Mary Price

How Medicare’s Payment Cuts For Cancer Chemotherapy Drugs Changed Patterns Of Treatment

The Medicare Prescription Drug, Improvement, and Modernization Act, enacted in 2003, substantially reduced payment rates for chemotherapy drugs administered on an outpatient basis starting in January 2005. We assessed how these reductions affected the likelihood and setting of chemotherapy treatment for Medicare beneficiaries with newly diagnosed lung cancer, as well as the types of agents they received. Contrary to concerns about access, we found that the changes actually increased the likelihood that lung cancer patients received chemotherapy. The type of chemotherapy agents administered also changed. Physicians switched from dispensing the drugs that experienced the largest cuts in profitability, carboplatin and paclitaxel, to other high-margin drugs, like docetaxel. We do not know what the effect was on cancer patients, but these changes may have offset some of the savings projected from passage of the legislation. The ultimate message is that payment reforms have real consequences and should be undertaken with caution.

Validation of an Algorithm for Categorizing the Severity of Hospital Emergency Department Visits

Background:Differentiating between appropriate and inappropriate resource use represents a critical challenge in health services research. The New York University Emergency Department (NYU ED) visit severity algorithm attempts to classify visits to the ED based on diagnosis, but it has not been formally validated. Objective:To assess the validity of the NYU algorithm. Research Design:A longitudinal study in a single integrated delivery system from January 1999 to December 2001. Subjects:A total of 2,257,445 commercial and 261,091 Medicare members of an integrated delivery system. Measures:ED visits were classified as emergent, nonemergent, or intermediate severity, using the NYU ED algorithm. We examined the relationship between visit-severity and the probability of future hospitalizations and death using a logistic model with a general estimating equation approach. Results:Among commercially insured subjects, ED visits categorized as emergent were significantly more likely to result in a hospitalization within 1-day (odds ratio = 3.37, 95% CI: 3.31–3.44) or death within 30-days (odds ratio = 2.81, 95% CI: 2.62–3.00) than visits categorized as nonemergent. We found similar results in Medicare patients and in sensitivity analyses using different probability thresholds. ED overuse for nonemergent conditions was not related to socio-economic status or insurance type. Conclusions:The evidence presented supports the validity of the NYU ED visit severity algorithm for differentiating ED visits based on need for hospitalization and/or mortality risk; therefore, it can contribute to evidence-based policies aimed at reducing the use of the ED for nonemergencies.

Steps To Reduce Favorable Risk Selection In Medicare Advantage Largely Succeeded, Boding Well For Health Insurance Exchanges

Within Medicare, the Medicare Advantage program has historically attracted better risks-healthier, lower-cost patients-than has traditional Medicare. The disproportionate enrollment of lower-cost patients and avoidance of higher-cost ones during the 1990s-known as favorable selection-resulted in Medicares spending more per beneficiary who enrolled in Medicare Advantage than if the enrollee had remained in traditional Medicare. We looked at two measures that can indicate whether favorable selection is taking place-predicted spending on beneficiaries and mortality-and studied whether policies that Medicare implemented in the past decade succeeded in reducing favorable selection in Medicare Advantage. We found that these policies-an improved risk adjustment formula and a prohibition on monthly disenrollment by beneficiaries-largely succeeded. Differences in predicted spending between those switching from traditional Medicare to Medicare Advantage relative to those who remained in traditional Medicare markedly narrowed, as did adjusted mortality rates. Because insurance exchanges set up under the Affordable Care Act will employ similar policies to combat risk selection, our results give reason for optimism about managing competition among health plans.

High-Deductible Health Insurance Plans: Efforts To Sharpen A Blunt Instrument

High deductible-based health insurance plans require consumers to pay for care until reaching the deductible amount. However, information is limited on how well consumers understand their benefits and how they respond to these costs. In telephone interviews, we found that consumers had limited knowledge about their deductibles yet frequently reported changing their care-seeking behavior because of the cost. Poor knowledge limited the effects of the deductible design, with some consumers avoiding care for services that were exempt from the deductible. Consumers need more information and decision support to understand their benefits and to differentiate when care is necessary, discretionary, or unnecessary.

HOW MUCH FAVORABLE SELECTION IS LEFT IN MEDICARE ADVANTAGE

The health economics literature contains two models of selection, one with endogenous plan characteristics to attract good risks and one with fixed plan characteristics; neither model contains a regulator. Medicare Advantage, a principal example of selection in the literature, is, however, subject to anti-selection regulations. Because selection causes economic inefficiency and because the historically favorable selection into Medicare Advantage plans increased government cost, the effectiveness of the anti-selection regulations is an important policy question, especially since the Medicare Advantage program has grown to comprise 30 percent of Medicare beneficiaries. Moreover, similar anti-selection regulations are being used in health insurance exchanges for those under 65. Contrary to earlier work, we show that the strengthened anti-selection regulations that Medicare introduced starting in 2004 markedly reduced government overpayment attributable to favorable selection in Medicare Advantage. At least some of the remaining selection is plausibly related to fixed plan characteristics of Traditional Medicare versus Medicare Advantage rather than changed selection strategies by Medicare Advantage plans.

Something is Amiss in Denmark: A Comparison of Preventable Hospitalisations and Readmissions for Chronic Medical Conditions in the Danish Healthcare System and Kaiser Permanente

BackgroundAs many other European healthcare systems the Danish healthcare system (DHS) has targeted chronic condition care in its reform efforts. Benchmarking is a valuable tool to identify areas for improvement. Prior work indicates that chronic care coordination is poor in the DHS, especially in comparison with care in Kaiser Permanente (KP), an integrated delivery system based in the United States. We investigated population rates of hospitalisation and readmission rates for ambulatory care sensitive, chronic medical conditions in the two systems.MethodsUsing a historical cohort study design, age and gender adjusted population rates of hospitalisations for angina, heart failure, chronic obstructive pulmonary disease, and hypertension, plus rates of 30-day readmission and mortality were investigated for all individuals aged 65+ in the DHS and KP.ResultsDHS had substantially higher rates of hospitalisations, readmissions, and mean lengths of stay per hospitalisation, than KP had. For example, the adjusted angina hospitalisation rates in 2007 for the DHS and KP respectively were 1.01/100 persons (95%CI: 0.98-1.03) vs. 0.11/100 persons (95%CI: 0.10-0.13/100 persons); 21.6% vs. 9.9% readmission within 30 days (OR = 2.53; 95% CI: 1.84-3.47); and mean length of stay was 2.52 vs. 1.80 hospital days. Mortality up through 30 days post-discharge was not consistently different in the two systems.ConclusionsThere are substantial differences between the DHS and KP in the rates of preventable hospitalisations and subsequent readmissions associated with chronic conditions, which suggest much opportunity for improvement within the Danish healthcare system. Reductions in hospitalisations also could improve patient welfare and free considerable resources for use towards preventing disease exacerbations. These conclusions may also apply for similar public systems such as the US Medicare system, the NHS and other systems striving to improve the integration of care for persons with chronic conditions.

Distributing

The viability and stability of the Medicare Part D prescription drug program depend on accurate risk-adjusted payments. The current approach, prescription drug hierarchical condition categories (RxHCCs), uses diagnosis and demographic information to predict future drug costs. We evaluated the performance of multiple approaches for predicting 2006 Part D drug costs and plan liability. RxHCCs explain 12 percent of the variation in actual drug costs, overpredict costs for beneficiaries with low actual costs, and underpredict costs for beneficiaries with high actual costs. Combining RxHCCs with individual-level information on prior-year drug use greatly improves performance and decreases incentives for plans to select against bad risks.

800 Billion: An Early Assessment Of Medicare Part D Risk Adjustment

Since 2006 numerous insurers have stopped serving the low-income segment of the Medicare Part D program, forcing millions of beneficiaries to change prescription drug plans. Using data from participating plans, we found that Medicare payments do not sufficiently reimburse insurers for the relatively high medication use among this population, creating perverse incentives for plans to avoid this part of the Part D market. Plans can accomplish this by increasing their premiums for all beneficiaries to an amount above regional benchmarks. We demonstrate that improving the accuracy of Medicares risk and subsidy adjustments could mitigate these perverse incentives.

Fixing flaws in Medicare drug coverage that prompt insurers to avoid low-income patients.

OBJECTIVE There is limited information on the protective value of Medicare Part D low-income subsidies (LIS). We compared responses to drug costs for LIS recipients with near-poor (≤200 percent of the Federal Poverty Level) and higher income beneficiaries without the LIS. DATA SOURCES/STUDY SETTING Medicare Advantage beneficiaries in 2008. STUDY DESIGN We examined three drug cost responses using multivariate logistic regression: cost-reducing behaviors (e.g., switching to generics), nonadherence (e.g., not refilling prescriptions), and financial stress (e.g., going without necessities). DATA COLLECTION Telephone interviews in a stratified random sample (N = 1,201, 70 percent response rate). PRINCIPAL FINDINGS After adjustment, a comparable percentage of unsubsidized near-poor (26 percent) and higher income beneficiaries reported cost-reducing behaviors (23 percent, p = .63); fewer LIS beneficiaries reported cost-reducing behaviors (15 percent, p = .019 vs near-poor). Unsubsidized near-poor beneficiaries were more likely to reduce adherence (8.2 percent) than higher income (3.5 percent, p = .049) and LIS beneficiaries (3.1 percent, p = .027). Near-poor beneficiaries also more frequently experienced financial stress due to drug costs (20 percent) than higher income beneficiaries (11 percent, p = .050) and LIS beneficiaries (11 percent, p = .015). CONCLUSIONS Low-income subsidies provide protection from drug cost-related nonadherence and financial stress. Beneficiaries just above the LIS income threshold are most at risk for these potentially adverse behaviors.

Responses to Medicare drug costs among near-poor versus subsidized beneficiaries.

Background:There is limited information on patients’ knowledge about their cost-sharing requirements and how that influenced their care-seeking behavior. Objective:To examine patients’ knowledge of their office visit copayments, their self-reported responses to perceived and actual copayments, and discussions with physicians about costs. Research Design:Cross-sectional telephone interview study with a 71% response rate. Subjects:Stratified random sample of 479 adult members of a prepaid, integrated delivery system: equal sample of members with and without a chronic disease. Measures:Perceived and actual office visit copayment amounts, patient self-reported behavioral responses to copayments, cost discussions with a physician, and patient attitudes about discussing costs. Results:Overall, 50% of respondents correctly reported their copayment amount, with 39% underestimating and 11% overestimating. Among respondents who reported having copayments, 27% reported delaying or avoiding a visit altogether, or talking to a physician/advice nurse instead of attending an in-person visit because of their copayment. Perceived office visit copayment amounts were significantly associated with self-reported behavior changes (OR, 1.47 per