4.5 percent higher for those
who were previously uninsured. The number of visits to the
hospital as well as the number of hospitalized nights are also
higher for the previously uninsured once covered by Medicare.
Similar qualitative patterns are observed for other measures of
utilization.
Conclusions: Medicare recipients who were uninsured prior
to age 65 increase their service utilization after Medicare
enrollment by a larger amount than individuals who were
previously insured. More extensive analyses will be performed
to look at various definitions of insurance coverage prior to
Medicare as well as longer term utilization patterns after
Medicare enrollment.
Implications for Policy, Delivery or Practice: Reforms to
Medicare include the option of buy-in beginning at age 62 or
increasing the eligibility age to 67. The relationship between
prior insurance status and later Medicare utilization is
important as elements of adverse selection may appear in the
former plan and moral hazard in the latter, both leading to
increased federal expenditures on the Medicare system.
Higher Medicare utilization by the previously uninsured and
intermittently uninsured after age 65 also suggests the need
for changes in the private insurance market to provide
coverage for the near elderly.
Primary Funding Source: NIA
• The Effect of the Availability of Spousal Coverage on the
Tradeoff Between Wages and Health Insurance Benefits
Jody Schimmel, M.A.
Presented by: Jody Schimmel, M.A., Ph.D. Candidate,
Economics, Institute for Social Research, University of
Michigan, 426 Thompson Street, Room 3050, Ann Arbor, MI
48109; Tel: 734.761.3441; E-mail: jodys@umich.edu
Research Objective: To identify the presence of a tradeoff
between wages and health insurance in compensation
packages offered to workers by their employers. Although
economists believe that such a tradeoff must be present in
theory, the existing empirical literature has generally not been
able to observe this relationship. This paper seeks to identify
the wage differential resulting from the offer of employer-
sponsored health insurance by utilizing variation in the
availability of spousal insurance coverage among married
individuals.
Study Design: The basic ordinary least squares (OLS)
regression of wages on health insurance is inadequate for
studying the tradeoff between wages and health insurance
since unobserved factors are correlated with both wages and
benefits, so that “better” jobs have higher wages and better
benefits and thus there is an observed positive relationship.
The wage reduction for those without an alternative source of
coverage should be larger than for those who have other
coverage, since those without other coverage presumably
value their coverage more. Here regression models which
utilize variation in the availability of spousal coverage is used
to identify the wage differential due to the offer of health
insurance through one’s own employer.
Population Studied: Respondents from the 2002 Health and
Retirement Study (HRS), which is a nationally representative
sample of the non-institutionalized United States population
over age 50. Older workers have higher health care costs than
younger workers and thus the reduction in wages due to
health insurance that they face are presumably higher and
therefore potentially more observable.
Principal Findings: Exploiting the variation in the availability
of spousal coverage reduces point estimates of the effect of
health insurance on wages by thirty to eighty percent as
compared to the simple regression on wages on health
insurance. Although this identification strategy removes some
of the upward bias, the point estimates are still positive
and/or statistically insignificant. These results suggest that
variation that a priori could be thought to be exogenous does
not fully correct for the positive relationship between wages
and health insurance.
Conclusions: Results here were wrong-signed and/or
insignificant, as has been found by other empirical studies.
The main problem plaguing most of these studies is that it is
quite difficult to find truly exogenous variation that would
allow for the removal of the upward bias of the effect of health
insurance due to unobserved factors. In order to identify the
health insurance-wage differential, different empirical
strategies which do not rely on seemingly exogenous
differences in health insurance availability are needed in future
work.
Implications for Policy, Delivery or Practice: In a time of
insurance reform, if policy prescriptions to widen the reach of
public programs or expand employer-sponsored coverage to
more workers are seriously debated, policymakers must
consider the reaction of firms and workers to these changes.
The lack of conclusive evidence on the magnitude of the
tradeoff between wages and health insurance in the existing
literature suggests that further research is needed before
large-scale changes to employer-sponsored health insurance
are enacted.
Primary Funding Source: NIA
• Prescription Medicine Utilization Trends among
Noninstitutionalized Medicare Beneficiaries, 1992 and
2000
Ravi Sharma, Ph.D.
Presented by: Ravi Sharma, Ph.D., Analyst, MCBS Survey
Operations, RP5022, Westat, 1650 Research Boulevard,
Rockville, MD 20850; Tel: 301.738.3589; E-mail:
RaviSharma@Westat.com
Research Objective: To evaluate the rising trends in the
usage of and expenditures on prescription medications
among noninstitutionalized Medicare beneficiaries in terms of
prescription drug coverage and health status.
Study Design: We tracked prescription medication (PM)
usage by noninstitutionalized respondents to the Medicare
Current Beneficiary Survey (MCBS) in 1992 or in 2000. Using
bivariate methods, we compared users with nonusers of PMs
by demographic characteristics, health insurance, prescription
drug coverage, and health status. We estimated logit models
of the likelihood of using PMs. For users, we estimated the
average number of PMs and total PM expenditure.
Population Studied: All noninstitutionalized, non-ESRD
Medicare beneficiaries responding to the MCBS in 1992 or in
2000.
Principal Findings: Whereas 85% of beneficiaries used
prescription medications in 1992, 91% did in 2000, a trend
coincident with expanding PM coverage and a rise in the
average number of chronic conditions. Irrespective of year, on
average, nonusers of PMs are healthier (as measured by fewer
chronic conditions, functional limitations and fair/poor selfreported health status) and are less apt to use major
healthcare services.
After accounting for beneficiary demographics, health
insurance status, PM coverage, and health status, during both
1992 and 2000, the likelihood of PM usage climbed steadily as
health status declined. Within each category of health status,
the likelihood grew over time, with healthy beneficiaries
showing the largest percentage increments. Since 1996 the
likelihood of usage steadily rose for beneficiaries with PM
coverage as well as those without, albeit a sharper rise
occured for the former.
Between 1992 and 2000, PM users exhibited rapid growth in
PM usage and PM spending. Beneficiaries with poorer health
status consumed successively greater amounts of PMs and
accrued greater expense over time relative to their healthier
counterparts. Average usage increased for each stratum of
health status during this period, with unhealthy individuals
experiencing the largest increases. A similar relationship is
evident between health status and total PM expense.
Conclusions: Compared with users, nonusers of PMs are
healthier and consume less healthcare resources. After
accounting for critical beneficiary characteristics, the temporal
rise in the likelihood of using PMs is due to greater PM
coverage, the higher incidence (or treatment) of chronic
diseases and functional limitations, and other trends (such as
direct-to-consumer advertising of PMs) unaccounted for here.
Greater severity of illness seems to outweigh the impact of
PM coverage on likelihood. The user rate of PMs, and, among
users, average PM usage and total PM expenditures, have all
shifted up for both healthy and unhealthy beneficiaries, and
for both those with and without PM coverage.
Implications for Policy, Delivery or Practice: As PM
coverage is expanded under the new Medicare law, more
intensive drug utilization management may be helpful to
curtail unnecessary PM usage. Since unhealthy beneficiaries
consume greater PM (and healthcare) resources, greater
emphasis on the prevention and limiting the progression of
chronic illness and disability among the Medicare population
(as well as younger cohorts) is called for.
Primary Funding Source: CMS
• Prescription Drug Expenditures among Elderly Medicare
Beneficiaries: A Comparison of Medical Expenditure Panel
Survey and Medicare Current Beneficiary Survey
Usha Sambamoorthi, Ph.D., Dennis Shea, Ph.D., Wenhui Wei,
MA; M.S., Dennis Shea, Ph.D., Stephen Crystal, Ph.D.
Presented by: Dennis Shea, Ph.D., Professor of Health Policy
and Administration, Department of Health Policy and
Administration, Pennsylvania State University, 116 Henderson
Building, University Park, PA 16802; Tel: 814.863.2901; Fax:
814.863.2905; E-mail: dgs4@psu.edu
Research Objective: This study evaluates prescription drug
expenditures among elderly Medicare beneficiaries from two
different data sources
Study Design: We used detailed self-reports on prescription
drug expenditures from the Medicare Current Beneficiary
Survey (MCBS) and Medical Expenditures Panel Survey
(MEPS) for the year 1999.
Population Studied: Medicare beneficiaries aged 65 and over
living in the community.
Principal Findings: Overall, average prescription drug
expenditures did not differ by data source. However,
differences in the average expenditures were noted in certain
subgroups of the elderly and the predictors of prescription
drug expenditures. Among subgroups of elderly with
significant differences in expenditures across the two surveys,
we found lower annual prescription expenditures among
respondents from the MCBS. With respect to out-of-pocket
prescription drug expenditures, MCBS figures were
consistently lower than those derived from the MEPS. While
gender, health status, functional status, number of chronic
conditions remained a predictor of prescription drug
expenditures in both surveys, other determinants of
prescription drug expenditures varied by data source. Poverty
level, health status, and number of chronic conditions are the
only common predictors of high burden of drug prescription
out-of-pocket expenditure, as a proportion of income.
Conclusions: For estimating over all drug expenditures
among elderly and examining the associations between
gender, health status and expenditures, choice of survey does
not seem to matter. However, due to differences in
measurement of income, burden of out-of-pocket prescription
drug expenditures was not comparable across the two
surveys.
Implications for Policy, Delivery or Practice: Studies that
use magnitude of out-of-pocket expenditures for prediction
and studies that use subgroup differences to suggest policy
need to be cautious about the source of data.
Primary Funding Source: AHRQ
Building, University Park, PA 16802; Tel: 814.863.2901; Fax:
814.863.2905; E-mail: dgs4@psu.edu
Research Objective: The objective of this research is to
identify who among the population of Medicare beneficiaries
would benefit from the reduction in or removal of the
doughnut hole.
Study Design: Demographic and economic data are used to
create a 2006 baseline dataset of the Medicare population,
and then take-up decisions and drug spending are
microsimulated under scenarios of incremental decreases in
the size of the doughnut hole in the Medicare drug benefit.
The effects of these reductions on increased costs to the
Medicare program and decreases in out-of-pocket costs
among different groups of Medicare beneficiaries are
assessed.
Population Studied: The population studied is the
community residing Medicare population as of 2000, with a
weighting adjustment to reflect the 2006 Medicare
population.
Principal Findings: As the doughnut hole is reduced,
Medicare spending rises dramatically, increasing by
approximately 15% for every $1,000 reduction in the stop-loss
theshold. More than half of the increased spending goes
toward individuals with incomes above 200 percent of
poverty, who have significant drug costs, but also significant
amounts of income and prior drug coverage. Comparative
analysis of reducing the doughnut hole to expanding drug
coverage subsidies for near-poor Medicare beneficiaries
suggests the latter may target a population in greater need of
assistance.
Conclusions: The gap in coverage between the spending cap
and the stop-loss amount in the Medicare prescription drug
benefit has attracted much attention. This is not a common
feature of many insurance plans and its implications for
beneficiaries and the program are unclear. This paper
identifies one possible argument that can be made in favor of
this feature. Individuals most likely to reach those spending
levels tend to have higher incomes and other potential
sources of drug coverage. Thus, reductions in the doughnut
hole tend to provide greater benefits to higher income
individuals.
Implications for Policy, Delivery or Practice: As a Medicare
drug benefit moves towards implementation, there are likely
to be efforts to modify the program prior to 2006. One
feature that may be targeted is a reduction in the gap known
as the “doughnut hole”. While such a change may be
appropriate for several reasons, the benefits of that reduction
may fall mainly to well-off Medicare beneficiaries. Alternative
changes in the benefit package may offer more relief to
Medicare beneficiaries in greater need.
Primary Funding Source: CWF
• Eating the Doughnut Hole: Who Benefits?
Dennis Shea, Ph.D., Bruce Stuart, Ph.D., Becky Briesacher,
Ph.D., Joseph Vasey, Ph.D., Chandra Ganesh, B.S.
• Formulary Variability in California Health Plans: A
Challenge to Prescribing Physicians
William Shrank, M.D., Susan Ettner, Ph.D., Peter Glassman,
M.D., Steven Asch, M.D. M.P.H.
Presented by: Dennis Shea, Ph.D., Professor, Health Policy
and Administration, Pennsylvania State, 116 Henderson
Presented by: William Shrank, M.D., Health Services
Research and Development Fellow, General Internal
Medicine/Health Services Research, UCLA/West LA VA
Hospital, 843 11th Street, #8, Santa Monica, CA 90403; Tel:
310.478.3711 Ext. 40920; Fax: 310.268.4933; E-mail:
shrankw@aol.com
Research Objective: Multi-tiered formularies and patient
cost-sharing increasingly have been utilized as mechanisms to
control the rising costs of prescription drugs. These
developments in the marketplace have forced physicians, who
often manage patients from multiple insurers, to become
aware of multiple formularies. In this study variability in the
formularies of major health plans in California was evaluated
to assess the challenge that an individual physician faces
when attempting to prescribe a patient the least expensive
among similarly effective medications from that patient's
formulary.
Study Design: We compared the formulary variability within
and across 6 major insurers in California from 2000 to 2002.
To track this variability, we evaluated 4 of the 5 highest volume
drug classes in terms of expenditures: Proton Pump
Inhibitors, HMG CoA Reductase Inhibitors (Statins), Calcium
Channel Blockers and ACE Inhibitors.
Population Studied: Formularies of 6 of the 7 largest health
plans in California were compared.
Principal Findings: When formulary variability across plans
was assessed, no more than 5% of the branded drugs
evaluated were “preferred” on either all or none of the
formularies. 60% of drugs evaluated in 2000 and 65% in
2002 were “preferred” on 2-4 out of the 6 formularies studied.
Variability of formulary coverage within plans between 2000
and 2002 was seen in 11-37% of branded drugs, by drug class.
Conclusions: In the classes evaluated over a two-year period,
appreciable variability was seen between formularies offered
by California health plans, with comparatively less variability
within plans. This variability poses a challenge to prescribing
physicians and may affect patient compliance with prescribed
medications. Systems improvements are discussed, especially
in the setting of the Medicare prescription drug benefit which
will likely subject increasing numbers of elderly Americans to
this formulary variability.
Implications for Policy, Delivery or Practice: The complexity
in todays system of providing prescription drugs to privately
insured patients might be overwhelming for elderly patients
who are enrolled in private health plans. As we institute a ne
Medicare prescription drug benefit, care must be taken to
ensure that beneficiaries are receiving medications that
require the least co-payment among medications that are safe
and effective.
Primary Funding Source: VA
• Modeling the 2004/2005 Medicare Transitional
Assistance in Oregon’s Medically Needy Program
Jeanene Smith, M.D., M.P.H., Judy Zerzan, M.D., M.P.H., Tina
Edlund, M.S.
Presented by: Jeanene Smith, M.D., M.P.H., Deputy
Administrator, Office for Oregon Health Policy and Research,
800 N.E. Oregon Street, Room 607, Portland, OR 97232; Tel:
503.731.3005 Ext. 652; E-mail: Jeanene.Smith@state.or.us
Research Objective: In January 2003, people covered by
Oregon’s Medically Needy (MN) program lost their benefits
due to financial shortfalls in the state budget. The MN
program is a federally-matched optional Medicaid program in
which states may chose to provide Medicaid coverage and/or
Medicare premium assistance to certain groups not otherwise
eligible for Medicaid with significant health care needs. This
population is not well characterized either nationally or locally.
In Oregon, the MN program mainly provided a prescription
drug benefit. Recently the Medicare Prescription Drug,
Improvement, and Modernization Act (DIMA) was signed into
law, ending in 2006 all state Medically Needy programs.
During the 2004-2005 period, DIMA provides transitional
assistance to Medicare beneficiaries through a prescription
drug discount card program for Medicare enrollees and $600
per year toward prescription drug expenses for individuals
under 135% of the federal poverty level (FLP).
Study Design: A 49-question survey instrument was created
to collect information about this population including
demographic information, health insurance coverage, health
conditions, access to care, prescription drug use and
utilization of health care. A vendor telephoned participants
with an overall completion rate of 58%. Medication use during
the MN program was obtained from administrative data for
the past year and current medication use was obtained from
the interview. Costs of medications were calculated using
average wholesale price plus the current Oregon dispensing
fee of $3.50.
Population Studied: A statewide, random sample of 1,269
people who were enrolled in the MN program.
Principal Findings: The 439 people surveyed included 36%
men and 64 % women from age 21-91 with 74% at less than
135% of the FLP. Ninety-two percent have Medicare coverage
and only 7.5% currently have prescription coverage. In the six
months since the MN program ended, 61% have skipped
doses of a medication and 64% have gone without filling a
prescription. In order to pay for medications, 60% have cut
back on their food budget, 47% have borrowed money and
49% have skipped paying other bills. Yearly prescription costs
were calculated in order to model the financial effects of the
new Medicare bill for this group. Preliminary results for those
under 135% of the FPL show average yearly costs of $2,996.
Eighty-seven percent had costs exceeding $600 per year, the
amount of the drug discount card for this population. The
range of yearly prescription costs is $0-$16,712. The first
quartile is $1,304 and the third quartile is $4,025. Further
analysis will demonstrate the impact for the entire sampled
MN population.
Conclusions: The MN program provided coverage for a lowincome, chronically ill population. Since its termination, there
have been significant changes in prescription drug use and
financial impact in their daily lives.
Implications for Policy, Delivery or Practice: In states where
prescription coverage options are not offered to this
vulnerable population, the 2004/2005 transitional assistance
provided in DIMA is inadequate. Low-income, chronically ill
individuals who are not eligible for Medicaid or state-only
coverage will have significant unmet prescription drugs costs
potentially resulting in adverse health effects and continued
personal financial impact.
Primary Funding Source: Oregon Health Policy and Research
through a RWJ State Coverage Initiatives Grant
• Does Ownership Form Affect Hospital Responses to
Revenue Shocks? Evidence from the Balanced Budget Act
of 1997
David Song, B.S., Kevin Volpp, M.D., Ph.D.
Presented by: David Song, BS, MD/PhD Candidate, Health
Care Systems, The Wharton School of Business, 3641 Locust
Walk, Philadelphia, PA 19104-6218; Tel: (215)561-0895; Fax:
(215)573-7278; E-mail: dasong@wharton.upenn.edu
Research Objective: The Balanced Budget Act of 1997 (BBA)
was enacted to save the Medicare program about $116 billion
in reimbursements from 1998-2002. It is unknown whether
these revenue reductions affected quality of care and whether
patient quality declined more in hospitals with larger rate cuts
and larger declines in net Medicare patient revenue. We
examine the impact of BBA on patient outcomes in California
hospitals immediately following the implementation of the
policy, and address whether the magnitude of any changes in
quality differed by hospital ownership form.
Study Design: We use audited hospital financial data, which
contain Medicare patient revenue data, and patient outcomes
data provided by California’s Office of Statewide Health
Planning and Development (OSHPD). We construct a
measure simulating the impact of the BBA on hospital
revenues through 1996 financial data from OSHPD and preBBA cost report data from the Centers for Medicare and
Medicaid Services. Alternative instruments of BBA’s revenue
impact are employed as well. Using a dataset of 150,972
Medicare acute myocardial infarction (AMI) admissions in
California general acute hospitals between 1996 and 2000, we
construct hospital-level mortality rates and risk-adjusted
quality measures. We use hospital-level fixed-effects models
relating AMI quality measures to the policy impact variable
and other covariates.
Population Studied: Medicare AMI patients in California
admitted between 1996 and 2000.
Principal Findings: California hospitals on average
experienced a decline in net Medicare patient revenues per
admission by 5.0% ($582) from 1997 to 1999, versus a
projected decline by 6.9%, according to our simulation. We
demonstrate that the degree of decline in net revenue varied
with Medicare exposure and resident intensity for California
hospitals. Although similar prior to the BBA, Medicare
revenues per admission in low Medicare exposure hospitals
and high Medicare exposure hospitals diverged post-BBA, as
actual Medicare revenues per admission in low Medicare
hospitals were $1000-$1500 greater than those in high
Medicare hospitals. More important, a 1% simulated
decrease in a hospital’s Medicare revenues corresponds to an
increase in 6 deaths per 1000 AMI admissions (p=0.020) for
that hospital, where the baseline Medicare AMI mortality is
13%. The effect sizes were no different in non-profit hospitals
and for-profit hospitals for Medicare AMI mortality (p=0.94);
length of stay (p>0.2); and nurse-bed ratios (RNs and LPNs
combined, p>0.2). However, non-profits cut charity care to a
greater degree than for-profits, even after adjusting for levels
of charity care (p=0.03). Mean NP and FP levels of charity
care in 1996-97 were $226 and $68 per admission,
respectively.
Conclusions: Our results suggest that hospitals alter their
levels of quality during periods of revenue windfall or shortfall,
but that behavioral responses by non-profits and for-profits
were similar. Future research would investigate the role of
non-profit competition during the BBA, as well as differential
NP-FP responses in caring for uninsured patients.
Implications for Policy, Delivery or Practice: Policies that
are designed to cut costs to reduce a budget's exposure to
Medicare expenditures may lead to changes in quality that
have important consequences for social welfare. Furthermore,
because of its unique mix of non-profit, for-profit, and
government-operated firms, studying quality in the hospital
industry sheds light on economic theories of firm ownership
form.
Primary Funding Source: National Bureau of Economic
Research
• Impact of a Generic-Only Drug Benefit on Medication
Use by Medicare Beneficiaries
Chien-Wen Tseng, M.D., M.P.H., Robert Brook, M.D., ScD,
Emmett Keeler, Ph.D., G. Caleb Alexander, M.D., M.S., Beth
Waitzfelder, M.A., Carol Mangione, M.D., MSHS
Presented by: Chien-Wen Tseng, M.D., M.P.H., Assistant
Professor, Department of Family Practice and Community
Health, University of Hawaii/Pacific Health Research Institute,
S. Hotel Street, Suite 303, Honolulu, HI 96813; Tel:
808.524.4411; Fax: (808) 524-5559; E-mail:
cwtseng@hawaii.edu
Research Objective: Rapidly rising prescription costs have led
many Medicare+Choice plans to drop brand-name drug
coverage and to offer generic-only drug benefits. How
generic-only drug benefits affect Medicare beneficiaries’
medication use and financial burden is unknown.
Study Design: A cross-sectional telephone/written survey was
conducted March-June 2002. We asked patients if they
adopted any of six behaviors to lower their drug costs either in
2001, when they had brand-name drug coverage, and/or in
2002, after drug benefits changed to generic-only coverage.
These six behaviors included: using current medications less
often than prescribed (e.g. skip or decrease a dose),, stopping
medications altogether, not starting new medications,
switching medications, using free samples, and/or using
others’ medications. Participants also reported any financial
burden from prescription costs in 2001 and 2002.
Population Studied: We sampled participants from a major
Medicare+Choice plan in one state whose pharmacy benefits
changed from brand-name drug coverage in 2001 to genericonly coverage in 2002. We used the plan’s claims data to
identify Medicare beneficiaries age 65 and older who had
moderately high annual drug expenditures in 2001 of $2,548
on average. A total of 611 of 973 randomly sampled eligible
participants completed the survey resulting in a 63% response
rate.
Principal Findings: Participants were significantly more likely
to adopt 4 of 6 cost-lowering behaviors after brand-name drug
coverage changed to generic-only coverage : use less
9%,15%, p<.0001, stop medications 8%,15%, p<.0001, not
start new medications 5%, 10%, p<.0001, and/or switch
medications 8%, 27%, p<.0001. Rates of using free samples
26%, and taking others’ medications 1%-3% did not differ
significantly before/after brand-name coverage ended. Of the
3 behaviors leading to a decrease in medication use, use less,
stop, not fill a new prescription, 28% of participants adopted
at least one behavior after coverage was limited to genericonly drugs versus 17% when coverage included brand-name
drugs, p < .0001. Younger age and lower income were
significant independent predictors of decreasing medication
use with a generic-only drug benefit, in multivariate analyses
examining the independent influences of age, gender,
education, ethnicity, health status and income. A greater
percentage of participants also reported difficulty paying for
prescriptions once the generic-only drug benefit was in place
37%, 65%, p<.0001 and said that drug costs affected enjoyable
activities 34%, 44%, p<.0001, caused difficulty paying
rent/bills 18%, 24%, p<.0001, and led to not getting medical
care 13%,15%,p=.004.
Conclusions: In this study of Medicare beneficiaries with
moderately high annual drug expenditures, switching from
brand-name coverage to generic-only drug coverage resulted
in many participants decreasing medication use because of
cost and to report financial burden from drug costs.
Implications for Policy, Delivery or Practice: It remains to
be determined the extent to which appropriate changes to
generic medications was possible, and whether careful
consideration by physicians/patients on how best to take
advantage of generic drugs could have prevented or reduced
the financial burden of drug costs after switching to a genericonly drug benefit.
Primary Funding Source: RWJF, American Academy of
Family Physicians
• The Effect of Retiree Health Insurance on Early
Retirement
Kaan Tunceli, Ph.D., Pamela Farley Short, Ph.D., William
Greene, Ph.D.
Presented by: Kaan Tunceli, Ph.D., Health Services
Researcher, Center for Health Services Research, Henry Ford
Health System, One Ford Place, Suite 3A, Detroit, MI 48202;
Tel: 313.874.5485; Fax: 313.874.7137; E-mail: ktuncel1@hfhs.org
Research Objective: (1) To estimate the effect of planning to
retire early on access to employer-provided retiree health
insurance (ERHI); and (2) to make a consistent estimate of
the effect of access to ERHI on the probability of early
retirement, allowing for the possibility that access to retiree
insurance is an endogenous variable.
Study Design: We utilized a panel study design with three
sequential observations at different points in time. The
retirement model is specified with three sequential equations
predicting retirement expectations in 1992, access to retiree
health insurance in 1996, and retirement between 1996 and
2000. Demographic and socioeconomic characteristics of
spouses are included in all three equations. In contrast to
most previous studies, we used multi-equation estimation
techniques (bivariate and trivariate probit) to account for
simultaneities involving the three dependent variables, in
addition to a conventional univariate probit technique.
Population Studied: The empirical analysis uses data from
the first five waves of the Health and Retirement Study (HRS),
which were conducted every other year from 1992 to 2000.
The analysis focuses on men who were less than 65 in 2000
and were full-time workers with insurance as active workers in
1996. The resulting analytic sample includes 1,039
respondents.
Principal Findings: The results vary significantly by
estimation technique. Planning to retire early increases access
to ERHI in the bivariate and trivariate models, while it does
not in the univariate model. According to the bivariate model,
men who planned to retire early had access to retiree
insurance at a rate 20 percentage points higher than their
counterparts who did not plan to retire early. The effect of
access to ERHI on early retirement is positive and significant
in all three models. However, the effect is larger for bivariate
and trivariate models compared to the univariate model.
According to the bivariate model, full-time employed men who
had access to retiree health insurance in Wave 3 were 19
percentage points more likely to retire than their counterparts
without access to retiree insurance. The effect of access in the
univariate probit was only 5.1 percentage points and weakly
significant. All three correlation coefficients between error
terms in the structural model were significant (p < 0.01).
Conclusions: These findings suggest that the effect of access
to retiree health insurance on the probability of retirement
might be quite large. In particular, estimation techniques that
account for endogeneity and the correlations between the
error terms in the structural model produced larger effects of
retiree health insurance on early retirement than in most
previous studies. This implies that previous research using
mostly univariate models might have underestimated the
effect of retiree health insurance on retirement.
Implications for Policy, Delivery or Practice: Policy
initiatives such as a Medicare buy-in or health insurance tax
credits that increase access to retiree health insurance are
likely to have larger effects on retirement decisions than
previous research has suggested. In other words, the
unintended effects on labor force participation of policies that
increase access to retiree health insurance might be greater
than anticipated.
• Trends in Medical Spending by Age: 1963-2000
Ellen Meara, Ph.D., Chapin White, M.P.P., Ph.D., David Cutler,
Ph.D.
Presented by: Chapin White, M.P.P., Ph.D., Post-doctoral
Fellow, National Bureau of Economic Research, 14 Suffolk
Street, #2, Cambridge, MA 02139; Tel: 617.642.2073; Fax:
617.868.2742; E-mail: chapin_white@post.harvard.edu
Research Objective: To measure trends in medical spending
from 1963 through 2000, by age group and by type of
spending (e.g. hospital care).
Study Design: We combine the Medical Expenditure Panel
Survey and earlier similar household surveys with the National
Health Expenditures (NHE) data on aggregate medical
spending. We use the household surveys to estimate the
fraction of spending accounted for by each age group, and
allocate total spending accordingly. We shift some of the NHE
spending across categories to make it more consistent with
the household surveys. Because institutionalized individuals
are excluded from the household surveys, we use National
Nursing Home Survey data to allocate nursing home
spending across age groups. Spending is inflated to 2002
dollars using the Consumer Price Index.
Population Studied: The U.S. resident population.
Principal Findings: From 1963 to 2000, the elderly as a share
of the population grew from 9.4% to 12.6%, and the fraction
of medical spending accounted for by the elderly grew from
19.7% to 39.2%. Over this period, the annual growth rate in
real per capita medical spending was 3.5% among the nonelderly, and 5.3% among the elderly, with per capita spending
among the elderly reaching $12,322 in 2000. Among the nonelderly, growth was fairly constant over this period. Among the
elderly, however, growth slowed dramatically, with the real
annual growth rate falling from 6.9% in 1963-1987, to 2.8% in
1987-1996, to only 0.9% in 1996-2000. Spending on
pharmaceuticals accelerated throughout the period for both
the elderly and non-elderly, with the real annual growth rate in
1996-2000 reaching 12.9% among the non-elderly and 9.4%
among the elderly.
Conclusions: Although the elderly share of the population has
been growing, population aging has played a very small role in
the overall growth in medical spending. The main driver of
medical spending growth has been the increase in spending
per capita within all age groups. The recent sharp slowdown in
spending growth among the elderly likely reflects new
Medicare payment policies, which affected acute care
hospitals, physicians and, more recently, post-acute care
providers. Spending on pharmaceuticals has grown very
rapidly among the elderly in recent years, despite the lack of a
universal drug benefit.
Implications for Policy, Delivery or Practice: Over the long
term, spending per capita has grown more rapidly among the
elderly than among the non-elderly. More recently, however,
Medicare payment policies appear to have slowed the growth
in spending among the elderly. These findings suggest that
projections of aggregate medical spending should reflect
differential trends in spending among the elderly versus nonelderly, and differential trends by spending category. The new
Medicare drug bill has two features that make it difficult to
project spending growth: it does not include substantial cost
containment measures, and it expands benefits for a spending
category (i.e. pharmaceuticals) in which the recent growth rate
has been very high.
Primary Funding Source: NIA
Invited Papers
New Capitated Alternatives in Medicare
Chair: Melvin Ingber, Ph.D.
Monday, June 7 • 8:30 a.m.-10:00 a.m.
•
Panelists: John Kautter and Gregory Pope, both from RTI
International; John Robst, Centers for Medicare and
Medicaid Services (no abstracts provided)
Invited Papers
Medicare Beneficiaries & Prescription Drugs
Chair: Brigid Goody, Sc.D.
Monday, June 7 • 2:00 p.m.-3:30 p.m.
•
Panelists: Daniel Gilden, JEN Associates; Melvin Ingber,
Centers for Medicare and Medicaid Services; Cindy
Thomas, Brandeis University; Marian Wrobel, Abt
Associates, Inc. (no abstracts provided)
Invited Papers
Medicare Drug Benefits
Chair: Roger Feldman, Ph.D.
Tuesday, June 8 • 9:15 a.m.-10:45 a.m.
•
Panelists: Marisa Elena Domino, University of North
Carolina, Chapel Hill; Geoffrey Joyce, RAND; Steven Pizer,
Boston University; Dennis Shea, Pennsylvania State
University; Robert Town, University of Minnesota (no
abstracts provided)