Jean M. Mitchell

Utilization trends for advanced imaging procedures: evidence from individuals with private insurance coverage in California.

Background:Recent reports by the Medicare Payment Advisory Commission have highlighted sharp increases in the use of advanced diagnostic imaging procedures among the Medicare fee-for-service population. Little research has examined whether such trends also exist among persons with generous private insurance coverage. Moreover, research documenting changes in the share of utilization linked to self-referral is nonexistent. Research Design:Using data from a large private insurer in California, we document trends in utilization for magnetic resonance imaging (MRI), computed tomography (CT), and positron emission tomography (PET) scans over the time period 2000–2004. We collected data that enable us to calculate relative changes in use rates by provider type (self-referral physicians, radiologists, hospitals, and independent diagnostic testing facilities). Examining trends in the share of utilization performed by provider type can offer insights as to the effects of self-referral on rates of use. Results:Rates of use for the 3 advanced imaging modalities examined—MRI, CT, and PET—increased rapidly between 2000 and 2004. PET utilization increased by almost 400%, whereas the corresponding increases for MRI and CT exceeded 50%. Findings suggest that physician self-referral arrangements and independent diagnostic testing facilities seem to be contributing to this greater use of advanced imaging, especially for MRI and PET. In contrast, relative changes in use of advanced imaging performed at hospitals were small. Use rates for all 3 modalities were much higher in southern California compared with the northern region of the state. Conclusions:Use of highly reimbursed advanced imaging, a major driver of higher health care costs, should be based on clear clinical practice guidelines to ensure appropriate use.

Hospital Costs and Competition for Services: A Multiproduct Analysis

The authors estimate the effects of market structure on hospital costs using a translog multiproduct cost function. Recognizing the multiplicity of services provided by hospitals, the results show that costs are substantially determined by service configuration, and that there are distinct economies of size and sco pe. The model also distinguishes market concentration measures by servic e type, including obstetrics, radiation therapy, diagnostic imaging, a nd surgery. Estimates show that, after controlling for the other determinants of cost, the degree of competition has only modest cost-increasing effects. Copyright 1992 by MIT Press.

Urologists' Use of Intensity-Modulated Radiation Therapy for Prostate Cancer

BACKGROUND Some urology groups have integrated intensity-modulated radiation therapy (IMRT), a radiation treatment with a high reimbursement rate, into their practice. This is permitted by the exception for in-office ancillary services in the federal prohibition against self-referral. I examined the association between ownership of IMRT services and use of IMRT to treat prostate cancer. METHODS Using Medicare claims from 2005 through 2010, I constructed two samples: one comprising 35 self-referring urology groups in private practice and a matched control group comprising 35 non-self-referring urology groups in private practice, and the other comprising non-self-referring urologists employed at 11 National Comprehensive Cancer Network centers matched with 11 self-referring urology groups in private practice. I compared the use of IMRT in the periods before and during ownership and used a difference-in-differences analysis to evaluate changes in IMRT use according to self-referral status. RESULTS The rate of IMRT use by self-referring urologists in private practice increased from 13.1 to 32.3%, an increase of 19.2 percentage points (P<0.001). Among non-self-referring urologists, the rate of IMRT use increased from 14.3 to 15.6%, an increase of 1.3 percentage points (P=0.05). The unadjusted difference-in-differences effect was 17.9 percentage points (P<0.001). The regression-adjusted increase in IMRT use associated with self-referral was 16.4 percentage points (P<0.001). The rate of IMRT use by urologists working at National Comprehensive Cancer Network centers remained stable at 8.0% but increased by 33.0 percentage points among the 11 matched self-referring urology groups. The regression-adjusted difference-in-differences effect was 29.3 percentage points (P<0.001). CONCLUSIONS Urologists who acquired ownership of IMRT services increased their use of IMRT substantially more than urologists who did not own such services. Allowing urologists to self-refer for IMRT may contribute to increased use of this expensive therapy. (Funded by the American Society for Radiation Oncology.).

Physician ownership of ancillary services: indirect demand inducement or quality assurance?

This paper analyzes two competing explanations for the ownership of ancillary facilities by referring physicians: indirect demand inducement and quality assurance. Consistent with the demand-inducement explanation we find physician-owned clinics treat patients for 50 percent more visits than do independent clinics and the differential is directly related to factors facilitating demand inducement. We find no difference in quality of care across ownership structures, however. In further support of the demand-inducement hypothesis we find that physical therapists are less likely to work in physician-owned clinics in states where therapists are allowed to practice independently.

Controlling the Escalating Use of Advanced Imaging The Role of Radiology Benefit Management Programs

Since the late 1990s, the use of advanced diagnostic imaging modalities has increased by double-digit rates, outpacing the rate of increase of medical spending overall. In an attempt to assure the appropriate use of advanced imaging procedures, private insurers are increasingly contracting with radiology benefit management programs (RBMs) to reduce overall use and expenditures for radiology services. This article describes the services offered by RBMs and then presents trends in utilization of advanced imaging procedures from three health plans that adopted RBM prior authorization protocols. The implementation of prior authorization protocols by each plan was associated with declines in use of advanced imaging procedures, especially during the first year of the program. Although more rigorous empirical analysis is required in order to draw definitive conclusions, these trends suggest that RBM prior authorization initiatives may be a viable approach for addressing concerns about appropriate use of advanced imaging.

Do financial incentives linked to ownership of specialty hospitals affect physicians' practice patterns?

Background:Although physician-owned specialty hospitals have become increasingly prevalent in recent years, little research has examined whether the financial incentives linked to ownership influence physicians’ referral rates for services performed at the specialty hospital. Objective:We compared the practice patterns of physician owners of specialty hospitals in Oklahoma, before and after ownership, to the practice patterns of physician nonowners who treated similar cases over the same time period in Oklahoma markets without physician-owned specialty hospitals. Research Design:We constructed episodes of care for injured workers with a primary diagnosis of back/spine disorders. We used pre–post comparisons and difference-in-differences analysis to evaluate changes in practice patterns for physician owners and nonowners over the time period spanned by the entry of the specialty hospital. Results:Findings suggest the introduction of financial incentives linked to ownership coincided with a significant change in the practice patterns of physician owners, whereas such changes were not evident among physician nonowners. After physicians established ownership interests in a specialty hospital, the frequency of use of surgery, diagnostic, and ancillary services used in the treatment of injured workers with back/spine disorders increased significantly. Conclusions:Physician ownership of specialty hospitals altered the frequency of use for an array of procedures rendered to patients treated at these hospitals. Given the growth in physician-owned specialty hospitals, these findings suggest that health care expenditures will be substantially greater for patients treated at these institutions relative to persons who obtain care from nonself-referral providers.

Physicians' responses to Medicare fee schedule reductions.

Background.Relatively little empirical research has addressed physicians’ responses to fee changes under the Medicare Fee Schedule. Objectives.We analyzed Medicare claims data for ophthalmologists and orthopedic surgeons for the years 1991 through 1994 to evaluate the relative importance of profit-maximizing and target-income theories in determining physicians’ supply responses to specific Medicare fee reductions. Research Design.This study was designed to estimate the impact of fee reductions for cataract extractions and major joint repair/replacement procedures through pooled cross-section time series data. Results.The supply function for cataract extractions has both strong own-price and cross-price effects, as well as a highly significant negative income effect. Yet, the magnitude of the income effect is small; thus, the substitution effect dominates the income effect. Similarly, in the supply functions for joint procedures, the own price has the expected positive sign, implying that as the fee declines, orthopedic surgeons will perform fewer joint surgeries. However, the cross-price variable has the correct sign only if treated as exogenous, and the variables measuring the income effect have the wrong sign, although their magnitude is small. Conclusions.These results suggest that the Medicare Fee Schedule does have the potential to influence physicians’ supply decisions, but these effects may vary by specialty and service.

Medicare Breast Surgery Fees and Treatment Received by Older Women with Localized Breast Cancer

OBJECTIVE To determine whether area-level Medicare physician fees for mastectomy and breast conserving surgery were associated with treatment received by Medicare beneficiaries with localized breast cancer and to compare these results with an earlier analysis conducted using small areas (three-digit zip codes) as the unit of observation. DATA SOURCE Medicare claims and physician survey data for a national sample of elderly (aged 67 or older) Medicare beneficiaries with localized breast cancer treated in 1994 (unweighted n = 1,787). STUDY DESIGN Multinomial logistic regression analysis was used to estimate a model of treatment received as a function of Medicare fees, controlling for other area economic factors, patient demographic and clinical characteristics, physician experience, and region. PRINCIPAL FINDINGS In 1994, average Medicare fees (adjusted for the effects of modifiers and procedure mix) for mastectomy (MST) and breast conserving surgery (BCS) were 904 dollars and 305 dollars, respectively. Holding other fees and factors fixed, a 10 percent increase in the BCS fee increased the odds of breast conserving surgery with radiation therapy relative to mastectomy to 1.34 (p = 0.02), while a 10 percent decrease in the MST fee increased the odds of breast conserving surgery with radiation therapy to 1.86 (p < 0.01). CONCLUSIONS Among older women with localized breast cancer, financial incentives appear to influence the use of mastectomy and breast conserving surgery with radiation therapy. This finding is consistent with the hypothesis that physicians are responsive to financial incentives when the alternative procedures have clinically equivalent outcomes and the patients clinical condition does not dominate the treatment choice. We also find that the fee effects derived from this analysis of individual data with more precise measurement of both diagnosis and treatment are qualitatively similar to the results of the small-area analysis. This suggests that the earlier study was not severely affected by ecological bias or other data limitations inherent in Medicare claims data.

Medicare fees and small area variations in breast-conserving surgery among elderly women.

This study used data from Medicare files, the American Hospital Association’s Annual Survey of Hospitals, and the 1990 census to investigate whether Medicare fees for breast-conserving surgery (BCS) and mastectomy (MST) affected the rate of BCS across 799 3digit ZIP code areas in 1994. The full model, which was based on the conceptual framework of the supply of and demand for different treatments, explained 51 percent of the variation in BCS rates. Medicare fees were statistically significant and had the hypothesized effects: a 10 percent higher BCS fee was associated witha7to10percent higher BCS rate, while a 10 percent higher MST fee was associated with a 2 to 3 percent lower proportion receiving BCS. Other significant economic variables were proximity to a radiation therapy hospital, a teaching hospital or a cancer center, and the percentage of elderly women with incomes below the poverty rate, which were negatively related to the BCS rate. Variations in age, race, and metropolitan populations had small or insignificant effects. The single most important variable was the percentage of cases with one or more comorbidities.

Expenditures on services for persons with acquired immunodeficiency syndrome under a Medicaid home and community-based waiver program. Are selection effects important?

OBJECTIVES In 1990, the state of Florida implemented an acquired immunodeficiency syndrome (AIDS)-specific Medicaid waiver program to provide home and community-based services to AIDS patients as an alternative to institutional care. The program is available to Medicaid beneficiaries with AIDS who are at risk of institutionalization. This study examines whether the waiver option was effective in reducing Medicaid expenditures per beneficiary during its first 2 years of operation. METHODS The authors used Medicaid claims data and county information on the availability of health services to model the selection of the waiver option by AIDS patients and then to estimate the effect of the waiver on expenditures controlling for nonrandom program selection. RESULTS The results indicate that the selection model is highly significant, but that the influence of nonrandom selection on the estimation of the program effects is negligible. More importantly, the regression results indicate that persons with AIDS who use waiver services incur monthly Medicaid expenditures that are on average 22% to 27% lower than otherwise similar nonparticipants. CONCLUSIONS These results, based on the first 2 years that Project AIDS Care was operational, suggest that home and community-based care for AIDS patients results in lower expenditures per beneficiary.